Petaluma satellite company eyes opportunities in space

Garrett Hill believes the satellite communication industry is poised for explosive growth, and he is preparing for it partly by turning his attention to a remote spot in the New Mexico desert.

Hill, the founder and CEO of Petaluma’s X2nSat, said growth is coming as more companies turn to satellites to control and receive data from a multitude of devices. Through such automated machine-to-machine communication, the businesses hope to measure processes and greatly boost efficiency.

“The market for that is where the Internet was in 1995,” said Hill. “It’s that early.”

In order to capture some of the opportunity, Hill wants X2nSat to become the first satellite communications provider to operate at New Mexico’s Spaceport America. The facility 180 miles south of Albuquerque is best known as the home for Virgin Galactic’s proposed $250,000 space tour flights.

Hill’s company and the spaceport this month announced an agreement allowing X2nSat to build a “gateway” or ground station for receiving satellite transmissions.

Hill first considered buying one of the available existing gateways, but he decided he didn’t want to acquire a facility from a bygone era. Too often, he said, satellite communication has been designed for use with spacecraft from the 1960s and technology from the 1970s.

“I want to build for where we’re going,” he said. He chose Spaceport America both for the attributes of its dry, remote location and for the synergy that can be achieved when operating near other space-related businesses.

X2nSat is based off North McDowell Boulevard in a business park where its 10 white circular antenna dishes sit across a driveway from a pasture where sheep graze. The privately held company began in 1996. It has five investors, including Hill, and employs 40 workers, including about 30 in Petaluma.

Company revenues exceed $10 million a year, Hill said, and are growing annually at 15 to 20 percent. He predicted X2nSat will exceed $100 million in revenues by the end of the decade.

The global satellite industry is a $200 billion business, according to the Satellite Industry Association. Of that, the largest segment is consumer services, primarily satellite television and Internet connections, which amounted to $100 billion last year. Commercial services comprised about $20 billion annually.

X2nSat provides communication services to businesses using a technology known as “very small aperture terminal,” or VSAT. The service uses small antenna dishes, similar to those for home TV satellite systems. The dishes can transmit voice and data signals via satellite to much larger antenna at the gateways, or ground stations, which typically are connected to the Internet via fiber optic cable.

The company operates one gateway in Petaluma, with antenna dishes ranging from 8 to 20 feet in diameter, plus another site near Atlanta. To this, Hill plans to add a third gateway at Spaceport America.

The $218 million spaceport sits about 100 miles north of the border town of El Paso, Texas, and adjacent to the U.S. Army’s White Sands Missile Range. Owned by the state of New Mexico, Spaceport America underwent construction in 2009.

Spaceport seeks businesses

The facility counts two key tenants, both companies started by billionaires. One is SpaceX, overseen by Tesla electric car co-founder Elon Musk, which was the first commercial enterprise to resupply the International Space Station. The other is Richard Branson’s Virgin Galactic, which one day hopes to fly tours from the spaceport to a height of 300,000 feet, or roughly 60 miles, above the earth.

The facility is seeking to bring in more diverse businesses into its 18,000 acres, said Spaceport America CEO Christine Anderson. She called Hill “very innovative and forward leaning” for seeing the potential there.

“We hope to have more satellite ground stations in the area we’ve set aside, but he’s the first one,” she said.

Anderson and other supporters foresee a day when passengers will use a form of space flight to travel across the world, say from London to Australia, in a few hours. She noted the U.S. now has nine commercial spaceports approved by the Federal Aviation Administration, and she likened the current efforts to the era of commercial air travel in the 1950s.

“We’re at the dawn of this new age,” she said. She acknowledged skeptics but said “there are always going to be naysayers.”

Critics counter that New Mexicans have invested a lot of tax dollars but realized little progress toward the day of local space flights - even before the breakup and death of a co-pilot last fall during a test flight above the Mojave desert of Virgin Galactic’s SpaceShipTwo rocket plane. One skeptic likened the spaceport’s construction to the building of an airport before the Wright Brother’s fight successful flight.

Hill, 44, is a Sonoma State University graduate who grew up around Bakersfield and Tulare. He said the spaceport meets well the needs of his company. The location isn’t subject to floods, earthquakes, fires or hurricanes and has extremely low horizons in all directions.

New Mexico gateway

The planned gateway there will be 5,000 to 10,000 square feet in size. Hill originally hoped to open it by year’s end, but he acknowledged that it likely will take more time to complete, including about six months for construction.

When completed, he said, the gateway will be part of his company’s efforts to connect more and more devices for businesses.

Already X2nSat provides satellite services for a company that pulls data from air quality monitors, as well as for a utility seeking to monitor operations at electric substations. But Hill said companies are finding they can operate more efficiently when they connect and measure data from a variety of devices. As an example, he cited Petaluma’s HydroPoint Data Systems, which operates smart irrigation systems to help companies and governments cut their water use.

The vast majority of future machine-to-machine systems in the U.S. will be connected via cellular networks, Hill said. Satellites may capture only 5 percent of the business, he said, but even a much smaller fraction of the total still could mean hundreds of millions of dollars in new revenue.

He also expects significant new business using satellites to provide a backup source of communication for companies whose regular voice/data systems go down due to a malfunction or disaster. For example, floods, earthquakes and hurricanes can knock out an area’s fiber optic cables or phone lines, leaving a company unable to conduct business.

As well, backup satellite systems can make a difference in dealing with relatively short disruptions in service. He noted that administrators for a major Gulf Coast hospital system were surprised to learn that the X2nSat service in one month had handled thousands of phone calls from the health system’s call centers due to breaks in the regular voice/data service.

“That market is just starting to boom,” Hill said regarding what he calls business continuity services. Most Fortune 500 companies are starting to use such backup systems. And he foresees a day when mid-size community banks, larger car dealerships and other companies with multiple sites will acquire such protection to make sure their computer systems never lose connectivity.

Growth opportunities

The growth opportunities correspond with expansion in the deployment of satellites.

Slightly more than 1,250 satellites were operating last year, according to the Satellite Industry Association. Of those, almost four in 10 were for commercial communication purposes.

Today six major companies operate communication satellites and X2nSat leases services from four of them, Hill said.

He counts about 30 satellites today that would be good candidates for growing his business. But in a little over two years, that number could grow to 100, and the planned efforts of various entrepreneurs may one day allow him to choose from upwards of 2,000.

His plan is that some of those new satellites will connect well with the proposed gateway at Spaceport America.

As well, locating at the spaceport will put a portion of his company in close proximity to other space-related companies. Hill said that will result in his workers gaining key insights from a group of peers. He also looks forward to personally exchanging ideas with other company leaders at the spaceport.

“We’re a Sonoma County company,” Hill said. “We’re not leaving Sonoma County. But that is going to be a great place to visit.”

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit

(Editors note: An earlier version of this story incorrectly said the company is located off South McDowell Boulevard. It is located off North McDowell Boulevard.)