When entrepreneur Ian Jones rescued satellite communications hub Goonhilly Earth Station, he was looked at like an ‘alien from Mars’. Now it’s generating revenue from multiple streams and looks set to play a key role in the next Nasa moon mission…
As Neil Armstrong carefully lowered his foot onto the surface of the moon on 20 July 1969, TV watchers in the UK sat captivated by the pictures – all being beamed to their homes via a giant satellite dish on Cornwall’s blustery Lizard peninsula. Antenna 1 – ‘Arthur’, as it was known – was the world’s first parabolic satellite communications antenna, and had been built in 1962 to communicate with the orbiting Telstar 1 satellite. British viewers would have Arthur to thank for their first live transatlantic TV pictures and coverage of such seminal events as Muhammad Ali fights, Olympic Games and Armstrong’s giant leap for mankind.
By 2006, however, Arthur was being prepared for an undignified leap into retirement. Goonhilly Earth Station, once the largest satellite earth station in the world and home to over 60 such antennas, was then owned by BT – and on 12 September the telecoms giant announced plans to close it by 2008, describing it as “no longer commercially viable”. With operations to be absorbed by its sister station at Madley in Herefordshire, Goonhilly was earmarked for demolition – to be replaced in part by a wind farm, with some outbuildings leased to other businesses. While Arthur would survive as a Grade II-listed building, Goonhilly’s role in the space age would be at an end.
But then Ian Jones heard about it. A satellite communications engineer with his own successful small businesses, Jones had worked at Goonhilly as a contractor and learnt of the station’s plight from a former colleague. “He told me BT were going to knock the antennas down,” Jones says, seated in his boardroom beneath pictures of Goonhilly-controlled satellites taken from the International Space Station. “With my entrepreneur’s hat on, I started doing some calculations and thought: Could you actually make a site like Goonhilly profitable and, more importantly, could a small company do it? It’s easy when you’re a giant like BT, but could the finances work for an SME?”
“What I quickly realised was, because of the scale of the site, the assets here and the way the telecom satellite industry has developed, there were a number of vertical revenue models you could attack simultaneously – and on different scales. At the bottom end there was the visitor centre [which once attracted 80,000 visitors a year but was closed by BT in 2010], where you might charge a fiver or tenner entrance but you get many thousands of visitors. On the other end, you’ve got the potential of these great, iconic deep space contracts [which would see the antennas modified to communicate with free-flying spacecraft rather than satellites locked in orbit] that might be worth six or seven figures. And in the middle you’ve got a range of different professional satcom contracts that bring in the medium-sized work.”
Jones used contacts in the industry to pull together a consortium of interested parties – including Oxford University and UK defence tech multinational QinetiQ – to approach BT and discuss taking over the site. The initial reaction, he says, was “puzzlement”. “The site for BT was making a loss and here we were saying we were interested in buying it. I was very clear, having done my calculations, that the site had this enormous potential, but saying to people you were going to do radio astronomy, deep space communications, satellite communications, and have a visitor centre – I might as well have been an alien from Mars.”
While the consortium dissolved, conversations with BT didn’t, and in early 2009 Jones set up Goonhilly Earth Station Ltd [GES] with two colleagues to continue negotiations. “It was wholly owned by us and we continued the conversation with BT on that basis, with no contracts behind us,” says Jones. “We didn’t have any backing, so we funded it ourselves. We cut a two-stage deal with BT – a three-year lease of just the antennas, because that’s all we could afford, and negotiated the price to purchase the whole site [to be completed by January 2014]. When we signed the deal in January 2011, we were under starter’s orders to get some business and finance.”
Preparing for lift-off
With the price set at “over £1m”, the race was on for GES to use the antennas to generate the cash required inside three years. Two early contracts helped the venture gain lift-off. A consortium of universities interested in using Goonhilly for radio astronomy – initially Oxford, Manchester, Leeds and Hertfordshire – was assembled, with some contributing cash, others equipment to their upgrade. Then a landmark contract with big-four satellite operator SES was secured for the telemetry, tracking and control of the company’s satellites. “We started building contracts from there,” says Jones. “SES liked what we were doing and we ended up getting several contracts with them for different satellites.”
Using the money generated to steadily upgrade site infrastructure as required, GES had hit on a formula for growth – but the team grew concerned that the cash generated at this early stage would not be enough to meet the January 2014 deadline to buy the site. Worse, its initial success had alerted others to its potential. “We decided to change tack and look for outside investment,” says Jones. “The date was looming and if we didn’t seal the deal it would all fall away and we’d be back to the drawing board. Also, I think BT had seen the light during those three years and realised the site was perhaps more valuable than the price we negotiated, so we didn’t want to put a foot wrong in terms of our lease. We were very careful that, rather than paying ourselves, we paid the lease fees.”
