Defense Budget Issue Should Benefit Commercial Satcom

While U.S. defense spending still accounts for a majority of military spending around the globe, rising debts have become such a concern that the once untouchable military budget now is being examined as a cost-cutting target. Some of the measures proposed go beyond calls for restructuring and reform of the acquisition process and tighter controls over program costs.

What does this mean for commercial satellite companies providing to the military? Some are already feeling the effects of the budget scare. ViaSat Chairman and CEO Mark Dankberg said delays in contract decisions on a number of government contracts already have affected the company’s revenue expectations. “The defense budget is clearly under increasing pressure, leading to ordering delays throughout the defense procurement market.”

The biggest concern for the space sector is that satellite-related activities, already at the bottom of the Air Force pecking order, could become a prime target in a restructuring of the budget controlled by aircraft-centric officials. The cancellation of the U.S. Air Force’s $26 billion Transformational Satellite (TSAT) program in 2009 feeds some of this concern, as the program fell victim to high costs, technological risk and development delays.

The reality remains that the U.S. military relies on commercial providers for more than 90 percent of satellite bandwidth over Iraq and Afghanistan. Budget-trimming proponents may actually look to commercial capacity as a cheaper alternative and could acquire even more than the massive amount the Pentagon already has at its disposal in the future.

“It’s not that [military communication] requirements changed much. What has changed is the way the military can satisfy those needs. Overall, the military’s thinking is clearly changing, and we’re seeing much more involvement on the commercial side,” says Intelsat General’s Kay Sears.

A December 2009 report from NSR forecasted that government and military users will continue to seek more capacity and coverage to fill the gap between demand and transponder supply. The result, according to NSR, could see the commercial satellite communications market jump to $9.3 billion by the end of 2018.

There is always a reason to be wary of the U.S. defense budget’s uncertain future, especially in a tough economy and a tightly wound political environment. However, the concerns of warfighters in the field will most likely be taken into account and the importance of commercial satcom will just as likely be realized. If politicians can read the facts, then commercial providers can rest easy knowing that there is still plenty of opportunity in the market. 

We are beginning the process of selecting the Satellite Executive of the Year for 2010 and are again seeking input from the satellite community.
The nominees will be featured in our February issue, with the winner gracing the cover of the March issue of Via Satellite and honored at SATELLITE 2011.
The honoree is chosen for durable contributions to the global satellite markets, technologies, business practices, services innovations or any combination of the aforementioned.
If you would like to submit a nominee, please fill out a nomination form at www.SatelliteTODAY.com/Nominations. The deadline is Dec. 15.