[Satellite TODAY Insider 01-31-12] The Pentagon’s plan to reduce military spending by $487 billion over the next decade was met with serious concern in the space sector after it was published Jan. 27 as part of the military’s 2013 full-year budget. Analysts, however,
   While total U.S. defense spending is expected decline 22 percent from its peak in 2010, analysts predicted that military satellite and space spending would fare much better than the budget as a whole. 
   Raymond James Analyst Chris Quilty said he has confidence in this prediction, given the fact that the United States’ dominance of space is expected to be a key discriminator on future battlefields. 
   “The Pentagon emphasizes in the report that space systems are ‘critical to our surveillance, communications, positioning, and networking capabilities,’ and that funding will be ‘protected’ for needed upgrades to the GPS, SBIRS, and AEHF programs,” Quilty told Satellite TODAY Insider. “Aside from the cancellation of the Global Hawk UAV program, which has experienced severe cost overruns, the Pentagon actually intends to increase spending on UAVs to support a minimum of 65 combat air patrols.” 
   UAVs represent a major source of satellite communications demand from the government sector. A a single Global Hawk aircraft consumes 500 Mbps, which is five times the total bandwidth used by the U.S. military during the first Gulf War. 
   While the defense budget does not spell out exactly which programs will receive additional spending, Quilty suspects that certain electronic warfare and communications satellite programs are likely to benefit. 
   “U.S. Special Operations forces are amongst the heaviest consumers of satellite communications, including satellite phones via Iridium and flyaway terminals,” Quilty said. “While the Pentagon inexplicably states that it intends to make substantial reductions in commercial satellite imagery, the document cryptically indicates that the military intends to substantially increase coverage beyond the current capability.” 
   The policy change seems to represent a major rebuke to DigitalGlobe and GeoEye, which were awarded a combined $7.3 billion, 10-year contract to supply imagery to the U.S. National Geospatial Intelligence Agency in August 2010.
   “Both stocks have been cut roughly in half over the past year, reflecting what we believe is an expectation that EnhancedView program will be slashed by 20 percent to 30 percent,” said Quilty. “While such an outcome is possible, we believe the eventual impact to both companies could be less than anticipated.”