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How much should the Department of Defense (DOD) plan on using commercial satellite communications (COMSATCOM) to meet its needs? Which needs best match commercial capabilities? And how will the newer commercial capabilities emerge and mature in the market? These are subjects of a continuing, evolving debate.

Some people maintain that the DOD should be wary because emerging wideband COMSATCOM systems will not survive market competition and will not provide adequate service within DOD theaters of operation. Other people hold that the wideband market is viable (albeit growing more slowly than predicted), will always be needed to meet the “last mile” shortfalls of fiber, and will always be a key component in DOD beyond-line-of-sight (BLOS) communication. The resolution of these issues is central to the formulation of a DOD communications investment strategy. As part of our support to multiple sponsors, MITRE must stay continuously apprised of this dynamic environment. This article attempts to reflect the current situation.

Ku-Band and Ka-Band
COMSATCOM has traditionally been categorized into narrowband and wideband systems. The narrowband systems, usually operating at frequencies known as L- or S-band, provide moderate data rates, up to approximately 64 Kilobits per se-cond (Kbps), to mobile users or to those who have limited time to set up equipment. The telephony SATCOM services such as INMARSAT, Iridium, and Globalstar operate in these bands. The wideband systems offer data rates ranging from approximately 128 Kbps to rates exceeding 10 million bps. These services are principally supported by the Ku-band and will eventually be supported by the Ka-band.

The Ku-band is exclusively commercial and has seen considerable growth over the past 20 years. It is also generating positive cash flows for at least the largest providers. The DOD makes extensive use of this band through multiple leases and service agreements with commercial service providers and commercial satellite companies.

With the increasing congestion of the Ku-band, the private sector made significant investment in developing the Ka-band. Recently, however, development has fallen off due to a host of factors, not the least of which is the downturn in the global economy. This reduction has forced the cancellation of some service roll-outs and significant delays/modifications to others.

The demand for all types of bandwidth has been increasing. According to the Satellite Industry Association, revenue in the satellite sector grew 17 percent in 2000 alone. Despite the financial problems experienced by the telephony SATCOM systems, financial experts continue to forecast growth in the demand for these systems. The forecasts range from Euroconsult’s estimate of 6.8 percent annual growth to Merrill Lynch’s estimate of 20 percent annual growth. An analysis of the number of subscribers supported by a typical commercial SATCOM system weighed against projected market demands led us to estimate that the projected market for 2010 can support at least three commercial wideband satellite systems, likely to be Ku- or Ka-band systems.

Applying Lessons Learned from Narrowband SATCOM
The major causes of the bankruptcy of the front-running satellite phone systems, Iridium and Globalstar, were an incorrect market assessment that failed to predict the faster-than-expected build-out of terrestrial cellular phone systems as well as competition from INMARSAT, an established global service SATCOM provider. As noted above, these failures reduced investor willingness to finance the follow-on wideband systems even though, in most cases, the wideband systems are based on a fundamentally different service paradigm. Drawing on the narrowband experience and using their existing Ku-band infrastructure to provide both a revenue stream and a transition baseline, providers of wideband COMSATCOM are taking steps to ensure business survivability. These include:

• Minimizing up-front investments by phasing service
• Using the same indoor equipment as terrestrial systems to take advantage of economies of scale
• Spreading out peak loading by offering business and home service from the same satellite
• Reducing risk and cash outlay by building a customer base with existing technology before transitioning to new technology.

Systems with healthy Ku-band services can lower risk by pacing the evolution to Ka-band to coincide with the demand. This introduction will occur first in existing markets–populated areas with an established Ku market base. The build-out to less developed regions will occur as an adjunct to the focus on urban markets, except in cases where individual countries decide to build an infrastructure.

In Times of Crisis
The DOD used commercial wideband SATCOM services and systems for years—primarily in the C- and Ku-bands—because there has not been enough organic DOD capability to meet its needs. While such service has been reliable when procured during times of relative calm, the DOD has learned several lessons about procuring commercial service during military campaigns.

At the beginning of the campaign in Kosovo, the Air Force made a comprehensive analysis of the availability of significant COMSATCOM transponder capacity in and around the Balkans. Although Europe has significant SATCOM coverage, there was little commercial capacity available, and certainly no entire transponders. Fundamentally, this happened because commercial providers attempt to maximize revenue by keeping their satellites operating near capacity. In fact, most will not launch a new payload until its resources are significantly subscribed. This limits the amount of surge capacity in any given area. In addition, news reporting and other services are attempting to obtain additional capacity from the same limited pool.

The DOD had a different experience in Afghanistan, but with a similar result. In contrast to central Europe, Afghanistan has very little COMSATCOM capacity available. There has been no business case to justify dedicating scarce satellite resources to a country with so small an economic base to use and pay for it. Therefore, the DOD has been unable to purchase meaningful satellite capacity in the region.

The preceding cases highlight the problem with obtaining satellite resources on the spot market. As a contrasting “success” story, the DOD also procures capacity from service providers—companies that contract with multiple satellite companies and market the resources. Because they buy large percentages of payload capacity, service providers have some clout in the field, and there have been occasions when the DOD was able to obtain services through them. However, the bandwidths have been restricted to date.

An unresolved issue pertaining to commercial satellite services concerns ownership of the system and host nation approvals. Foreign corporations now own most international systems. Even when a U.S. parent company controls” the system, the substantial number of international partners makes it uncertain if the U.S. government could exercise influence over the service in times of crisis, emergency, or war.

In addition, the gateway terminals (ground entry points for the satellite signals) are usually located in foreign countries, whose sovereignty gives them the right to control the use of any radio terminal within their country. Although this control usually takes the form of licenses and fees, it can also extend to actual restrictions on terminal use and access. This situation should not be interpreted as precluding any use of COMSATCOM in theater. Rather, all service provider risks/benefits must be assessed. Not all gateways are on unfriendly soil—in most cases, we will have allies near our theaters of operation.

What Does This Mean for the DOD?
Because it has not built sufficient organic systems to meet its growing need, the DOD will continue to rely on COMSATCOM to provide a substantial amount of its BLOS communication capacity. Unless the DOD makes prior plans and pre-arrangements with commercial pro-viders, there will be limited capacity available in times of crises. While high-level studies have addressed the commercial/military SATCOM issue, there is still a need to perform a detailed tradeoff analysis of:

• The proper balance between military organic and COMSATCOM to meet the DOD need
• The true cost of owning vs. leasing services. This should include the assessment of the value of prepayment of options to purchase satellite bandwidth
• The risks inherent in alternative approaches
• The correct business relations for the situation
• Any Federal Acquisition Regulation changes that would be needed to permit the new business practices.

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