Traditional government satellite competitors, including SES Government Solutions President and CEO Tip Osterthaler, XTAR President and Chief Operating Officer Philip Harlow and Intelsat General President Kay Sears, signed the letter, which asked the Defense Department to take a more analytical approach to comparing the costs of government-owned satellites with those offered by commercial operators.

    The group of executives said recent government budget pressures should encourage decision makers in the Pentagon to reconsider the amount of money they are spending on government-owned satellites and whether they could save money with commercial versions.

   Intelsat General Vice President of Legal and Government Affairs Richard DalBello said the group recommended that the Pentagon decide what level of commercial satellite communications infrastructure it needs and create an appropriate budget for specific projects, as well as create a single office to manage commercial and military satellite capabilities.

   The letter comes just one month after Lockheed Martin was awarded a contract to manufacture two Advanced Extremely High Frequency (AEHF) satellites for the United States Air Force, confirming a deal that was expected to generate nearly $2 billion for the company. Under the terms of the deal, Lockheed Martin also will produce the fifth and sixth AEHF satellites.

   The first two AEHF satellites were launched in 2010 and 2012, respectively. The network is shared by the United States, Canada, the Netherlands and the United Kingdom. The AEHF aims to improve secure military communications, ensuring safe lines of communication between the president and top military leaders in extreme situations such as a nuclear attack. It represents a significant upgrade on the Milstar system, which has been in place since 1994.

   North American and European regions account for an estimated 80 percent of global defense spending, but were also among the hardest hit by the global financial crisis. The current situation of defense budget cuts across most countries is expected to persist during the next decade, though the need for enhanced communication capabilities and Intelligence, Surveillance and Reconnaissance (ISR) requirements for international armed forces is expected to drive demand for military satellites during the next decade, according to online market research firm ReportsnReports.

   "Defense departments around the world are exploring and inviting new alternatives for reducing their costs,” the firm wrote in a recent report. “Apart from pushing back their project timelines, utilization of COTS equipment is a potential choice for the government. Thus, the military satellite industry is gradually undergoing a transition towards selecting commercial providers against defense suppliers for its programs.”

   Recently, the government side of the military satellite world has made an effort to rapidly adopt new strategies such as Public-Private Partnerships (PPPs) and Private Finance Initiatives (PFIs). Governments are also increasingly adopting the capacity leasing approach on privately owned satellites, rather than deploying own systems. These strategies, said ReportsnReports, have become critical to account for the huge capital requirements and post deployment assistance required for these projects.

   “In the current scenario of defense budget cuts in many countries around the world, Private Financing Initiative (PFI) is gaining significant importance, through which the satellite project will be built and owned by a private company. In return, the governments agree on guaranteed contracts for the satellite services throughout the satellites’ lifetime.”