Op-ed | Contracts Will Determine Value of Hosted Payload Alliance

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The formation of the Hosted Payload Alliance in April by seven companies seeking to educate government representatives about the value of using commercial satellites to carry payloads into orbit will be a success if they can produce contracts that they otherwise could not have obtained.

Companies engaged in space and satellite businesses lack the political clout in Washington of bigger industries, such as banking, insurance, cable and telecommunications. When companies in the comparatively tiny satellite and space industry have competed with bigger industries in public policy debates, the behemoths would outgun them with well-funded political action committees and heavyweight lobbying teams.

In vying to carry hosted payloads on commercial satellites, there is no competitor from outside the industry to battle. For that reason, the alliance seems to be a cost-effective way to fulfill its mission of creating an open dialogue to address policy and program issues affecting hosted payload initiatives.

The seven companies involved in the alliance are seeking to win contracts that might not go to any of them if they cannot make a compelling case for governments around the world to forgo building and launching dedicated satellites. Instead, the company representatives want governments to order payloads that will hitch rides into space on commercial spacecraft.

Two of the main reasons for letting commercial spacecraft host government payloads are to save money and to reduce the amount of time needed before the desired capabilities can be provided. Both are compelling value propositions.

Of course, the companies themselves will compete on cost, technology, competence, speed to deployment and other factors. For now, they can tout their collective capabilities to sway government representatives to use commercial satellites, but the cooperation will end quickly once the companies begin competing for the same contracts.

The alliance’s creation marks a stark contrast to the days more than a decade ago when multibillion-dollar low-Earth-orbit satellite systems such as Iridium and Globalstar practically turned pointing out the shortcomings of the other into a blood sport. While questions arose almost immediately about whether either company ever could recoup the enormous costs of building global satellite constellations, the two fierce rivals zealously pummeled each other with verbal attacks in the media. In the end, both filed for Chapter 11 bankruptcy court protection. Ironically, restructured Iridium is part of the alliance.

Direct competitors in the satellite industry have found common ground to their mutual benefit. DirecTV and EchoStar Communications outlasted industry rivals to become a satellite TV duopoly that lured customers from entrenched cable TV operators. The satellite TV service providers, their equipment suppliers and various dish dealers formed the Satellite Broadcasting and Communications Association to represent the interests of the consumer satellite industry.

Another voice in the Washington policy mix is the Satellite Industry Association, a trade association formed to represent global satellite operators, service providers, manufacturers, launch services providers and ground equipment suppliers. Founded in 1995, the association has taken stands on policy, regulatory and legislative issues affecting the commercial satellite industry. The association promotes the benefits and uses of commercial satellite technology and its role in the economy, national security, homeland security, disaster relief and recovery, and the global information infrastructure.

The Hosted Payload Alliance is a narrowly focused group that currently is keeping its costs at a minimum by refraining from hiring a professional staff and instead conducting its business through the representatives of its seven member companies. The alliance formed as a response to the 2010 U.S. National Space Policy that called for increased use of public-private partnerships with the commercial space industry to meet mission requirements.

Rather than engage in lobbying, the alliance takes an educational approach, said Don Thoma, chairman of the alliance and executive vice president of marketing at Iridium. The National Space Policy indicated that hosted payloads are a viable option that should be promoted, but there has not been a “50-year history” of getting access to space on commercial spacecraft, he explained.

The value of the alliance will be proved if it builds awareness of the industry’s capabilities; increases the number of hosted payloads that come to fruition; and raises the interest level in such arrangements by governments through requests for information and requests for proposal, Thoma said.

Naturally, engineering and management challenges exist in forging successful partnerships between government agencies and private-sector satellite companies. But the prospects for the companies seeking hosted payload contracts are improving as governments cut spending and search for cost-effective ways to launch payloads.

The competitors teaming up as alliance members to ensure governments turn to them to meet their communications needs are: Boeing Space and Intelligence Systems; Intelsat General Corp.; Iridium Communications Inc.; Lockheed Martin Space Systems; Orbital Sciences Corp.; SES World Skies U.S. Government Solutions; and Space Systems/Loral.

Hosted payloads allow governments to address long-term communication requirements economically. If the alliance smoothes the path for governments to secure rides into space for their communications payloads, it will prove its mettle.

The initiative sure beats the approach of Iridium and Globalstar in the 1990s to batter each other with damaging public statements to the detriment of both fledgling companies. They now provide a lasting example of what not to do.

Paul Dykewicz is a satellite industry journalist who has covered the development of satellite television, satellite radio, satellite broadband and hosted payloads. He writes a weekly blog at hostedpayload.com