Northern Sky Research released the 12th edition of its Government and Military Satellite Communications report late last month. The annual report is the the longest-running on the government & military satellite communications market, providing a much anticipated view of the drivers, regional trends, and capacity demands of the market through 2024.
NSR Senior Analyst Brad Grady kindly agreed to the following Q&A, giving SatCom Frontier readers a high-level summary of the findings.
Q: You talk about “COMSAT” vs. “GOVSAT” in your report. What exactly do you mean by that?
In government and military communications markets, there are really two different ‘types’ of capacity available to government and military end-users; either commercially owned capacity that is from providers such as Intelsat (COMSATCOM), and government-owned satellite communications capacity (GOVSAT, aka MILSATCOM) from the likes of WGS or MUOS. Both systems have their place in the overall suite of government and military connectivity, but there are debates within government and commercial circles as to ‘who’s better’ or ‘what’s cheaper’.
Although the U.S. Government in particular has always relied on commercial partners, leasing capacity really took off during the conflicts in Iraq and Afghanistan where there simply wasn’t enough government-owned capacity to connect the ever-increasing need for data on the battlefield. With those conflicts winding down (or at least the US’s role in those conflicts), the market for “bulk leasing” (acquisition of commercial capacity by government end-users) has likewise seen a reduction in demand.
Now, with budget constraints on the minds of a lot of policy makers in government and military circles and the realization that there will always be the need for COMSATCOM, there is greater debate between the roles of commercial vs. government satellite capacity. Mostly cost-centric, the government claims that its’ proprietary satellite capacity is significantly cheaper than commercial alternatives, while commercial entities point to acquisition style as a major cost-driver and technology refresh and resilience are key advantages.
While there are valid points on both sides of the argument, the argument is really about a fundamental change within government circles – and that is with the U.S. Government’s limited financial and human resources where does it continue to make sense for government to invest in its own capabilities and where can it take advantage of commercial offerings?
Q: Is the government buyer ready for true managed services? Are there other areas where commercial can support government?
Depending on the end-user and application, the barriers to managed services have or are quickly eroding. There will continue to be some applications which will never be migrated to a managed service (or even commercial capacity) due to national security concerns (Nuclear Command-Control Infrastructure, some ‘special operations’ missions, some ISR assets), but other’s like forward deployed operating locations, or other mobile-centric assets are prime candidates for managed services.
Looking forward, High Throughput Satellites (HTS) will further accelerate the shift towards a managed service model for a lot of applications. Just as we are already seeing in the commercial markets, there are a lot of moving pieces that go into a mobile-first HTS-powered network. There are definitely times and locations where it will still make sense to ‘own the capacity’ in some fashion for the US Government, but as the style and manner in which US forces are deploying around the world continues to evolve, flexibility and responsiveness quickly begin to favor a managed service model whereby government can get the connectivity where it needs it, when it needs it – without worrying about the “how’s” (how much capacity, how long is the deployment, how many terminals, etc.)
Beyond capacity, there are a lot of places for commercial and government collaboration. Outsourcing the role of ‘flying the satellites (WGS is being discussed)’ to a commercial entity is one near-term area where commercial can support government that is really a win-win for both sides; freeing up valuable military personnel for other more demanding missions, and leveraging the expertise of commercial operators. Looking forward, as HTS capacity coverage expands and the U.S. Government explores follow-on options for WGS, commercial operators can provide a solid source of technical expertise and experience to the U.S. Government.
Q: How do you view the DoD’s progress towards satellite bandwidth acquisition reform?
“Government” and “Reform” are never words that equal easy or quick – and satellite bandwidth acquisition reform is no exception. In terms of ‘value to taxpayer’, the U.S. Government has definitely created a more competitive environment for leasing commercial satellite capacity through some consolidation, and re-competing contracts before they are fully expired.
However, for systemic acquisition reform there are definitely challenges that need to be overcome on a policy and practical level. Consolidation of satellite capacity architecture/requirements//purchasing/oversight between both commercially-owned and government-owned assets is probably needed, irrespective of ‘who’ that entity actually is.
Another step is the Pathfinder programs which aim to solve some of the questions on both policy and practical levels in acquisition reform (can government buy capacity before it is launched, etc.) If nothing else, there is a lot of dialogue occurring around innovative approaches which aim to both work within current policy parameters and reform the manner of acquisition – which commercial industry continues to have input.
Regardless of how the capacity is acquired, commercial industry will play a role. What is key is involvement early and often – which thankfully seems to be one area where there has been a lot of positive work done lately.
Q: Is there a UAS bandwidth market beyond U.S./NATO use? Are there opportunities for new government use of UAS?
Definitely, but the question is really ‘how much’. Outside US/NATO, Israel tends to be another large market for UAS applications and we can expect other countries in the region to continue to explore how UAS fit into their domestic security policies. The US and NATO will continue to be significant consumers of UAS services, but as the costs and technical barriers for large UAS operations reduce, we will continue to see demand emerge outside of these traditional markets.
One area we are paying careful attention to, are the smaller UAS platforms – and, it is definitely an area where we could see significant growth rates. As terminal form factors continue to shrink and become lighter it will open up these previously terrestrially-connected UAS airframes to satcom.
Outside of the military, border security is probably the second most-likely application. Leveraging all of the sensors and airframes of the military markets, it will be the ‘next big market’ of UAS connectivity. However, just as on the commercial side, we are only scratching the surface of potential UAS applications – everything from enhanced wildfire monitoring in California to search and rescue applications off the coast of Florida are being discussed, so it will only be a matter of time to see which applications become viable.
Q: What has been the growth trends for Ku-, Ka-, and X-bands in the past few years and how do we see those markets developing in the future?
In our latest report we’ve noted raw capacity to government and military customers (Bulk Leasing) has been in a decline due to the winding down of US Military operations in Iraq and Afghanistan. We continue to expect bulk leasing to see steady declines for FSS capacity on the whole, but FSS wide-beam Ka-band capacity and FSS X-band capacity are areas where we see some growth opportunities on the bulk leasing side.
For managed services, FSS Ku-band is a strong market, driven by UAS applications, maritime, and land-based services, but the story is really in the shift towards HTS-based offerings. By 2024, we expect upwards of 82 Gbps of HTS capacity demand from geostationary and non-geostationary orbits across both the bulk leasing and managed services market.
Within the HTS markets, GEO-HTS Ku-band will see some tremendous growth rates, as UAS and maritime end-users on existing FSS Ku-band services migrate over to GEO-HTS Ku-band. With more than 30% of HTS capacity demand in 2024 on GEO-HTS Ku-band, there is a lot of growth over the next ten years. On the Ka-band side, GEO-HTS Ka-band will account for around 50% of HTS capacity in 2024, supporting not only mobility but fixed VSAT. Non-GEO HTS opportunities will be about 14% of total HTS capacity demand in 2024, while GEO-HTS C-band for primarily maritime applications will account for the remaining HTS capacity demand by 2024.
Overall, we will see a net-decline in FSS capacity leasing for the next couple of years as the market adjusts to the ‘new normal’ of budgets and deployment paradigms, however, HTS in both GEO and Non-GEO, alongside FSS capacity for mobility applications will drive capacity growth in the government and military markets over the next ten years.