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Israeli eyes in space

Following the deal with Taiwan to supply images taken by the Eros A satellite, Israel once again appeared on the space map

By: Amnon Barzilai 
The Israeli company ImageSat is at the center of a storm, following a story that appeared this week in the "Daily News" newspaper that sees light in Taipei, the capital of Taiwan. ImageSat, the news said, signed a contract with Taiwan's Ministry of Defense that allows it to use photographs of China, taken by the company's Eros (A-1) civilian imaging satellite. The "Morning Post" newspaper, which sees the light of day in Hong Kong and is close to the government in China, reported on the anger prevailing in Beijing. "Taiwan has gained an advantage in the field of espionage," it said.

In Israel they wondered about the timing of the publication of the news. Already a year ago, the Chinese government asked Israel for clarification on the contract. The Ministry of Defense stated in response that the satellite transmits images at a civilian resolution level accepted in the world. Beyond that, ImageSat offered its services to the Chinese government, but it preferred the services of the American photography satellite Iconos, owned by Lockheed Martin.

The president of Imagesat International, Dr. Moshe Barlev, refused to deny or confirm the publications. The main client of the company, which is a private and commercial entity, is the Ministry of Defense of Israel, which sees the civil enterprise as a main support for its space program. The other customers of the company are probably the defense ministries of other countries.

The company does not hide the fact that the photographs have a military-intelligence value. In the brochure she prepared about her activities, photographs taken by the satellite of an armor base, communication facilities, military camps and fortifications, along with cities and roads, were attached. The sites photographed in the brochure are not identified.

However, beyond the storm, ImageSat operates as a business organization. Thus, recently the company made some strategic decisions. The first of which is to move immediately to the development of a second generation of photography satellites model B-1 and not to continue developing the satellite already floating in space model Eros, which is a derivative of the Israeli spy satellite Ofek 3.

The company also decided to postpone for about two years the plan to raise capital through a public offering on the New York or Tel Aviv stock exchanges. At the same time, Bank Leumi opened a credit line with a maximum amount of 70 million dollars. Following this, an agreement was signed between the company and the Mbat factory of the Aerospace Industry to build two prototype satellites. B-1 The scope of the transaction is about 110 million dollars.

The third strategic decision was to suspend, due to the uncertainty in the global economy, the decision to build a cluster of seven satellites and settle for three. "By 2004, all satellites will be floating in space," says Barlev.

The company's watershed was the launch of the Eros photography satellite. On December 5, 2000, the satellite was launched from the missile site in Svobodny, Russia, using the Russian START-1 satellite launcher. Already now, less than eight months after the start of satellite transmissions, ImageSat's cash flow is positive and revenues cover current expenses.

Barlev points out that even if the company only has one photography satellite, it will be able to cover the investment within 4-3 years and start making a profit. This statement is not self-evident in view of the construction, launch and insurance costs of the satellite, which are estimated at 70 million dollars.

The company's accountant, Uri Ben Amutz, says that the business model of ImageSat is different from that of other companies. According to him, the company needs a high initial investment to finance the construction of the satellite and its launch. However, he adds, for the purpose of selling the photo time on the sites chosen by her clients, almost no additional investments are required from her, and therefore she enjoys immediate income.
Today, the company has a backlog of long-term orders amounting to 300 million dollars, and according to estimates, additional contracts totaling 200 million dollars will be signed during the year.

ImageSat employs about 40 people, including the operators of the satellite's control station located in the Mbat Bihud plant, the employees of the photo archive located in Limassol, Cyprus, as well as operators of the stations that receive the photos around the world. The main office bearers in the company are Berlev, the CEO Jacob Weiss, and the VP Dr. Patrick Rosenbaum, who was one of the founders of the Space Administration in the aerospace industry together with Berlev. The head of the marketing and business development department in the company is Brigadier General Haim Yafarah, former commander of the Intelligence Corps. "The company's vision was formulated by the CEO's advisor, Steven Wilson, who also founded it," says Rosenbaum. "Without Wilson, this project would not have arisen."

In addition to the ImageSat satellite, an Icon of the American company Lockheed Martin, which was a year ahead of ImageSat in its commercial program, is floating in the satellite space. A competition developed between the two companies. It is estimated that the competition will increase world awareness of the use of photographs from space, and companies from other countries will launch photographic satellites.

There is no unequivocal estimate of the scope of the market for photographs from space. "Until now it was a military market, that is, the photographs were transferred to the army that initiated the launch of the satellite and other countries were not given permission to purchase them," says ImageSat. Since the market is still in its infancy, the estimate is based on the current demand for aerial photographs from airplanes, which is estimated at 2 billion dollars a year. However, ImageSat intends to develop marketing niches in the field of real estate and agriculture. For example, photographs ordered by farmers suing insurance companies for damage by pests to their crops, or photographs to be submitted in a claim to cover damages following severe storms.

It is also possible to enter the field of communication by providing photographs from places that press photographers find it difficult to reach. The Eros satellite, for example, took a photo of the American spy plane that landed a few months ago at the air force base in China, but it was decided not to publish the photos. Photographs taken by Lockheed Martin's satellite appeared in the media.

According to the estimate in ImageSat, by 2005 the demand for satellite photos in the world will reach about 7 billion dollars per year. The awareness of the potential inherent in photographs from space and the lack of technology available to build satellites, create the company's great opportunity. "Instead of making large investments, customers can contact us and receive service as if they had a satellite," says Ben Amutz. The company aims to control over the course of the decade about 30% of the market for photographs from space.

However, the increase in the rate of sales cannot be realized at this stage due to technological obstacles. Although photographs from space are transmitted to the ground stations in real time, there is a difficulty in transferring them to customers via the Internet. A photograph from space covers an area of ​​12.5 square kilometers, but due to network communication limitations it must be divided into segments and sent one by one. Therefore, the development of ImageSat as a global provider of photographs from space to any point on Earth in real time depends on the rate of broadband penetration for use among customers. It is estimated that only in about two years will the distribution network, based on the photo archive in Limassol, be fully operational.

Recently, foreign investors from the Capital Advisors group, LP Pegasus, a private venture capital fund from Connecticut in the USA, Kash Vera, the Merrill Linz investment house, and a group of investors from France joined the venture. Following this move, the holdings in the company of the Aerospace Industry and Elbit Systems, which owns Alup, the manufacturer of the telescopic camera installed on the satellite, were diluted, and most of the shares are in the hands of the foreign investors.

It is possible that this combination of company ownership led to the decision to register it in the Netherlands Antilles. This matter did not go unnoticed by the Income Tax Commissioner and there was concern that the company was trying to evade paying taxes. The matter is settled after it was clarified that there is no intention to evade paying taxes according to the law.

The technology of the two photography satellites of the B-1 model, which are now in the initial stage of construction, will be more advanced than the satellite of the previous model. The camera will produce photographs with a higher resolution than the current one - it will photograph objects 600 cm and even 85 cm in size from an altitude of 50 km.
The weight of the satellites will increase from 250 kg to about 350 kg and they will be equipped with two fuel tanks that will give them a lifespan of more than ten years. The development of civilian satellites also sheds light on Israel's ability in the field of intelligence satellites, which are also manufactured at the Mbat plant of the Aerospace Industry.

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