Venture into the unknown
To ensure it didn’t miss the deadline and open up the site to other interested parties, GES did a deal with venture capital trust Downing, raising £3.8m for 30 per cent of the business. It was a cash injection that kept the dream alive – so does Jones have any advice for other entrepreneurs looking to get the best deal from VCs? “Be absolutely realistic with the business plan,” he says. “VCs will always say ‘Contact us at the earliest possible stage – we want to jump in when there’s the biggest potential for growth,’ and this is a real dilemma because that’s often the stage when you’re the crank with the new idea who hasn’t proved anything to anybody. But by this stage we already had revenue and proved we could win contracts with major organisations – that was a real tick in the box.
“Many businesses play the Excel game of filling in their spreadsheet for the year and then looking at the bottom right-hand corner and it’s negative – so they start tweaking the sales numbers until everything turns green. That’s a dangerous way to go about it. Or they play the game of saying, ‘The market’s worth £Xbn, I’ll have 0.01 per cent of the market’, just assuming you’re going to win contracts. I think that’s very unrealistic because you’re setting yourself up to be a minnow in a market. The key thing is to target what you’re really good at and win as many contracts as you can – and name them in your business plan. That’s what we did, and any contracts that were less certain prospects didn’t appear in our baseline plan – our business plan was rock solid. You can take that to the VC and they can pick it apart as much as they like, but you can always show your track record.”
With the cash in place, on 12 February 2014 GES announced it had finally completed the purchase of Goonhilly from BT on a 999-year lease. The company hasn’t looked back since. As Jones leads Director around the site, he illustrates how previously written-off pieces of equipment have been resurrected and turned into revenue generators. “That antenna had a tree growing through it,” he says, pointing to a dish glinting in the Cornwall sunshine, before explaining that a £100,000 restoration and upgrade now sees it generate “tens of thousands” of pounds in a matter of weeks. With GES turning over more than £1m in its first full year and setting sights on £1.8m in the next year, the company is bullish.
UK space scene
But it is as part of the wider UK space economy that Goonhilly’s potential really excites its chief executive. In 2013, a report by MPs concluded that the UK industry could quadruple its slice of the global business to £40bn – a 10 per cent share – by 2030. In support, the government announced a £200m investment for new technologies in the sector and, in July 2014, unveiled plans for the country’s first spaceport – with eight possible sites shortlisted for a base from which to rocket-launch satellites, astronauts and even tourists into orbit from 2018.
With the industry growing at seven per cent a year, already employing 34,000 people directly and supporting 65,000 jobs in other industries, the significance of space to the wider UK economy is clear. The day after Director visited Goonhilly in mid-September, representatives of 75 SMEs joined Jones at the site to find out how they might be able to enter the space supply chain. “It’s an incredible industry to be in at the moment,” he says. “In July, we had the UK Space Conference in Liverpool – it was a buoyant atmosphere. Having this strategy in the UK that we’ve never had before means there is a co-ordinated approach to identify key elements. I think it will start to emerge over the next couple of years that Goonhilly is becoming a key part of UK strategy. It’s the UK’s best space asset in terms of ground infrastructure and the UK Space Agency recognises that now. Increasingly, the crazy idea from a few years ago is becoming mainstream.”
Shooting for the moon
The most powerful illustration yet of Goonhilly’s new-found significance for the UK in space came in July when the European Space Agency (ESA) announced it has commissioned a study – in association with QinetiQ and BAE Systems – to assess whether its largest antenna, Goonhilly 6, could provide communications support for Nasa’s unmanned Orion Exploration Mission 1 in 2018. “We’ve taken the Nasa specification for tracking their Orion mission to the moon and we’re looking at what the gap is, then we’re building a fully costed model for that upgrade to take place. And we’re in discussion with Nasa to say we’re making this available,” says Jones. “We’re hopeful that will come – it’s a very strong aspiration.”
Now bolstered with £2m of Regional Growth Fund assistance from government, GES is pushing on to enlist the crucial next element – the public. With a new £4m visitor centre planned, Jones hopes a landmark moment in UK space history later this year – the scheduled flight of British astronaut Tim Peake to
the International Space Station on 15 December – will prove pivotal. “That’s really going to awaken the public interest and inspire another generation – we want to do as much as we can to support Tim’s mission and be as open as we can to the public to find out about that,” he says.
GES is also exploring the development of yet more revenue streams, from the building of nanosatellites to involvement in international big data projects such as the Square Kilometer Array [SKA] – the world’s largest ever radio telescope, to be constructed in South Africa and Australia from 2018. “There’s a sub-sea cable which runs from South Africa, around the coast of Africa and eventually winds its way right here into the Goonhilly site,” says Jones. “For the work with radio astronomers, we’re putting in a fibre optic between here and Jodrell Bank, the SKA project’s headquarters. So we’ll have the potential to connect the headquarters with the actual telescope. It could be a catalyst for some quite amazing things.”
Not bad for an entrepreneur whose idea to rescue a site destined to become a wind farm meant he was once looked at “like an alien from Mars”. As Director left Goonhilly, we paused at the main gate where a sign reads “The UK’s gateway to space”. Nearby, a fully operational Arthur continues to watch the skies – ready to beam inspiration to the country’s next generation of space industry engineers.
To learn more about Ian Jones and GES’s past and future projects, visit goonhilly.org
Ian Jones is a member of the IoD