As we have said before, the winding down of the wars in both Iraq and Afghanistan is expected to have little impact on the U.S. military’s long-term demand for commercial satellite bandwidth. This new report from NSR, a Boston-based consulting firm, predicts that instead of declining, the U.S. military will buy 68% more commercial satellite capacity in the next decade than it did in the previous one. This growth will be fed by continuing turmoil in hot-spots around the globe and by the insatiable demand for bandwidth and ground-based network services of the ever-more-sophisticated sensors on manned and unmanned aircraft.
Here is a summary of the NSR report:
Short-Term Pause in Growth Rate for Government & Military Satcom Deman
NSR Report Projects Near-Term Challenges but Long-Term Revenue Potential of $9.7 Billion by 2021
CAMBRIDGE, MA – September 25, 2012 – According to NSR’s newest market research report Government and Military Satellite Communications, 9th Edition, despite near term uncertainty driven by troop withdrawals and budgetary challenges, government and military demand for commercial satcom services looks solid in the long term. In fact the commercial industry will supply 68% more satellite capacity to government and military users over the next decade.
The U.S. and NATO allied nations troop pull-out from the Middle-East, coupled with severe budget situations, is certainly a major preoccupation for satellite services in the coming years. Government and military budget reductions will impact some markets more than others, but the short- to mid-term will see the most effects of these challenges.
However as recent events in Libya and Afghanistan have shown, the war on terrorism is not over and the next hotspot could well be North Africa. With more intelligence, surveillance reconnaissance (ISR) manned and unmanned aircraft to assist in this endeavor, increased mobility requirements and higher overall demand for agile and nimble systems at a lower cost will spur long-term revenues but at a slower rate than the past few years.
“The market performance in the short-term will be overshadowed by the pull-out from Afghanistan, but the bottom will certainly not fall out” stated Claude Rousseau, Senior Analyst for NSR and author of the study. “The total revenues grew by almost 10% in 2011 and despite questions today, the market should reach $9.7 billion from 1 million in-service units, while transponder demand is set to increase substantially due to UAVs and ISR missions” continued Rousseau.
While there are continuing needs for narrowband communications, demand for capacity is clearly moving towards broadband services with video and large data files as well as social media being strong drivers for bandwidth usage in all segments. The growth in the equipment side is driven by land-mobile units, but the UAV market will absorb the largest portion of commercial satellite capacity in the coming decade. As the U.S. shifts its military strategy towards Asia, there is an expectation that more satellite units and capacity will move to this region.