MDA is a leader in the development of Synthetic Aperture Radar (SAR) and the commercialization of the resulting data, but as one competitor put it in the fall of 2020, “the commercial SAR floodgates are only just now, this year, slamming open.” Can MDA maintain its lead?
RADARSAT-1 and RADARSAT-2 and becoming a SAR data leader
We recently featured some of the notable newer SAR commercial companies that are emerging globally. That list didn’t include MDA as the company has been in the commercial SAR business since the late 1990’s when the RADARSAT-1 satellite was launched. That satellite was developed in public-private partnership with the Canadian Space Agency overseeing management and with Spar Aerospace manufacturing the satellite. Spar was later acquired by MDA. So MDA has been in the commercial SAR business for over 20 years. (Note: RADARSAT-1 was taken out-of-service in 2013.)
In 2007 RADARSAT-2 was launched and MDA had a sweetheart of a deal. The government paid them to manufacture the satellite and handed them ownership. The government still maintained some data rights, but MDA was free to commercialize the data. And it did, and continues to do so.
Historically the RADARSAT-2 deal was politically charged where even some members of the government questioned the deal after it had been made. The deal was meant to help MDA become a prime satellite contractor and build a network of contractors and to compete internationally. While MDA did create a contractor network which it would later use to build the follow-on RADARSAT Constellation Mission (RCM), it did not become an international satellite manufacturer based in Canada. It would later buy US based Space Systems Loral for that, but that’s another story. Arguably one of the biggest benefits of the RADARSAT-2 deal was the lucrative revenue stream which has positioned MDA to be a strong competitor in the commercial SAR segment.
The RADARSAT Constellation Mission data problem
The RADARSAT-2 data commercialization was so good MDA hoped it would continue when the RCM constellation was announced. MDA was the prime for RCM but the government decided it would retain ownership of the constellation of three satellites. What wasn’t known was what commercial data opportunities would be available.
RCM “data rights” was a hot topic at conferences. The government kept everyone guessing for several years as it weighed its options. In the end the government decided MDA and other organizations wanting to commercialize the data would not get real-time access. Instead the government opted for an Open Data policy that allowed some of the data to be publicly available. To this day, users, even government users, complain about access to the data. Part of the problem is the strict rules and interpretation of the outdated Remote Sensing Space Systems Act (RSSSA).
MDA made money out of RCM as the prime contractor. However, it saw the data as a source of real long-term revenue. The RCM data problem led the company to make an important strategic decision.
Legacy manufacturers and the future of SAR
MDA is not the only legacy SAR manufacturer. Airbus and Lockheed Martin have a long history in SAR development, mostly for government civil and defence clients. In the near term, manufacturing SAR satellites for those clients will continue. But the SAR world is changing. Innovation in SAR technology is changing the landscape. Small capable SAR satellites have been developed. Constellations of SAR satellites are being planned and launched. How does MDA fit into this picture?
Enter SARnext
MDA had to move on from RCM. As the RCM satellites were being launched discussion was already happening within the community about its follow-on. It should be noted that RCM was always meant to be constellation that could add more satellites depending on government needs. As it turns our RCM is oversubscribed and some departments, including Defence, need and want more data. So RCM will see a follow-on. But the Canadian government does not move fast, and unless the RCM functions beyond its projected lifespan, there could be a gap in SAR data. There’s no news or timeline yet for the RCM follow-on.
MDA sensing the Canadian governments slow to commit or announce an RCM follow-on has initiated its own development program called SARnext. Announced in February of this year Mike Greeley said at the time, “MDA delivers world-class operational geospatial intelligence systems and services that empower government and commercial customers around the globe to make critical decisions in support of their missions. This announcement today represents a significant investment in our company’s future, and will introduce a new and reliable source of next generation Earth observation data, imagery and analytics to the world.”
This was an important strategic move. Yes, MDA will have to invest its own money this time to build and launch the satellite(s). But it needs the SAR data. With RCM not providing them with the data they need, and with RADARSAT-2 now operating beyond its original lifespan, and with no RCM follow-on announced, and just as important, with other commercial entities entering the market, MDA had to do something.
Within Canada it’s still in a strong position. MDA is well positioned to win a bid to manufacture an RCM follow-on. As well, by developing their own satellite, and knowing what government needs in terms of SAR data, they will be well positioned to sell that data to the government. And the government needs the data, especially the Department of National Defence. There are no guarantees the government will buy the data, but the calculation has been made that MDA can commercialize the data of SARnext.
The biggest question MDA faces with respect to SAR data surrounds competitors and selling internationally. MDA is a proven supplier. But competition is about to get fierce. As I earlier stated, we examined the newer notable players in our article The boom in Synthetic Aperture Radar satellites. We listed only eight companies. There are more out there and coming.
SARnext is an important program for MDA, and how it evolves, whether just one satellite or more, the innovations they offer, will determine the company’s prospects for future revenue from SAR data. There is a silver lining in all of this though. Global SAR data needs are increasing. Demand outweighs current supply and could remain that way for some time. MDA has a window of opportunity to keep its market share and even expand it.
Update 6:00 p.m. ET: MDA reached out to SpaceQ with a couple of comments.
With respect to RADARSAT-1, MDA pointed out that a company was created called RADARSAT International, Inc. (RSI), a consortium of the companies involved, to commercialize the data and that MDA was involved in the project from the onset and not just through the acquisition of Spar. We didn’t go into all these details as RADARSAT-1 is only a small portion of the short history we were writing. As well, MDA commented that RADARSAT-1 was not really a public-private partnership (PPP), though the RADARSAT-2 deal was, and MDA invested $80 million into the project.
As well with RADARSAT-2 MDA noted that “As a direct result of R2, MDA was able to win a $150M commercial export contract for the 5 satellite RapidEye constellation for a German customer. In addition MDA used the R2 expertise to enter into a contribution agreement with the government for Cassiope (satellite), which provided the foundation for Spacecraft Bus experience in Magellan, Winnipeg, later used in RCM.” I will still stick with my point that MDA is not known as a satellite manufacturer for international customers. With the exception of when it owned US based Space Systems Loral as previously noted. The point being, MDA does not manufacture satellites in Canada for international customers.
Lastly, MDA wanted to note that with RCM “we delivered three complex spacecraft under a Firm Fixed Price arrangement and assumed significant technical and programmatic risk. The risk and reward as a prime contractor were in-line for contracts of this type.”
I’ll also add the focus of the article was on MDA’s SAR capabilities, both in manufacturing and commercializing the data. It wasn’t about MDA’s capability in manufacturing satellites. Clearly they can do that.