Northern Sky Research (NSR) recently issued the 10th edition of its Government and Satellite Communications report, which projects that the global satellite industry will generate $5 billion in revenue growth by 2022. This growth will come primarily from the rising transponder and bandwidth demand of UAVs and airborne manned missions.
SATCOM Frontier spoke with Claude Rousseau, a senior analyst with NSR, about the findings of the report, as well as key trends in SATCOM and bandwidth usage. Mr. Rousseau, who is based in Paris, specializes in the use of commercial satellites by government and military customers; mobile satellite services for aeronautical, maritime, M2M applications; and the Earth observation markets.
He also supports NSR’s presence in the European, Middle East and African regions. He has over 20 years of experience in various roles within the space sector and has been a market consultant for over a decade. He holds a Bachelor of Science (Physics and astrophysics) from the University of Calgary and a Master of Space Science from the International Space University (ISU).
What applications are likely to drive capacity and equipment take-up in the short- to long-term?
In the short-term, the government and military markets overall are not looking up after more than a decade on an ascending slope. Cuts affecting the market will mean single digits sloping down to no growth in many segments. However, there are bright spots in SATCOM capacity demand for mobility applications such as aeronautical and unmanned aerial vehicles. Equipment purchase in 2013 will take a short break in large part due to the pull-out of NATO troops expected to happen next year in Afghanistan.
You recently authored a study that forecast an upcoming “lull” in SATCOM demand. How will this affect FSS and MSS operators?
All indicators and recent events, such as the U.S. government sequestration and subsequent shutdown, the NATO troops’ pull-out of Afghanistan, and next year’s budget request in many European countries, point to a decrease in use of current units and allocation for new military equipment. Furthermore, the last 12 to 18 months saw many awards “re-competed,” where pricing of capacity was affected negatively, thus putting more pressure on FSS operators by government customers to bring down commercial capacity prices.
For their part, MSS operators have already seen the effect of fewer in-service voice and data units in the field affect their bottom line. This reduction could force both FSS and MSS operators to switch their focus to commercial clients, as well as looking for new opportunities in emerging markets such as Asia, Africa and Latin America.
Can bandwidth be purchased more efficiently and economically by governments? Does your research build in any assumptions for improved procurement policies?
Bandwidth can be purchased more efficiently by government anytime, any day, absolutely. In a perfect world, however, since we’re not living in such a world, maximum efficiency and economics of bandwidth procurement still has a long way to go. One method of achieving that efficiency includes measures and programs that are now in place to consolidate needs across departments and agencies and even between various countries to pool resources or expand competition so that governments can get “more bang for their buck” when it comes to satellite capacity. We have already seen the positive impact that these measures can bring and have built into our model slow but continuous procurement policy changes with less “on–the-spot” capacity purchase and more refined planning over the coming decade.
When talking about efficiencies and savings, it is not only better procurement of products and services that drives the model. Government users creates additional efficiencies and savings by fielding new and more advanced technologies, such as advanced coding and modulation; lighter and cheaper commercial-off-the-shelf products; using lower cost-per-bit high-throughput satellite capacity; and having hosted payloads on commercial satellites. All these show signs of coming back to the forefront once the current “lull” gives government officials more time to think and actually plan for better, more efficient ways of buying from commercial vendors.
What do you think will be the most significant developments for the space market in 2014?
Hopefully the start of the high throughput satellite (HTS) mobility market will be front and center. SpaceX should also make a big impact if it launches successfully all of its rockets. Personally, I will be keeping an eye out on the continuing development of small satellites with higher capabilities. But I also know — and expect — that new and daring projects from the many bright engineers and scientist that work in this business will take me by surprise.
The full report is available for purchase here.