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Government & Military Satcom Market to Face Reduced Budgets but Increasing Demand


December 13, 2011


NSR's annual review of the government and military satellite market shows the industry stands to continue revenue gains until 2020 but will need to provide higher level solutions for less cost, and via a host of new procurement methods. The shaky global economy as well as increasing budget pressures within countries that have driven market growth over the past 10 years, notably the United States, are at the core of future procurements and in choosing the solution mix over the long term.

"The budget crunch is becoming more pronounced and has taken center stage in procurement decisions. As such, creative solutions including hosted payloads and public-private partnerships (PPP) like the Paradigm-U.K MoD model may be some of the ways to move forward to address fiscal constraints," according to the study's author Jose Del Rosario, Senior Analyst for NSR. "Recent developments likewise signal increased non-U.S. participation in overall spending where cash-strapped allies are finding solutions within the commercial satellite industry that fit their own budget limitations."

The pullout from Iraq and Afghanistan is foremost in setting the barometer or market direction over the long term as it signals a new era in military projection and engagement. Declining troop presence will adversely impact certain segments of demand, but other applications will not only nullify service reduction but even drive growth. Intelligence gathering, surveillance and reconnaissance (ISR) in particular will require far greater bandwidth support than enabling troops on the ground. Unmanned aerial vehicles (UAVs) will specifically drive usage as ISR missions are expected to increase as troops are withdrawn.

"Providing less expensive but higher throughput bandwidth for UAV missions and supporting instruments that enable greater accuracy is one of many opportunities the commercial satellite industry can target in cementing its long-term relationship with government and military entities," Del Rosario notes. "UAVs can never replace troops on the ground and indeed, a relatively large corps of soldiers will continue to engage the enemy. But over time, more UAV or UAS missions will develop around the globe."

In sum, NSR projects government and military satellite communications revenues to grow from an estimated $4.0 billion in 2010 to $9.4 billion by 2020, yielding total revenues of $71.9 billion over an 11-year period. Satellite services that support ISR and tactical missions on the ground and in the sky should receive the highest boost.