A few weeks ago, Telesat announced it would use SpaceX’s rockets to deploy its network relay satellites, starting sometime in 2026. While neither company offered a contract value nor the total satellites to be deployed, some guesses can be made based on previous Telesat statements.
First, the contract between SpaceX and Telesat is for 14 launches. The 14 launches will not deploy the expanded number of Lightspeed network relay satellites (about 1,600). Instead, it appears as if Telesat’s initial batch of 198 satellites will be deployed using SpaceX’s rockets. The announcement noted that a single Falcon 9 launch could carry and deploy up to 18 of Telesat’s satellites, each with a mass of 750 kilograms.
If Telesat is launching only 198 Lightspeed satellites, then it appears that less than 18 satellites will be launched from most of those 14 launches. Suppose the company gets funding for the remaining 1,400+ satellites it filed with the FCC. In that case, there are potentially many more launch opportunities for SpaceX from Telesat–over 71 of them launching the maximum 18 per launch using the Falcon 9.
Regarding the launch contract value, some people have used the $67 million per Falcon 9 launch estimate to come up with $938 million for the overall contract. Perhaps, but if so, that’s likely the upper limit as a contract “bundle o’ launches” would probably involve some launch discounting–even if SpaceX is the only realistic game in town. SpaceX probably kept the price low to keep Telesat from even considering the yet-to-be-fielded competition. Still, SpaceX wins from this deal, as does Telesat.
What Cost, Peace of Mind?
Telesat and its investors don’t have to worry about the method to deliver its satellites to orbit because it will be using an existing, reliable, flexible, and inexpensive launch system. All the company has to do is make sure MDA delivers its satellites on time and that those satellites work reliably. Thus, we see some benefit from the constant delays that have been a part of the Lightspeed business plans–significantly lowered costs while gaining technology maturity—at least $2 billion alone just from switching from Thales Alenia to MDA.
Those circumstances could have been a happy accident resulting from the company’s constant delays in starting its network relay constellations. But the result helps resolve some challenges I perceived of Telesat’s willingness to continue with Lightspeed about 2.5 years ago:
None of the information above answers why Telesat is moving ahead with Lightspeed. If anything, the constellation’s technology, features, timing, and market plans raise more questions, as they don’t appear to give Telesat any significant edge.
That observation was in response to Telesat’s initial selection of Thales Alenia Space to build its Lightspeed satellite. That company is no longer contracted to build Telesat’s satellites–MDA is. While getting satellite details from Telesat is refreshing, they are trivia until the satellites are in orbit and operating. However, that information is still more than what we’ve seen from Amazon’s Project Kuiper division (and it’s appreciated).
So, while the satellites are not a reality yet, it’s likely that MDA will fulfill the contract to build them since it doesn’t appear to be working on any dubious new technology. MDA also has satellite manufacturing experience. And, unless there’s some kind of catastrophe, SpaceX will be there to launch those satellites.
To be clear, neither Project Kuiper nor Telesat have demonstrated any kind of urgency in getting a constellation in orbit. It's not clear whether the planned satellites of either one will even work. The thing about Murphy is that he’s the one constant that seems to work on Earth and in space. SpaceX has had time to gain experience and weather some of the challenges that the others will surely confront. They will respond differently, sometimes better or worse than SpaceX.
Hope Meeting Market Reality
On the other hand, Project Kuiper has already had to change its satellite prototype launch plans because a launch vehicle that was supposed to be ready isn’t. The change itself isn’t a tragedy for the Project Kuiper team, but it seems to portend some challenges. It also signifies some questionable internal decision-making processes for the company. But it appears that Project Kuiper’s point wasn’t necessarily to get internet relay satellites in orbit as quickly as possible. It seems to have adopted the Blue Origin approach to space operations.
The announcement to launch thousands of Kuiper satellites using three companies was a marketing exercise for Amazon. It sounds great and is readily accepted by those who are true believers in the importance of commercial expansions into the space industry. A renowned technology company spending billions of dollars to fund not just one but three launch companies’ new rocket development efforts? Awesome!
