The strategic importance of ESA R&D Programmes

1. The strategic importance of ESA R&D Programmes Dirk Breynaert, CEO NEWTEC VRI President 27th October 2005 VRI Workshop "Looking for alternative space strategies"

2. VRI (1) • VRI (Vlaamse Ruimtevaartindustriëlen) groups 27 Flemish companies, research centres and educational institutions involved in the aerospace field • VRI members investment (made in technology development in the space sector) has a direct impact on the added value and employment in Belgium • The association represents its members in cooperation with the Belgian and Flemish Authorities and sets up actions to enhance the space industry image in Belgium • VRI celebrates its 10th anniversary VRI Workshop "Looking for alternative space strategies"

3. VRI (2) • VRI members have in common to support « alternative » space strategies  • VRI members are mostly supported « alternative ESA programmes » • VRI is therefore wishing ESA and Belgian authorities to give the highest priority to these programmes • As a consequence, in view of the forecoming ESA Council at Ministerial level, VRI decided to organize a workshop on the subject VRI Workshop "Looking for alternative space strategies"

4. VRI members

5. ‘Alternative’ companiesrepresent 95% of the market

6. Alternative space companies (1) • Alternative space companies are those focusing their strategy on: • The provision of products or services for commercial satellite applications (1st category) • Companies exclusively active in the 3 lower segments of the value chain: value-added services, ground equipment, lease of satellite capacity OR • The integration of small space missions or scientific instruments (2nd category) • Companies offering solutions for “smart” space missions • Newtec and Tellitec are belonging to 1st category VRI Workshop "Looking for alternative space strategies"

7. Alternative space companies (2) VRI Workshop "Looking for alternative space strategies"

8. Newtec - Profile • Newtec is a leading satellite solutions and equipment provider for: · Internet-IP Access network · Television & Radio Exchange Networks · Broadcast TV Uplink Stations and Downlink stations · Television Distribution Networks · Interactive Television • Unconsolidated sales of 70 Million € in 2005 • +200 highly qualified people employed VRI Workshop "Looking for alternative space strategies"

9. Newtec - Major milestones · 1985: NEWTEC Cy founded · 1994: Start development of Newtec-defined products · 1997: NEWTEC AMERICA founded · 2001: NEWTEC ASIA PACIFIC founded in Singapore · 2002: Take-over of SKYWARE from Philips in Germany and TEAMTEC from Cable-Print in Belgium · 2004: Creation of a SANGINE , Joint Venture company with Aramiska in Belgium · 2005: Creation of a NEWTEC DIAMOND SATELLITE COMMUNICATIONS, Joint Venture company with Diamond electronics in China and Newtec_MENA in Dubai VRI Workshop "Looking for alternative space strategies"

10. Newtec – Strategic move • Newtec was created in 1985 with the objective to provide cost-effective equipment to ESA • Such equipment, responding to ESA specifications, was fully (100%) funded • When European telecom market got liberalised in 1994, Newtec decided: • to target the commercial market • to become responsible for defining its own product VRI Workshop "Looking for alternative space strategies"

11. Newtec – Turnover evolution (1) Up to 1994, Newtec turnover was 100% coming from ESA VRI Workshop "Looking for alternative space strategies"

12. Newtec – Turnover evolution (2) From 1997, commercial turnover started to grow significantly VRI Workshop "Looking for alternative space strategies"

13. Newtec – Relations with ESA • Before 1994, ESA was the privileged customer of Newtec • After 1994, Newtec decided to apply exlusively forsupport from industrial R&D programmes • ARTES-4 is 50% co-funded by industry • From a « customer », ESA became the « catalyst » ofNewtec entrepreneurship • 10 years later: • > 90% of Newtec turnover is commercial • < 10% is coming from ESA • Newtec has a worldwide market presence VRI Workshop "Looking for alternative space strategies"

14. Leverage effect • Thanks to their leverage effect, industrial R&D programmes are the best tools to maximise economic return from public investments

15. Tellitec – Profile (1) • Tellitec (Berlin) is an SME focused on the development of software for 1-way and 2-way satellite communication systems including DVB-RCS; applications are (e.g.): • Protocoll enhancements and replacements for TCP/IP including HTTP-Prefetching and SMB-Enhancement • IP Multicast content delivery solutions • IP Traffic shaping, compression, and encryption systems • Tellitec’s turnover in 2004 was 2.3 Million EUR • Since its inception in 2004 Tellitec has become a prominent software supplier for the European and world-wide satellite industry VRI Workshop "Looking for alternative space strategies"

16. Tellitec – Profile (2) • A well known suite of off-the-shelf software products: • Tellitec has large operational projects in Europe, Australia, Africa, the Middle-East, and the Americas • Strong experiance in B-2-B (e.g. DVB-RCS, DigitalSignage, and D-Cinema) and B-2-C (e.g. 1-way satellite Internet services) projects • Strong position in standardization of DVB-RCS (air) interfaces to foster future cross-vendor interoperability VRI Workshop "Looking for alternative space strategies"

