With a backdrop of a new U.S. presidential administration, the beginning of a shift in troop strength from Iraq to Afghanistan and a global economic recession, 2009 likely will be anything but dull in terms of military satellite communications. While the United States military will continue to drive
commercial satellite communications demand, the rest of the world will be spending money as well. Here, we take a look at what might happen outside of the United States as well as what impact events in the United States may have on other countries and their military satellite communications strategies.

“The major unclassified European military satellite efforts will come from France, Italy, Germany and the United Kingdom; however, continued consolidation and international cooperation among the various military satellite programs will keep production numbers far below those in the United States,” says John Edwards, senior aerospace and defense analyst, group leader — international military markets, Forecast International. “The major production efforts in Europe, Israel and Japan are expected to account for about eight military communications satellites, 16 military reconnaissance spacecraft (including electronic intelligence), and another three spacecraft in the global positioning category. I am forecasting that the world’s major satellite programs will produce around 95 dedicated military satellites within the next 10 years, meaning that satellite production in Europe, Israel and Japan should account for about 28 percent of this forecast,” Edwards says.

Andrea Maleter, technical director, Futron Corp, adds, “While the U.S. Department of Defense has been the highest profile and largest military user of satellite communications, other countries have extensive capabilities and are also expanding them. In Europe, beyond NATO, the U.K. Ministry of Defence’s Skynet/Paradigm program and SpainSat, there is an enhanced role emerging for the European Defense Agency as well as other individual national defense programs.

In Asia, the new Japanese space policy explicitly provides for the first time for a military space program, and Australia is considering similar programs.”
Prashant Butani, a satellite analyst at Northern Sky Research (NSR), believes it is unclear whether there will be an increase or decline in this overall market. “Developments and policies around the globe will dictate demand and spending levels, so the degree to how much the decline or increase in the market will be is not clear. For instance, there is a definite pullout in Iraq, which affects demand negatively, but there is also a move to increase the U.S. presence in Afghanistan,” he says. “It will be a matter of time to see the net effect of both these initiatives. If one were to consider developing economies such as Brazil, Russia, India and Mexico, there are civil programs that warrant satellite communications capacity, and there is a latent need for military
satellite communications capability, which by itself would have brought in considerable growth had it not been for the economic slowdown which puts most of these programs in question.”

Expected to weather economic storm

Edwards highlights a number of markets where there could be potential growth in the military space arena. “Some notables are Japan, Israel, Germany and Spain, which are all fielding systems in the next 10 years,” he says. “The Bundeswehrsat (SATCOMBw) is a high-priority program for Germany. The Bundeswehr had previously relied on leasing capacity on existing commercial communications satellites, and the unilateral development of the Bundeswehrsat, a global broadband communications network, illustrates how important the program is to the German military. It breaks from
the traditional approach of engaging in multinational European efforts for military satellite development.

“France and the United Kingdom have Syracuse 3 and Skynet 5, respectively, and the fact that these systems are operational limits military comsat production in those two countries over the next five to 10 years,” says Edwards. “I also expect the proliferation of military satellites to push into Turkey and other NATO countries looking for a homegrown edge.”

NSR sees Africa, with the newly created U.S. Africa Command, to see growth as communications capabilities are built up, and South and Central Asia also could be growth regions because of various military activities taking place throughout the region says Butani. “Certain countries such as Israel, Australia and Germany (to a certain extent) have programs in place that will generate hardware requirements in the near future, but hardware vendors will have to be thorough in their market research before exploring newer economies, as most programs here will probably not see the light of day in 2009,” he says.

Edwards adds, “Unlike the market for commercial systems, military markets are less exposed to risk when it comes to the whim of the consumer, which in this case is the military itself. Therefore, manufacturers of these systems – especially in the United States – can look forward to a strong
military satellite market.”

