Military planners in the U.S. and NATO expect the demand for satellite bandwidth to remain high, even with the drawdown of forces in Afghanistan and limited number of troops remaining in Iraq. Although fewer soldiers are stationed in these countries than in the recent past, a presence is being maintained to train local forces, and unmanned aerial vehicles (UAVs) continue to monitor activity. The need by the military for satellite bandwidth will therefore remain high. UAVs are particularly dependent on satellite communications, as commands must be sent to the UAVs and data must be sent back to operators. A combination of military-owned and commercial satellites will be employed to meet this demand.
In the future, the use of smartphones may also increase the demand for satellite bandwidth. Military planners are increasingly using smartphones to provide better connections between soldiers. While soldiers will likely use terrestrial networks to stay connected locally, satellites will be vital to connecting them with global networks. The high amount of smartphone data usage will increase the need for satellite bandwidth.
That said, the landscape for military satellite sales is changing. In the past, military sales tended to be more stable than commercial deals. Military deals also typically included lucrative research and development contracts, which were often worth billions of dollars and ran for years before a single satellite was built. However, with tighter budgets, militaries are looking for creative ways to get more for their money, and are investing less in research and development.
The symbiotic relationship between manufacturers and the military has been especially powerful in the United States, where military space programs have enjoyed strong and steady streams of funding. In fact, even DoD programs that have experienced substantial cuts are still being robustly funded compared to programs in other countries.
While the U.S. military is an enormous source of revenue for satellite manufacturers, even this market is facing restrictions moving forward. The U.S. does not have any large-scale communications satellite RDT&E efforts in the pipeline. And other programs, such as the Space-Based Infrared System (SBIRS), are entering the production phase. This lack of opportunities is especially painful to U.S. manufacturers such as Boeing and Lockheed Martin. Boeing has begun to look to the commercial market to make up for the absence of opportunities in the military market.
Europe’s military space budget has been characterized by investments in hardware developed and validated by civilian space agencies or the commercial sector – the opposite of the United States, where the commercial market has benefited from research and technology development financed by the U.S. Department of Defense. The pooling of space resources among nations in Europe shows faith in one another, but the manner in which space programs are financed is cumbersome and redundant. While military space investment should be an obvious candidate for multilateral programs in Europe, the trend has been for Britain, France, Germany, Italy, and Spain to pursue their own individual milsatcom programs, although a recent agreement between France and Italy to jointly procure the geostationary satellite could lead to more multilateralism in the future.
Funding will continue to be relatively high in the U.S., with a focus on production rather than RDT&E. Still, it will be much lower than in previous years. As a result, competition will increase on a worldwide basis as manufacturers compete for fewer opportunities. U.S. manufacturers will have to rely on the commercial market to increase sales, just as their European competitors have for some time. Companies that adapt to the new marketplace by adopting new concepts, such as building payloads to be hosted on commercial satellites, will be the most successful in the years ahead.