Industry executives who want their commercial satellites to gain a reliable, supplemental revenue stream by hosting government payloads on their spacecrafts need to ensure the compatibility of both missions before undertaking such cooperative arrangements. That coordination requires meshing geographic coverage and technical and operational requirements to meet the needs of both the operator and the hosted payload customer.
Satellites built for operations that have a tight cash flow will gain proportionately greater advantages from hosted payloads. To that end, the most promising hosted payload partners include remote sensing satellites and spacecraft that offer specialized communications transponders for small countries. An advocate of that view is Stephen Blum, president of Tellus Ventures Associates, a Marina, Calif.-based consulting firm. A key reason that remote sensing satellites are possibilities for hosted payloads is that the revenue streams provided from such services are not so high that they preclude accommodating a guest payload onboard.
“For example, a remote sensing payload might be for the commercial imagery market or the government/research sectors, such as intelligence gathering or weather tracking,” Blum said. “The revenue from that business might be in the millions or tens of millions of dollars a year, maybe even the hundreds of millions if it’s a killer app, but not in the billions or tens of billions.”
In addition, a big benefit for a payload to be hosted on a geostationary satellite rather than launched into low Earth orbit (LEO) on a small satellite is to gain a far superior look angle that could cover as much as one-third of the Earth’s surface. Hosted payloads placed in geostationary orbit, roughly 36,000 kilometers above the equator, span a much greater geographic area than a satellite positioned only 500 km to 2,000 kilometers above the Earth.
Despite the allure of government revenues to justify the business case for a satellite launch, not all potential alliances are worth pursuing. With billions of dollars in cash flows at stake with high-power satellite television services, direct broadcast satellite (DBS) providers DirecTV and EchoStar Communications may be the worst candidates to host payloads, Blum said. No government payload would be able to offer enough revenue for a DBS company to forgo what it could obtain from its own business.
But even remote sensing companies have challenges to overcome for a hosted payload arrangement to make business sense.
A hosted payload arrangement needs a cost-effective strategy and limited technical complexity to ensure compatibility, said William Schuster, chief operating officer of, a Herndon, Va.-based space imaging company. If a hosted payload agreement is structured properly, potential problems can be averted, he said, but achieving seamless service for both missions requires preparation.
When a spacecraft intended for one purpose ends up hosting a payload that has another mission, advance discussions are needed between both sides to decide what will happen if any on-board system fails prematurely. A plan needs to be agreed to in advance by each side about what happens to both missions if anything goes awry.
It also is possible that either side may need to compromise on the launch schedule if delays occur in the construction and delivery of the host satellite or the payload that it will carry. In addition, a launch failure involving the vehicle that is scheduled to lift a hosted payload into orbit may limit the alternative launchers that could be used if the satellite operator is contracted to carry a U.S. government payload that requires special security measures.
For example, military payloads would face the same schedule and replacement issues as commercial satellite companies in a hosted payload arrangement. Military leaders who are accustomed to having total control of a satellite would need to be able to accept the constraints of working with a partner if they wanted to put a payload on a commercial spacecraft.
With U.S. government spending cuts on the horizon, hosted payloads will offer a way to deploy needed capacity on orbit more cost effectively than could be achieved by sustaining the higher expenses of building and launching a dedicated satellite. However, strict discipline needs to be exercised to ensure that only missions that make financial sense and involve acceptable compromises for each side become reality.
Paul Dykewicz is a seasoned journalist who has covered the development of satellite television, satellite radio, satellite broadband and hosted payloads.