Lockheed Commercial Launch Unit Sees Potential in Hosted Payloads

WASHINGTON –
The U.S. Defense Department’s need for commercial satellite communications services – and its willingness to explore innovative partnerships with satellite operators
– is creating a new opportunity for commercial launches of Lockheed Martin’s
Atlas 5 rocket, which is used primarily
to loft
U.S. government payloads, according to a company official.

David Markham, president of Denver-based Lockheed Martin Commercial Launch Services, which markets the Atlas 5 to commercial customers, says the Pentagon’s interest in so-called hosted payloads aboard commercial satellites could drive business to his company. The Pentagon, he said, might insist that commercial satellites with U.S. military payloads on board be launched aboard U.S. rockets like the Atlas 5.

Hosted payloads aboard commercial communications satellites typically are transponders or other systems dedicated for U.S. military use. Under some hosting arrangements, the Pentagon would pay a satellite operator an up
front fee to include such payloads on their spacecraft.

“There is an interest on the part of the [U.S.] government in having those launched on U.S. launchers,” Markham said.

In an early application of the hosted payload concept, satellite operator Intelsat of Bermuda has agreed to include an Internet router aboard its Intelsat 15 spacecraft on behalf of U.S. Strategic Command. Intelsat 15 will be launched aboard an Atlas 5 during the second quarter of 2009, but that launch contract was signed before the company agreed to host the Internet Router in Space, or IRIS, payload.

Kay Sears, senior vice president for sales, marketing and
business development at Intelsat General, the Intelsat unit set up to sell services to U.S. government customers, said
the selection of
launchers will be complicated when a hosted payload is involved. She said
sometimes it will make sense to use a U.S.-based launch services company, but other times that might not be necessary.

Richard DalBello, Intelsat General
vice president of government affairs, said that while U.S. policy dictates that U.S. government satellite hardware
be launched aboard domestic
rockets
, the guidance with regard to hosted payloads
is not clear cut
. For example, if the government is merely leasing a transponder on a commercial satellite, it might be less concerned about who launches it than if the spacecraft carries a payload that the government paid for up front, he said.

In addition, the U.S. Secretary of Defense can waive sections of the launch policy, and U.S. space policy in general encourages the use of commercial services wherever possible, DalBello noted.
“There is a lot of flexibility that allows them to find a balance [among] competing policy needs,” DalBello said.

Markham said
Lockheed Martin intends to be as competitive as possible on price, but he and DalBello agreed
that price is not the only factor in a satellite operator’s choice of launchers.

“Price is important but it is just one business parameter. Schedule is also important,” DalBello said.

Although the Atlas 5 is more expensive than the non-U.S. vehicles that tend to dominate the commercial market, in some cases it is the best option for a company that needs to have its satellite up and operating at a certain time.

Markham noted that Atlas 5 insurance rates are among the most competitive in the industry and said
quality and launch record should also be major considerations in the selection of a launch services provider.

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