Impact of Obama Administration

The United States is still the big power in terms of military satellite communications, and its military space strategy could have a knock-on effect around the world, but Edwards says trying to forecast what the Obama administration will do and what impact that will have on military spending around the globe is difficult. “We are all curious to see what course President Obama will take and what we can expect in terms of military space. Cuts are coming, that much is for sure, but I think that a lot of the doom and gloom vis-à-vis drastic cuts to the overall defense budget are unfounded,” he says. “I do expect programs like Future Combat System and missile defense are in for a whack in the FY10 and FY11 cycles; however, I expect that military space programs like WGS (Wideband Global Satcom), MUOS (Mobile User Objective System) and AEHF (Advanced Extremely High Frequency) are safe. TSAT (Transformational Satellite Communications System) could be in for trouble, as could certain space control programs. How this ripples out to the
rest of the world remains to be seen. Certainly, component manufacturers could take a hit, but I don’t think there is going to be a sea change in the military space spending arena.”

Butani says, “Potential flashpoints are developing such as the current situation in the Middle East, Pakistan and Central/Eastern Europe with Russia’s pronouncements on installing missiles near Poland. The new administration will have to deal with these realities and will have no choice but to react or even prepare for the eventual deterioration of these flashpoints. So in a way, there are situations where the new administration can be proactive such as Iraq but will have to be reactive like in Pakistan, making predictions on what will happen difficult.”

European Satellite Communications

One of the most interesting case studies of a military satellite communications system outside of the United States is the Skynet 5 system in the United Kingdom. This innovative system, as well as providing the capacity to support the U.K. Ministry of Defence’s military satellite capacity needs, also will generate revenues through third party deals. Paradigm Secure Communications (an EADS Astrium Services company) is responsible for selling excess capacity on the Skynet 5A, 5B and 5C satellites to interested nations. Malcolm Peto, managing director, Paradigm Secure Communications, believes the Skynet 5 system is well placed to meet the needs for more military satellite communications capacity. “There are two things impacting military communications at the moment. Firstly, there is a need for more military capacity. Secondly, there is also a worldwide shortage of commercial capacity in certain areas. We want to be able to meet both of those requirements,” he says.

The challenge is to bring some of these deals to fruition this year. “I think a good year would be that some of those countries that have been interested in the use of another country’s military capacity over the last couple of years, to see them start putting out formal requests for that capacity. That is the first step. We have seen some traction in the United States last year, which was quite widely publicized. That would be a big step. We have seen some of our NATO partners do it in the past. For some of the Eastern European countries, that are not necessarily NATO, they are starting to be more interested, so for them to formally request it would be the first big success this year. Secondly, to win a large proportion would be the next stage. I certainly expect the requests to come in, barring any political shake-ups,” says Peto.

Despite the fact that U.K. troops are set to pull out of Iraq, as well as deepening economic gloom, Peto does not expect either of these to have a major impact on the Skynet 5 system. “I don’t envisage any large impact. In fact, we envisage the contrary,” he says. “Coming out of Iraq is one thing, and we were well established there, but the intent of NATO and the United Kingdom to make Afghanistan work is causing us a very large work load at present. What we were doing in Iraq, we are now doing in Afghanistan — and more substantially in Afghanistan. Within the overall Astrium remit, all of our businesses in France and Germany are busy to try and underpin the Allied Forces in Afghanistan.”

Other European countries also are looking to develop their military satellite communications systems. One such country is Spain, which has a military satellite system consisting of Spainsat and Xtar-Eur, operated by Hisdesat. Miguel Angel García Primo, COO, Hisdesat, says the system gives the Spanish armed forces far more flexibility. “The new system has provided our armed forces with new uses and capabilities such as communications on the move, use of manpacks even within global coverage and increased traffic through all terminals in general and through the smallest terminals in particular, for example, in the case of submarines. The major challenges are related with the upgrade of the network to be able to fully exploit the satellite capabilities both in terms of higher data rates and better interconnectivity with the concept of everything being over IP and with a final goal of becoming network centric,” he says.

