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U.S. ‘Pivot’ to Asia-Pacific Doesn’t Warrant New Investment, Says SES Exec

Tip Osterthaler. Credit: SES photo

LONDON — Commercial satellite fleet operators that deal with the U.S. government are not investing in new capacity over the Pacific in advance of the announced “pivot” of U.S. security interest to that area because they have no incentive to do so, a senior satellite fleet official said here Nov. 28.

Tip Osterthaler, chief executive of SES Government Services, a U.S. division of Luxembourg-based SES, said SES and the two other commercial operators doing regular business with the U.S. government — Eutelsat of Paris and Intelsat of Luxembourg and Washington — cannot defend such an investment to their boards of directors.

Addressing the Global Milsatcom conference here organized by SMi Group, Osterthaler said U.S. government demand for commercial satellite capacity in the Middle East and, to a lesser extent, Southwest Asia more or less stumbled upon unused commercial satellite bandwidth already covering those regions.

That is not likely to recur in the Pacific Ocean region, he said, where the three fleet operators’ satellites are 80 percent full and unable to cater to a big spike in demand — even from a valued customer like the U.S. government.

Osterthaler said that while the U.S. government’s annual spending of around $1.2 billion on commercial satellite bandwidth makes it the single largest customer for commercial operators, the government purchases account for only around 10 percent of total commercial demand.

Osterthaler’s point — that the U.S. government up to now has not been able to book capacity for the long term, relying instead on short-duration task orders and indefinite-delivery, indefinite-quantity contracts — has been made by SES and, especially, Intelsat in the past.

They have urged U.S. government agencies to take out long-term leases that include strict termination-liability clauses so that the commercial operators are not left without compensation if the government decides the capacity is not needed.

U.S. government and industry officials have said U.S. law permits long-term leases of bandwidth, but that the Department of Defense has never seen fit to make a strong case to Congress.

“It’s hard to overstate the problem,” Osterthaler said of the prospect of U.S. and allied forces arriving in a Pacific theater with insufficient satellite capacity. “Without access to the global communications infrastructure, you’re going to have problems.”

Commercial satellite operators assume that the current renewal of U.S. Department of Defense satellites — Advanced Extremely High Frequency, Wideband Global Satcom, Mobile User Objective System — will be just as incapable of satisfying military forces’ demand for bandwidth as the satellites they are replacing.

Harold D. Haney, chief of the Space and Missile Defense C4 Division at U.S. Strategic Command, said the commercial operators may be dancing faster than the music.

These new constellations of dedicated military satellites “have yet to make their impact,” Haney said here. “For every year that passes we are closer to fielding these constellations, and many of the satellites of the older constellations are outlasting their design lives. We’re going to grow both larger and stronger in our milsatcom capability.”

In a brief interview, Haney said he did not mean to forecast that U.S. government use of commercial capacity will fall dramatically from where it is today, which is about 80 percent of the total satellite bandwidth used by the U.S. government.

But Haney said he did take issue with the idea that a disaster is in the offing simply because of a lack of commercial capacity in Asia.

The Asia-Pacific region does not lack for satellites or satellite operators. There are some two dozen operators, most with small fleets and many owned wholly or in part by governments.

Unlike the fleets of Intelsat, SES and Eutelsat, these regional and national operators are not all under pressure to demonstrate a return on investment, and the result is that many of their satellites have fill rates that are so low as to be unacceptable to the major operators.

Osterthaler acknowledged this. But a close look at the regional operators in question, and the quality and coverage of the C- and Ku-band spectrum they are licensed to use, he said, makes them ill-suited for big U.S. government contracts.

“They often have fragmented spectrum that is in the hands of government entities — not highly desirable from a U.S. government perspective,” Osterthaler said.

He insisted that current projections on the capacity of the Wideband Global System, which uses X- and Ka-band frequencies, and the capacity of its associated ground network are “unrealistic in our view.”

“There is no incentive right now to invest on behalf of the U.S. government,” Osterthaler said. “Commercial operators are for the most part non-U.S. companies that do not wake up in the morning wondering what the U.S. government needs.”

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