17. Tellitec – Relations with ESA • Tellitec’s commercial activities have been supplemented over the past two years by involvement in various ESA ARTES projects. • This lead to successful customer- and use-case-centered product enhancements oriented towards the cutting edge of the market. • The participation within ESA ARTES projects also lead to further fruitful co-operations with other European companies involved in the satellite communication business. VRI Workshop "Looking for alternative space strategies"

18. AlternativeESA programmes (1) • From an SME perspective, ESA programmes can be classified in: • Institutional programmes, for the implementation of ESAmissions • large missions (GALILEO, GMES…) • small missions (PRODEX…) • Industrial R&D Programmes, for supporting companies in the development of their own products • ARTES VRI Workshop "Looking for alternative space strategies"

19. Alternative ESA programmes (2) • Alternative ESA programmes are defined as the ones offering to industry the opportunity to develop alternative strategies: • Industrial R&Dprogrammes AND • Small institutional programmes • Newtec and Tellitec are exlusively concerned by Industrial R&D programmes VRI Workshop "Looking for alternative space strategies"

20. Alternative ESA programmes (3) VRI Workshop "Looking for alternative space strategies"

21. Importance of industrial R&D Programmes • The commercial success of Newtec and Tellitec is the result of their focus onindustry-driven R&D (ARTES) which allowed the companies • to define their own products according to their own strategy • to focus on their customers requirements (α clients) • to define their own R&D activities • Efficiency of ARTES-4 is mostly the result of industry financial commitment (50% co-funding) • Programmes such as ARTES deserve the highest priority from ESA VRI Workshop "Looking for alternative space strategies"

22. ARTES budget (1) • Within European Space Policy, satellite communication is considered as one of the 5 priority areas of action • See EU « White Paper »: « Bridging the digital Divide » • However, ESA satellite communication budgets (ARTES) proposed by ESA are decreasing VRI Workshop "Looking for alternative space strategies"

23. ARTES budget (2)Yearly budget proposed to Council Total ARTES budget proposed (Berlin) is 1135 M€ on 4 years incl. 250 M€ for ARTES-4 and 235 M€ for ARTES-3

24. ARTES budget (3) • Furthermore, within ARTES, an increasing priority is given to large institutional programmes (Alphasat, ARTES 8 « Large Mission ») • This is done at the detriment of Industrial R&D programmes (Artes 3, 4 & 5) • Newtec is therefore recommending: • ESA to give a higher priority to ARTES R&D Elements, in particular those which are close to the market (ARTES-3 & 4) • ESA Member States to subscribe in priority to these Elements VRI Workshop "Looking for alternative space strategies"

25. ESA role and priorities (1) • ESA should break away from seeing big institutional programmes as “the” only solution • ESA should rather give the priority to alternative programmes (such as R&D programmes). • As a consequence: • ESA impact on industry turnover, employments and competitiveness would drastically increase • ESA would have to accept to act also as a catalyst (as it is already the case in Artes) instead ofjust a customer VRI Workshop "Looking for alternative space strategies"

26. ESA role and priorities (2) • ESA acting as a catalyst means also: • Encouraging all actors of theindustrial value chain to cooperate (e.g. within pilot projects) • Making a bridge between terrestrial telecom and satellite telecom actors • for example by encouraging the later to adapt existing terrestrial telecom standards, as it is has been initiated for the use of TMN standard (for network management) within SATLABS VRI Workshop "Looking for alternative space strategies"

27. ESA procedures • Present ESA procedures (tenders, evaluations, contracts) are presently optimised for 100% funded procurements, and not for industrial R&D • Especially for co-funded R&D activities - with 50% financial contribution from industry - ESA should establish lighter procedures • Procedures for (100% funded) small Work Orders should also be simplified VRI Workshop "Looking for alternative space strategies"

28. Importance of an active role of national authorities • Lack of ESA focus on industrial R&D programmes such as ARTESis a great problem, especially for a small country • Belgium does not benefit from a national space programmeto support their SMEs • In the present circumstances, an active role of the Belgian authorities to support such programmes in ESA Delegates Bodies is becoming more and more important VRI Workshop "Looking for alternative space strategies"

29. CONCLUSION • In view of the ESA Ministerial Conference in December 2005, European authorities are asked to: • strengthen their policy in favour of R&D programmes in ESA Delegate Bodies • allocate a large part of their space budget to ESA industrial R&D Programmes • Newtec and Tellitec strongly encourage ‘alternative’ space companies from all ESA Member States to send a similar message to their own National Delegation VRI Workshop "Looking for alternative space strategies"