Business from above: The money in satellite imagery

Katie Morley grills Managing Director of Astrium's UK Geo-Information Services business, Andy Stroomer, about its products, who uses them and how satellites make money

What does Astrium do?

Astrium is the space division of the European Aeronautic Defence and Space Company (EADS) - a group that also consists of Airbus, the leading manufacturer of commercial aircraft; Eurocopter, the word's largest helicopter supplier; and Cassidian, provider of global security solutions.

We build satellites and space transportation (rockets and launchers), and we also make use of the data that comes from our satellites which we sell to companies to use for a range of purposes.

What kind of images can satellites produce?

Satellites take advantage of a number of imaging modes. First, there's optical imagery which lets you see a county or a region from afar, but these images aren't very detailed. The best commercial optical satellites give a resolution of about 50cm - so one pixel on an image represents 50cm on the ground. Most of the detailed images that you see on Google Earth are captured by aircraft.

We've also got satellites producing radar imagery that can see through clouds, which is useful for defence purposes and for those looking to detect geographical change, such as disaster response planners. The downside of radar is that it's a little harder to interpret.

What data products do you sell?

We sell the basic satellite imagery that we produce, but we can add further value onto that data in a number of ways. We can compile datasets to make predictions, for example, for the purposes of managing disasters like floods or forest fires. For example, we might provide an insurance company with an image of a coastal town and we could then use a broader dataset to map out where policy holders are located on that map, providing them with a risk assessment tool for flooding, for example, that will aid their decision making when creating policies.

Farmers are also using our products to monitor their crop growth. We can either provide them with a basic photo (which means fairly little to them), or we can analyse our data to provide them with information - for example, how much their crops grew between January and March - and to assist them with their farming strategy, helping them work more efficiently and so save money. Detailed satellite imagery is able to identify different rates of growth within individual fields - enabling farmers to target resources more efficiently, for instance, by only needing to fertilise or irrigate certain areas. One of the most successful applications of this technology is used by winegrowers to decide when and which grapes should be harvested.

The latter option in either scenario is where we can make additional revenues and margins from providing more complex information that has real added value for our customers - and so the real value in our long-term business model lies here.

In some cases, particularly if people have very specific projects, they'll request specific up-to-date imagery, and we'll provide this by specially programming our satellites to detect particular sequences of activity.

Who buys your data?

It's bought by a wide range of clients including the military, police, agricultural businesses and environmental managers. Companies like Google also buy it to use commercially - Google Maps' pictures are a combination of high resolution satellite imagery, aircraft imagery and also pictures from vehicle mounted cameras. Google Earth also uses imagery from a variety of sources, including our own to produce its pictures by overlaying different types of satellite data from a range of sources.

This can lead to a situation where data is seen as a commodity, and sometimes even that this data should be made freely available by companies like our own, in return for advertising exposure. As a satellite services provider we need to ensure that the added value we can bring - in terms of data assurance, freshness and quality for example - is recognised in a way that allows us to continue to develop our own business model.

Can you tell us more about how your business model works?

The first thing you have to think about in a business like a satellite company which requires a high capital investment is how you're going to recover your investment costs. Satellites have a finite operational life, so you have to recuperate your investment within that time. Typically, a low earth orbit satellite takes two years to build, weighs two tonnes, costs upwards of £100 million to manufacture (without launch costs) and lasts five to seven years, so you have that amount of time to recover investment costs (the biggest outgoing), with running costs to consider on top of that. Data is valuable, but what's much more valuable is understanding it, and being able to utilise that data to support the needs of businesses.

Where's the industry going in the future?

Over the last two decades we've launched well over 100 satellites (for all types of applications), but most of these have been government funded. The industry has transformed from governments launching the satellites and then us exploiting them, to us building them and exploiting them ourselves. In terms of data prices, the value of raw, low-quality pictures that can be found easily online will decrease in the future, but the value of reliable and accurate data will hold its value in the market.

With regards to what the next generation of satellites will do, producing optical imagery at a higher resolution will become possible, which will mean much more accurate and high quality pictures will be produced. It will allow satellites to produce the type of data that aircraft produce today much more cost effectively because a satellite in orbit can cover a much wider area than an aeroplane. So we're simultaneously expanding our technology capability and moving towards a better, more sustainable business model.

Will we ever have the capability to produce live maps?

Yes, definitely. It's already possible to embed CCTV imagery in a 3D city model, which will be the next generation of police surveillance. However, privacy is an increasingly important issue as surveillance technology grows and therefore the technology associated with ability to ensure privacy is equally important. The creation of systems that automatically wipe out number plates and the inside of buildings is already with us, and will allow technology to advance without privacy being compromised.

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