However, there were and are challenges with those contracts, including the reliance on non-existent, unproven rocket systems. Also, the fact that Amazon appeared to be “subsidizing” three different rocket systems indicated the global launch service industry was/is in an unhealthy place. At the time, I observed:
What's most eye-opening about this announcement is that it again exposes the orbital launch industry’s fragility. A single company, in this case, Amazon, shouldn’t be the economic fountainhead for three launch companies. After all, as with SpaceX, what happens if Amazon disappears (this is unlikely)? Of course, many companies rely on Amazon every day for selling their wares on the company’s site, so, that’s not a huge leap for Amazon itself. Yes, ULA and Arianespace have other customers, but they historically have maintained low annual launch rates (when compared with SpaceX’s four+ launches per month).
Telesat’s contract with SpaceX doesn’t mitigate the launch service weakness. The industry’s fragility seems even more evident today, even as U.S. launches are breaking records this year. That status is not because of Blue Origin’s or ULA’s launches. Despite an additional 1.5 years since my observation, Blue Origin has nothing to launch, and ULA has launched just two rockets in 2023 (2.5% of 79 U.S. launches so far). Instead, SpaceX has increased its monthly launch cadence to over seven per month in 2023.
The Shareholders Awake
Kuiper’s launch contracts are only as good as the available rockets. That’s something that Amazon’s shareholders have finally clued into. In late 2021, I conducted an analysis in an attempt to figure out which launch company Amazon might select for Kuiper. I assumed the company wanted to use existing launch systems, and the logic pointed to SpaceX’s Falcon 9, primarily because it was the least expensive option. Instead, Amazon chose ABL Space. I noted:
But the fact that PK didn’t choose SpaceX, instead choosing to pay more than double SpaceX’s per kg rideshare cost ($5,000/kg), indeed comes as a surprise to no one. Although, Amazon shareholders should question that decision at the next meeting.
Years later, and in the past few weeks, at least some of Amazon's shareholders questioned the launch service selection decisions made for Project Kuiper. They are suing Amazon and Jeff Bezos for conflicts of interest (Bezos’ pushing Blue Origin, his company, despite having no rocket) and for not considering SpaceX (at all), a company with rockets and the most U.S. launches this year (so, perhaps, a lack of due diligence in launch provider selection?).
The shareholders noted that the clock has been ticking since the Federal Communications Commission greenlit Project Kuiper’s deployment plans. They worried that selecting launch services without rockets to launch satellites would move those plans beyond the FCC’s requirement in 2026.
Those shareholders are correct to be concerned, as, based on the current and projected launch landscape, launch providers Amazon contracted with will be able to launch not much more than about 32% of the FCC requirement by the end of 2025 (leaving over 1,100 satellites to be deployed by mid-2026). Others have pointed out that the FCC will probably be lenient with that requirement, so we shall see when we get to that date.
Some people will point out that Amazon’s board was right not to select SpaceX for launching its satellites. SpaceX’s Starlink will compete with Project Kuiper, after all. Perhaps that’s true. But for Project Kuiper to even have a chance at competing, the company’s satellites need to be operating in a functional constellation. The company’s current launch contracts don’t provide ironclad reassurance in achieving that baseline requirement despite choosing companies (only two of the three) that have demonstrated an excellent history of reliable launch service.
However, Project Kuiper’s other competitors have chosen SpaceX to launch their satellites. OneWeb chose the company because Arianespace couldn’t fulfill the remaining launches and now has 635 satellites in orbit–just 13 shy of the 648 OneWeb satellites planned for the initial constellation. Telesat is choosing SpaceX because–what is the reasonable launch alternative for a company attempting to fulfill shareholder expectations? And while Telesat's choice is interesting, it will mean nothing until the company has orbiting satellites. But, at least OneWeb’s and Telesat’s launch contract decisions appear logical and responsible.
Project Kuiper’s launch contracts were never that. They were marketing bolstered by hope, mixed in with a plan for a slow service rollout. Maybe the contracts were intended to be a show of solidarity against SpaceX, bringing the resources of four companies to bear against it. Their failure doesn’t bode well for those wishing for a vibrant, competitive launch market.