[Satellite News 08-24-10] In August alone, Boeing Space and Intelligence Systems has seen a flurry of commercial and military satellite activity, winning over $1 billion in new satellite manufacturing contracts, a Ka-band distribution deal with Inmarsat and, most recently, an additional UHF payload deal from Intelsat.
    Coming off of a difficult economic recession in 2009, which saw the company take hits in its aviation business and from the cancellation of the TSAT program, Boeing’s satellite business has responded strongly. Not only has the company won new contracts in August, but it has also completed its Wideband Global Satcom (WGS) Block 1 responsibilities to the U.S. Air Force by activating the constellation’s third satellite, WGS-3, and extended its space-related business for both civil and military programs.
    In a June interview with Satellite News, Jim Simpson, vice president of business development for Boeing Space and Intelligence Systems, predicted that the company would make a strong impact on the international satellite marketplace in the near future with at least two to three awards for as many as six satellites made up of the company’s 702MP and 702HP platforms and hosted payloads. If successful in its pursuits, said Simpson, 2010 would be a very successful year for Boeing.
    “In the next few years, our goal is to move to greater balance in the 70 percent government / 30 percent commercial range. We believe our expertise in both commercial and government markets enables us to be well suited for hosting government-utilized payloads on commercial systems and provides an adjacent market,” said Simpson.
    Boeing’s satellite business model changed after the cancellation of TSAT, as the company saw the U.S. government moving toward a more distributed architecture of advanced EHFs, WGSs and commercial satellites for communication needs. The company also recognized the need to revamp its presence in the commercial space sector after it suffered a $1.56 billion net loss in its 2009 third quarter, compacted by a 17 percent earnings decline from Boeing’s Network and Space Systems division. At the time, Boeing’s losses stemmed from lower volume on intelligence and security systems, missile defense, and combat systems and $3.5 billion in charges the company accumulated from delays in its 787 Dreamliner and 747-8 jumbo jet program. Interestingly, the company also said that its contracts to provide four of its new 702B satellite to Intelsat, awarded in July 2009, helped offset the damage, hinting that Boeing would look to its satellite division for solutions.
     Simpson said his company believed that the emergence of hosted payloads as a potential to augment military communications, space surveillance, missile warning or Earth observation could push more activity to the commercial side. “This distributed architecture and other alternate architectures are being evaluated to enable an economical approach to meet the needs of the warfighter and is a significant departure from the large multi-mission TSAT approach.”
    Boeing has used this shift to its advantage. The company now finds itself the recipient of a $1 billion investment by Inmarsat to build three Ka-band satellites based on its 702 high-power platform and act as Inmarsat’s Global Xpress VSAT service distribution partner for the government sector. The company estimates the investment in its Inmarsat-5 constellation and Global Xpress will be $1.2 billion over four-and-a-half years, incorporating the fixed cost of the satellites as well as the cost of additional ground network infrastructure, product development, launch services and insurance. With operations are expected to start in 2014. Boeing has pre-committed to capacity purchases representing more than 10 percent of Inmarsat’s target Ka-band revenues in the first five years after global service launch.
    Rebecca Cowen-Hirsch, Inmarsat’s vice president of Global Government Systems, said her company chose Boeing as a partner because of its historical connection government and military customers. “Inmarsat and Boeing both understand that the economy has resulted in government budget cuts and that the military’s primary concerns are performance and cost. Especially following the cancellation of the TSAT program in 2009. The military’s global requirement, however, has increased for the past 31 years,” she said.
Inmarsat CEO Andy Sukawaty said that Boeing won the contract and partnership over three other competitors in a highly competitive process. “All of them had credible proposals. Having said that, Boeing had something like 70 percent of the Ka-band transponders that are in the sky. In terms of minimizing risk on the program, Boeing stood out from that perspective. Boeing has been very active in most of the U.S. government’s major satellite programs, so they were a natural fit. They know the market, so they know how to position this service and customize it in a way that the government customer will find attractive.”
    Analysts largely praised the deal, citing it as a clever move by Inmarsat to utilize Boeing’s government Ka-band stockpile and history with the WGS program. Shortly after the Inmarsat deal was announced, Boeing activated the U.S. Air Force’s WGS-3 satellite, completing the constellation’s Block-1 program and building strength for the next three satellites, which will make up the Block-2 program. The next week, Boeing secured a $182 million Pentagon contract to build the seventh program satellite, WGS-7, adding on to the Air Force’s commitment to Boeing with three more already in production.
    Boeing Space and Intelligence Systems’ Bob Pickard told Satellite News that the successful launch and operation of WGS-3 provided a stepping stone to the company’s work on the Air Force’s Block 2 constellation and the WGS-7 satellite. “This is a satellite program that continues to deliver positive results and significant value to the warfighter. Boeing is progressing well in building the 3 Block 2 satellites and is working with the Air Force on a follow-on series with up to six more satellites.”
    Boeing has also increased its presence in the civil and academic space sector. On Aug. 18, The Johns Hopkins University Applied Physics Laboratory implemented a space-based system to monitor the Earth’s space environment, which will see Boeing handle data collection, processing and packaging from the Iridium satellite fleet for the Active Magnetosphere and Planetary Electrodynamics Response Experiment  (AMPERE). Boeing developed a new data pathway for transferring magnetic field samples from the satellites to the ground station that provides the data up to 100 times more frequently than before. Based on this innovation, AMPERE will be able to provide data every 2 to 20 seconds from each Iridium satellite, and the data are available within minutes for analysis. Previously, data were only sampled once every three minutes and were available for analysis the following day.
    “This program provides a model of a successful public-private partnership between the scientific and academic communities and industry,” said Steve Oswald, vice president and general manager, Boeing Intelligence and Security Systems. “Together this team will answer critical scientific questions about our home planet.”
    Boeing ended its successful month with a contract from Intelsat to provide a second ultra-high frequency (UHF) hosted payload on the IS-27 satellite. The payload will offer 20 25-KHz UHF channels capable of serving the U.S. government sector and other international Intelsat General clients. The IS-27 spacecraft is one of four commercial communications satellites that Intelsat ordered from Boeing in 2009, the same satellites that helped Boeing offset its losses in the third quarter of that year.
    According to Simpson, Boeing’s success rate should sustain for some time. “Our commercial model has been pretty consistent since 2003 at around 15 to 25 [geostationary] satellites per year. We believe that this model will continue through 2020.”