1. DFI International Washington, DC Next-Generation Space Transportation: Six (Hopefully) Interesting Thoughts in 60 Seconds May 17, 2001 Lori Garver Director, Space Programs Prepared for

2. D F I I N T E R N A T I O N A L Next-Generation Space Transportation … generating revenue for the industry Thought #1: It is neither the best of times nor the worst of times However, future dynamism in the industry is still almost entirely dependent on deployment of commercial constellations 0 2000 4000 6000 8000 10000 12000 19971998199920002001(E)2002(E) $ millions 0 20 40 60 80 100 120 140 160 180 19971998199920002001(E)2002(E) # Satellites Launched Government/Civil Commercial non-GEO Commercial GEO Global Satellite Launches (1997-2002)Global Launches Revenues (1997-2002) Satellites are going up … Source: DFI InternationalSource: Merrill Lynch

3. D F I I N T E R N A T I O N A L Next-Generation Space Transportation Thought #2: It is all relative Company Capex To Light (Millions) Years to Complete 360 Networks31,360$ 39 AT&T23,2969 Sprint13,4408 Worldcom16,1287 Qwest39,42425 Global Crossing16,12824 Genuity19,71241 Williams105,728123 Broadwing82,432785 Level 3 (Internal)7,1683 Level 3 (Dark Fiber)152,32076 507,136 $ 38 TERRESTRIAL FIBER DEPLOYMENT COSTS Satellite is no longer the black sheep of the family $900,000,000 $630,000,000 Iridium Globalstar LAUNCH REVENUES FROM IRIDIUM, ORBCOMM, GLOBALSTAR Source: Level 3, DFI International Estimates Over $1.5 billion for the launch industry alone

4. D F I I N T E R N A T I O N A L Next-Generation Space Transportation Thought #3: Pioneers show us the way TERRESTRIAL SPACE TELECOM GRAVEYARD RIP ? Industry failures are not only to be expected … ? ? RIP DBC RIP Winstar RIP Aduronet RIP ? … but are, in many cases, essential to the development of robust markets

5. D F I I N T E R N A T I O N A L Next-Generation Space Transportation Thought #4: Hey, look down, I see demand Source: RHK, DFI International Estimates 10 100 1000 10000 20002001200220032004 Terabits/sec 1.75 17.5 175 875 3500 Broadband Multicasting – $14 billion market by 2005 by some accounts; leverages unique one-to many ability of satellites Digital Cinema – specific multicast application; can provide dynamic improvement in global distribution of major films Universal Service – providing service to those areas where market economics will never support terrestrial buildout Route Pioneer – providing services in emerging markets until demand warrants terrestrial buildout Global Network Demand (2000-2004)Key Commercial Satellite Applications Demand for connectivity is expected to be explosive … … and although terrestrial solutions will dominate, satellites will play a significant role

6. D F I I N T E R N A T I O N A L Next-Generation Space Transportation Thought #5: Next-gen launchers need to be three things … reliable, reliable, and more reliable “Reliability is too important to trade off … [but] capacity could be sacrificed” -- International Space Agency Program Director “Reliability is of the utmost importance … a launcher must have a proven track record” -- Commercial LEO constellation executive “[We are] willing to trade price for other factors such as reliability” -- Commercial LEO constellation executive “The five leading factors that we consider in selecting launch vehicles are reliability, reliability, reliability, reliability, and reliability” -- Commercial satellite manufacturing executive … but increasing reliability is also the easiest way to reduce cost to orbit – by continuing to drive down insurance premiums Not only is reliability the key decision criteria for satellite operators … Satellite Launch Insurance Premiums (1989-1999) Source: JH Marsh & McLennan

7. D F I I N T E R N A T I O N A L Next-Generation Space Transportation Thought #6: Government can be a successful enabler The Interstate Highway System cost $329 billion… … resulting in $1 trillion in economic cost savings

8. D F I I N T E R N A T I O N A L Next-Generation Space Transportation Conclusions NASA should focus on its core mission… Space transportation remains an exciting industry with steady growth Pioneering projects are, by definition, costly and time consuming Satellites are increasingly viewed as a key component of global telecommunications infrastructure Shakeouts in the satellite and launch markets, like in terrestrial telecom markets, lead to a “flight to quality” Government has a key role as enabler