Pentagon Report Says Commercial Bandwidth is Four Times More Expensive than WGS

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WASHINGTON — A U.S. Defense Department study says buying bandwidth from commercial satellite providers is nearly four times more expensive than using military-owned communications satellites.

The study provides a counterpoint to the long-held position of commercial satellite operators that leasing is cheaper than buying, and illustrates the uphill challenge they face in seeking to change the way the Pentagon meets its satellite communications needs.

The report says the U.S. Air Force-owned and -operated Wideband Global Satcom system should remain a top priority and that the Defense Department should use commercial satellite bandwidth only when WGS capacity is not available.

Prepared by the Defense Department’s chief information officer, the “Satellite Communications Strategy Report” was distributed to the congressional defense oversight committees in September. It was ordered up in the National Defense Authorization Act for Fiscal Year 2014 and lays out broad plans for the Pentagon’s commercial satellite bandwidth purchases over time horizons of five, 10 and 25 years.

“The appropriate mix of DOD and commercial SATCOM bandwidth is to maximize the use of the less-costly, more capable WGS satellites and to use commercial SATCOM when WGS capacity is unavailable, when user demand exceeds the supply of WGS capacity or when the users’ ground infrastructure will only operate over commercial satellites,” the report says.

Nonetheless, the report also calls for a legal evaluation of multiyear leases, something commercial satellite operators have advocated for years as a way to bring down the cost of bandwidth and help them better tailor their fleets to the military’s needs. House members, including Rep. Mike Rogers (R-Ala.), chairman of the House Armed Services strategic forces subcommittee, have spoken out in support of that.

Pentagon officials insist they are bound by procurement rules to limit bandwidth leases to one year, something Rogers says has resulted in “bad rates.”

Commercial operators also say they can offer many of the same technical capabilities as the WGS satellites but at less cost to the military.

The report argues otherwise, saying the Pentagon paid about $14,200 per megahertz of WGS bandwidth in 2013, compared with $56,220 for comparable commercial bandwidth that year. In addition, since 2010, commercial bandwidth prices have risen more rapidly than WGS bandwidth — some 11.5 percent compared with 4.4 percent, the report said.

But the report also acknowledges there is room for improvement in the Pentagon’s bandwidth leasing habits and points to a series of experimental “pathfinder” programs as key to the Pentagon’s five-year strategy.

Under the first of the pathfinder contracts, awarded in June, SES Government Solutions of McLean, Virginia, will lease the full capacity of an aging satellite covering Africa to a Pentagon customer. A request for information for a second pathfinder, under which the Air Force will purchase a transponder before its host satellite is launched, was issued later that same month.

The report also appears to lend support to the idea, advocated by industry, that responsibility for meeting the military’s bandwidth requirements should be consolidated under one agency. Currently, the services, primarily the Air Force, procure and operate satellites while the Defense Information Systems Agency leases commercial capacity based on requests made by the services.

“Recognizing the variability of demand and the expected reduction of funding, the DOD may have to move toward a ‘shared resource’ model of usage, versus the current ‘my demand/my capacity’ separatist philosophy,” the report says.

The report also says a five-year strategy must include more funding for commercial satellite communications services. Currently, the Pentagon is using 10 times more bandwidth than in 2001, the report says, with most of the demand coming from the Middle East and Africa. However, the report says, the Pentagon still lacks a reliable means of measuring and predicting demand for commercial bandwidth in future years.

“With future reduced levels of [overseas contingency operations] funding, the DOD will need to review options for increasing the funding levels for current COMSATCOM demand in the baseline budget,” the report says.

Over the past decade, commercial bandwidth has typically been procured through accounts for so-called overseas contingency operations, which are funded through supplemental appropriations that fall outside the normal budgeting process.

The Defense Department’s 10-year plan calls for evaluating the successes and failures of experimental funding and contracting methods. The 25-year plan is largely ignored and likened to a “crystal ball” prediction.

The role of commercial operators in meeting the Defense Department’s satellite bandwidth needs will be the subject of an industry panel discussion at an Oct. 23 luncheon hosted by the Washington Space Business Roundtable here.