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SpaceX explosion means losses beyond the rocket

The explosion of a SpaceX rocket Thursday will have an impact across the space industry, far beyond the losses on the launchpad at Cape Canaveral.

An Israeli satellite operator's deal to sell itself to a Chinese company is imperiled. Planned launches of communications satellites that support international mobile phone service and digital television are delayed and put in doubt. NASA's cargo deliveries to the International Space Station will probably be disrupted.

All of them are customers of Space Exploration Technologies Corp., or SpaceX, whose rocket exploded in Florida. The private space launch company, led by entrepreneur Elon Musk, has a generally solid safety record.

But last week's setback and a failed launch last year, when its rocket carrying NASA cargo fell apart in flight, are raising questions about SpaceX, a company that has risen rapidly by offering lower costs and promising accelerated launch schedules.

At this stage, there are more questions than answers. The key for SpaceX will be how quickly it can satisfy federal investigators, rebuild the damaged launchpad at Cape Canaveral and resume sending satellites into space. For commercial telecommunications customers, getting a satellite manufactured is time-consuming and expensive, taking two years or more and costing $200 million to $400 million each.

The launch itself is a high-risk step, but once in orbit the satellites are money spinners. The upfront investment is paid back in a few years, and they then generate hefty profits for the remainder of their useful life, which could be as much as a decade.

So once a satellite is ready to go, time on the ground — and delay — are financially painful. Among the commercial satellite operators lined up for SpaceX launches this year are Iridium Communications, SES of Luxembourg, EchoStar and KT Corp. of South Korea.

"No doubt SpaceX will fix the problems, but if you're a customer time is money," said Scott Pace, director of the Space Policy Institute at George Washington University and a former NASA administrator. "This will get customers looking at alternatives. It may give competitors an opening and slow down SpaceX."

The large communications customers have the most money at stake in space. Revenue for satellite services last year was $127.4 billion, according to a report by the Tauri Group, a research firm, for the Satellite Industry Association. The launch business, though the gateway to space, is small by comparison — $5.4 billion in revenue last year.

In the market for launching large, geostationary communications satellites, the main SpaceX rival is Arianespace, a French multinational company. And there are others, notably International Launch Services, a U.S.-Russian joint venture, which launches Russian-designed Proton rockets from Kazakhstan.

But Arianespace, which has an excellent safety record, is considerably more expensive than SpaceX. And the safety and performance record of the Proton rockets lags that of the SpaceX workhorse, the Falcon 9.

If the SpaceX launch timetable is delayed a few months, industry analysts say, its customers will probably wait. If the delays stretch out further, other launch providers will look increasingly appealing. SpaceX said it was too early to predict when its launches might resume.

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