The military satellite communications system enables Spain to collaborate better with other European countries. “The Spanish Ministry of Defence and Hisdesat fitted the Spainsat and Xtar-Eur satellites with more capability than was necessary in order to cooperate with our allies and provide these capabilities where they are needed,” says García Primo. “In addition, the two-thirds of the Earth coverage of the Hisdesat system allows several
customers to use both satellites. Our military cooperation with other European countries is been very fruitful for both parties. At this time, Hisdesat is providing long term services to two European NATO countries and has provided occasional services to two other countries additionally,” he says.
In terms of when it might look to add new satellites to the system, García Primo, says, “The satellites are quite new. The oldest one has been in orbit four years, but has a design life of 15 years, and the propellant on board has enough for more than 18.5 years of orbital maneuvers. However, Hisdesat is already working with our partners to add new satellites to our constellation to extend the currently wide coverage from Denver to Singapore available today for our customers.”

New Programs in the Middle East

In the Middle East, one of the most interesting operators to emerge in recent years is Yahsat. The United Arab Emirates-based company has committed more than $1.6 billion to a dual satellite system to serve military and commercial customers. The country’s military is the anchor customer, and Yahsat will look to do other deals in this area. “It is not only about pure satellite capability but how you build your services and understanding military clients,” says Jassem Al Zaabi, Yahsat’s CEO. “This is definitely a culture we have been able to build through our anchor clients we have, which is the UAE military. We think a very big military client like the UAE military will open the door for us to sell our services to other governments and militaries in the area. This is going to be one area that we start soon. We are trying to make sure we have a very good value proposition and good services first — I don’t mean only capacity but the whole package. This is a very delicate segment. Customers have very clear requirements so you have to be able to deliver,” he says.

Vendors also See Opportunities

One of the main companies targeting the European military satellite communications market is Thales Alenia Space, which works with a number of European nations on their military satellite systems. Blaise Jaeger, executive vice president, telecoms, Thales Alenia Space, is confident the company will find business. “We foresee growth in this market, with requirements increasing. Because of current conflicts, everybody realizes the importance of exchanging information,” he says. “With intelligence, reconnaissance, etc., the volume of information is increasing and so are the required throughput and bandwidth. The market will grow not only in Europe but also from other governments around the world that need these capabilities.”

Jaeger believes going forward, there will be more sharing of costs of these next-generation systems, and this is an area where Thales Alenia Space is very proactive. “One solution we have developed, starting with the French government, is to share investments in the platform, satellites and launch costs. We started doing this in France with Syracuse, sharing the satellites between the Ministry of Defence and France Telecom,” he says. “Today, we want to export this business model to other countries based on sharing commercial and military payloads on the same satellite. This is also the model for Yahsat, which is a dual-use system, and it could be the model for the next generation of broadband satellites to be shared by the French Ministry of Defence and French space agency, CNES. Different countries could also share certain resources, like France and Italy. In other words, one olution is to deploy a dual-use system and share the investment.”

Jaeger expects Thales Alenia Space to increase profits and revenues in this area in 2009. “First, we have Yahsat, an ongoing program that will generate more revenue in 2009 than in 2008, but the main target for 2009 is the start of two important projects for the European defence market,” he says. “The first one is Sicral 2, offering secure SHF (super high frequency) capacity as well as some UHF capacity. It would complement both Syracuse 3A and 3B in France and Sicral 1 and Sicral 1B in Italy. We expect this project to kick off in 2009. We also expect the Athena-Fidus satellite project to start in 2009. With Ka-band and EHF payloads, this satellite will also complement the capacity offered by Syracuse and Sicral for broadband applications. Both these projects are joint endeavors by France and Italy. The combination of these two satellites will complement and replace existing Sicral and Syracuse capacity. As a Franco-Italian company, we are very keen on starting these projects for both governments.”

Bottom Line

It would seem that there will be little change in the military satellite communications arena in 2009, as the demand for capacity in regions such as the Middle East will remain strong and military operations continue elsewhere around the globe. A number of nations will continue with their next-generation military satellite systems, and while the new presidential administration in the United States may have some impact on military spending, this should still remain a vibrant satellite communications marketplace despite changing economic and theater circumstances.

Mark Holmes is Via Satellite’s Assistant Editor.