Mobile satellite services provider Inmarsat is making a $1.2 billion bet on its Ka-band Global Xpress satellite constellation, which is aimed at the maritime, enterprise and government markets worldwide.
Traditionally a provider of L-band services, primarily for maritime and military customers, Inmarsat of London was prompted to invest in a Ka-band system by circumstances including increased competition from fixed satellite services operators in some of its core markets and the growing appetite for broadband applications. The three-satellite Global Xpress constellation is under construction by Boeing Satellite Systems and slated for launch in 2013 and 2014.
The U.S. military and intelligence community together constitute a key target market for Global Xpress; both have embraced Ka-band services to augment long-used X-band capacity for broadband applications. Among the fastest growing of these is transmission of intelligence, surveillance and reconnaissance data.
Inmarsat estimates that by 2019, Global Xpress will be generating annual revenue of about $500 million. The company also continues to operate a robust fleet of L-band satellites, whose signature service is Broadband Global Area Network.
As president and chief executive of newly created Inmarsat Government, David Helfgott, a satellite industry veteran, is responsible for winning business in the all-important U.S. military and intelligence market. One of the primary contracting vehicles for that business is the Future Comsatcom Services Acquisition (FCSA), administered by the U.S. General Services Administration and Defense Information Systems Agency.
Helfgott, who emphasized that Inmarsat is a provider of end-to-end network solutions and not just bandwidth, spoke recently with SpaceNews staff writer Titus Ledbetter III.
What’s the status of Global Xpress?
The bottom line is that the program is on schedule. It is a transformational program for the industry as well for Inmarsat and we are extremely excited about it. It combines what we do well, which is global coverage and mobility, and adds to that Ka-band. If you add those three variables together, it is a unique highly complementary capability to the government market. The first flight goes up towards the end of 2013 or early 2014. Then, the satellites go up every six months for the next two flights. All three of them will be on station by the end of 2014.
Inmarsat expects Global Xpress to generate $500 million in revenue by 2019. What percentage of that will Inmarsat Government be accounting for?
The United States market is clearly the largest single component in any business case that includes government. Today the U.S. Defense Department alone spends nearly $1 billion annually on commercial satellite services. As Global Xpress is designed to perfectly complement U.S. government investments in military satellite communications, we expect that Inmarsat Government will continue to serve a significant share of that market and be a key factor in Global Xpress success.
What trends are you seeing in the government market?
We see the continued need for the efficiency and flexibility that come with a managed solution, as opposed to just buying raw bandwidth. The idea, which is 20 years old in the telecommunications industry but a fairly recent phenomenon in government communications, is that you pay for quality service. You pay for a service level agreement, if you will. In an Internet Protocol-based infrastructure, you can do that now. We see some of the trends around budget pressure actually playing into our favor in that area because you can get more capability at a lower cost per bit through a managed solution than if you bought raw bandwidth and tried to figure out how to optimize that. We are well-positioned from that point of view.
Inmarsat is one of eight companies recently selected to provide managed telecom services to the U.S. government under the portion of FCSA known as CS2. How is this program different from the way the government has done business in the past?
What is unique about it is the scope. The legacy Defense Satellite Transmission Services-Global program started off as just bandwidth. This is anticipating a much more robust approach to the market and that has been our strategy all along. You have bandwidth cases; you’ve got mobile services; you’ve got fixed services; you’ve got the network management systems to go around that; you have managed solutions as a line item; you’ve got equipment and valued added services, which includes things like consulting. That is literally a description of our portfolio today.
What is your strategy for securing FCSA CS2 task orders?
Pricing strategy notwithstanding, we think it’s differentiating ourselves through both technical innovation and through customer intimacy. Technical innovation not only includes the quality of our satellites, Global Xpress, and our L-band fleet, our Broadband Global Area Network, but also our terrestrial infrastructure and our ability to provide managed solutions. We have information assurance credentials. That is a very important differentiator in this market. If you are going to carry government traffic, you better have information assurance capability and credentials. All of the ways you can technically differentiate yourself, we bring to the table. We also understand the end users’ requirement better than anybody else.
Can you elaborate on the point about information assurance?
Inmarsat Government offers secure communication solutions and managed network services to U.S. government customers that include all components of the link, network, hardware and services in an end-to-end chain. We operate a private, global backbone that is always on, with accredited extensions to secure government networks, and includes encryption allowing our customers to communicate securely and reliably, anytime, anywhere. The end-to-end path is designed to withstand device failures and facility outages and guard against proactive network intrusion from outside adversaries. Global Xpress will benefit from this same approach, as we are able to layer in security requirements in our architecture from the very beginning of the design and implementation of the program from a satellite space and ground network architecture perspective.
Does L-band have a future in the U.S. government market and if so, what is that future?
We believe that L-band mobile satellite services have a very important and robust future in the U.S. government critical communications services market, from asset-tracking applications to smaller, lower-profile mid-band communications, to mobile communications and safety services. We have also seen great advancements in traditional L-band services, driving throughput to broadband speeds.
What is the fastest-growing segment of the U.S. government market?
For satellite communications, it is airborne intelligence, surveillance and reconnaissance. That is just a function of the enormous amount of bandwidth that they need. That is the largest single driver. The other fundamental ones are network centric operations, expeditionary forces, and this idea of comms-on-the-move — those things are very important too.
How can you fully exploit the airborne opportunity given that most of the Pentagon’s unmanned aerial vehicle fleet is equipped for Ku-band services?
The move from Ku towards Ka is a fundamental long-term trend, as evidenced by the Pentagon’s massive investment in the Wideband Global Satcom system. Ka has superior performance qualities, particularly in the area of airborne intelligence, surveillance and reconnaissance requirements, and when offered as a uniform, global network, is designed for both mobility and reinforced with supplemental spot-beam coverage. Global Xpress will provide excellent complementary capabilities to that community.
What do you think about the future hosted payload market?
There is nothing specifically good or bad about hosted payloads. It is an opportunity that we would look at if it came to us. But we don’t see the need for it if you have the financial wherewithal and the confidence in your business culture to launch a constellation that effectively augments and complements a military satellite constellation. Nobody knows satellite mobility like Inmarsat and nobody has done it longer than Inmarsat. We are just taking it up a notch. We are open to the idea of hosted payloads but I don’t see a specific need for it, given the way that we are investing in and launching Global Xpress.
Is the market potential for hosted payloads overhyped?
I wouldn’t say overhyped. But I think that there are other ways to provide what the military is looking for that are less expensive for the military.
