Evaluating the economic impact of design alternatives on domestic communication satellite ventures

What are the economic consequences of establishing a domestic communication satellite venture? Has the best design alternative been selected? Should investments be made to develop new technology? How much should be invested? These are but some of the questions facing those concerned with providing domestic communication satellite services. Because of the demand, performance and cost uncertainties and the unpredictability of the need for and timing of large capital expenditures (due to less than perfect reliability of transportation systems and satellites) providing answers to these and other related questions is a complex process.This paper describes a methodology for providing answers to the above questions. The methodology, by explicitly considering demand, performance and cost uncertainties and satellite and transportation system reliability, develops probabilistic pro forma financial analyses of domestic communication satellite system ventures. In so doing, the risk dimension is quantified and alternative courses of action can be evaluated and compared taking into account expected values, risk and risk aversion preferences. It is also important to quantify and consider the risk dimension since many R &; D projects are specifically aimed at risk reduction.