The U.S., meanwhile, is fielding new military communications satellites and laying the groundwork for the next generation of protected satcom. Today's architecture consists of Milstar satellites and the first two of four Lockheed Martin Advanced Extremely High Frequency (AEHF) spacecraft. Study contracts have been awarded to Boeing, Northrop Grumman, Space Systems/Loral and others to support a new acquisition program in the 2020 timeframe.
The U.S. Air Force is still hoping for more-efficient procurement of expensive satellites such as the AEHF and Space-Based Infrared System through multi-spacecraft “bulk buys,” but Congress continues to have reservations about the program.
Demand for satellite capacity from military and civilian government agencies is expected to drive not only procurement of spacecraft and services, but also a trend toward hosted payloads, where a commercial operator is paid to loft a government-developed payload on its satellite. This reduces costs while providing additional revenue to operators. Bureaucratic and technical hurdles remain to be overcome, but hosted payloads are expected to increase over the next 10 years.
Government payloads usually take longer to develop than commercial satellites, but both industry and government are working to make hosted payloads more widespread. The Pentagon is developing administrative and cost models to make procuring and deploying hosted payloads easier, and more companies are joining the Hosted Payload Alliance formed in 2011. The Australian Defense Force hosted a $167 million military satcom payload on the Intelsat 22 satellite launched in 2012.
The U.S. accounts for more than two-thirds of military satellite production, with spacecraft valued at more than $21 billion to be produced over the next 10 years. Japan (6.7%), Russia (4.8%), China (4.7%) and France (4.4%) are the other leading buyers. Even as defense spending declines in the U.S., Boeing and Lockheed Martin will continue to dominate the military market, with demand from home markets also benefiting Astrium in Europe, Mitsubishi in Japan and Reshetnev in Russia.
After focusing on military production, both Boeing and Lockheed are again targeting the commercial market, where growth is being driven by demand for broadband Internet services, video distribution and government services. Growth will be most rapid in Latin America, Eastern Europe, the Middle East, Africa and Asia as those regions demand the digital television and wireless connectivity services already available in North America and Western Europe.
A number of the major commercial satellite operators, such as SES, are nearing the end of programs to replace aging satellites and expand their fleets. Most deliveries under these programs are expected to be completed by 2014. This could put pressure on satellite manufacturers as backlogs begin to decline, but demand is expected to remain strong as smaller regional operators continue to upgrade their fleets.
Even the large operators are expected to continue buying satellites as they expand into areas such as Ka-band broadband for faster, cheaper Internet access. High-throughput Ka-band satellites will be the primary supplier of bandwidth for the growing market to provide mobile broadband services to aircraft and ships. Escalating demand for wireless devices is leading even large fixed-satellite service operators like Intelsat to take aim at the mobile broadband market.
Intelsat, which will complete its seven-satellite Ku-band mobile network in 2013, plans a series of Epic spacecraft with C-, Ku- and Ka-band capability. Scheduled for launch in 2015, the Boeing-built first Epic satellite will cover the Americas and North Atlantic. Inmarsat will launch three Ka-band satellites for its Global Xpress broadband mobile network beginning in 2013. Intelsat and Inmarsat will join Europe's Avanti Communications, Eutelsat and SES, ViaSat and Hughes Communications in the U.S., Australia's NBN and Russia's RTComm in offering Ka-band service.