DoD Satcom: Big money for military satellites, slow shift to commercial services
The Pentagon plans to spend nearly $13 billion over the next five years to develop and acquire military communications satellites.
According to U.S. Department of Defense budget documents, this large investment supports growing demands for connectivity and secure data networks across the U.S. armed forces and national security agencies. The 2023-2027 spending plan includes funding for the Pentagon’s first-ever low Earth orbit broadband constellation and smaller numbers of bespoke communications satellites to augment or replace existing systems.
These procurements of bespoke satellites, analysts and industry executives told SpaceNews, appear to run counter to government claims that DoD is poised to transition away from traditional satellite procurements toward greater reliance on commercial space services.
“I think it’s fair to say that this budget doesn’t reflect a pivot to a greater adoption of commercial capabilities in lieu of government-owned and operated capabilities,” said Mike Tierney, industry analyst at the defense and aerospace consulting firm Velos.
Unlike satellite acquisitions, commercial satcom services are funded through revolving accounts on a year-to-year basis and are not forecast in budget line items, Tierney noted, so it’s difficult to predict future buys.
Lt. Gen. Michael Guetlein, commander of Space Systems Command, which oversees Space Force satellite procurements, said he is pushing for change in a culture that favors building systems in-house. The goal is to “buy what we can and only build what we must,” he said. “You will start to see that shift, year to year, as we go forward.”
The satellite acquisitions funded in the Space Force budget, he said, reflect priorities vetted and approved by the Joint Chiefs of Staff.
“The one thing that is always needed is more comm,” he said. “We never have enough comm to get after what we need to do. We need more comm to support the fight.”
Guetlein said the satellite industry could expect more commercial satcom opportunities in the coming years.
The U.S. Space Force’s Commercial Satellite Communications Office (CSCO) said it plans to award nearly $2.3 billion in commercial satcom contracts over the next two years. CSCO buys commercial satcom capacity and services for the U.S. armed forces and allies.
The largest of the commercial opportunities is an $875 million multiple-award deal for low Earth orbit satellite broadband services over 10 years.
The Space Force, in a 2020 vision document, said satcom should be an “integrated enterprise” of military and commercial systems. According to the document, “for those frequency bands, coverage areas or specialized capabilities not offered by the commercial satcom industry, purpose-built constellations and payloads will be acquired.”
Making these buy-vs-build decisions “requires a little bit of calculus,” said Guetlein. “We’ve got to really understand how that capability is going to be used in the future, in a time of crisis or time of conflict. And can I depend on that capability?”
“If I cannot guarantee that it will be there when I need it, then I probably need to own it, not lease it,” Guetlein said. “If industry can guarantee that that capability will be there in times of crisis or conflict, then I can probably buy those services. And I would rather buy those services than have to go build something myself.”
One reason to buy commercial satcom services is that it adds layers of resilience, he said. “In a conflict, it gives us proliferation. It gives us redundancy across our networks.”
At a time when U.S. adversaries are stepping up cyber attacks that threaten terrestrial and satellite-based networks, said Guetlein, the Space Force and its satcom suppliers will be taking a “holistic approach to cybersecurity and not just look at it in stovepipes.” NEW
The projected $13 billion worth of satellite procurements in the 2023-2027 defense budget pay for a mix of strategic and tactical communications systems.
The lion’s share is for the Evolved Strategic Satcom, or ESS, program. The Space Force plans to spend $5.5 billion over five years to continue the development of three proposed payloads and ground system concepts from Boeing, Lockheed Martin and Northrop Grumman. The companies are expected to complete prototype designs by 2025 and conduct in-space demonstrations. The Space Force said it plans to field ESS in the early 2030s.
The ESS will provide highly secure communications lines for the most sensitive national security operations, including nuclear command and control.
Another big-ticket item in the budget is $2.2 billion for narrowband satellites. The Space Force is looking to buy two more Mobile User Objective System (MUOS) satellites that provide Ultra High Frequency (UHF) communications.
The U.S. Navy acquired four MUOS satellites — made by Lockheed Martin — plus an on-orbit spare launched in 2016. The program has since been transferred to the Space Force. MUOS supports mobile users with voice and low-rate data transfer. Because the satellites are oversubscribed, DoD wants to buy two more.
The Space Force is conducting an analysis of alternatives before it decides whether to buy two more MUOS or opt for a new design. A Lockheed Martin spokesperson said the company has kept its production line warm and is “ready for the next acquisition.”
For secure tactical communications, DoD is budgeting $2.5 billion for Protected Tactical Service (PTS) satellites and a ground system called Protected Tactical Enterprise Service (PTES).
Boeing and Northrop Grumman are developing PTS payloads and Boeing is also the PTES prime contractor. Both companies are expected to launch prototype payloads in 2024 for on-orbit demonstrations.
The ESS and PTS constellations are intended to augment and eventually replace the Advanced Extremely High Frequency (AEHF) satellites made by Lockheed Martin. The sixth and final AEHF satellite was launched in March 2020.
The AEHF satellites carry strategic payloads, which must be able to operate in a nuclear war environment, and tactical payloads for battlefield use. The plan is to disaggregate the capabilities of AEHF into the ESS for strategic communications, and the PTS for tactical users.
The Space Force said the ESS satellites will provide polar coverage, which AEHF does not. The military today relies on two Northrop Grumman-developed Enhanced Polar System satellites to extend the AEHF network over the North Pole.
While military satellites have mostly operated from geostationary orbits, the Pentagon is now for the first time building its own broadband constellation in low Earth orbit that will connect users across the world. The Space Development Agency, which is overseeing the project, is budgeting $2.7 billion over five years for the Transport Layer, a mesh network expected to have hundreds of small satellites.
Even though there are commercially available broadband services, DoD’s requirements are unique, said SDA Director Derek Tournear. The Transport Layer satellites, for example, have to be interoperable with the Link 16 tactical data link protocol that is only used by the U.S. military and allies. “There’s no commercial market for Link 16 as far as I know. So that’s one of the areas where it is mission specific to the DoD,” said Tournear.
INTEGRATION OF MILITARY AND COMMERCIAL
The five-year budget plan includes $257 million for “commercial satcom integration,” a funding line Congress created in 2019 in response to backlash from the commercial satcom industry after appropriators funded a new Wideband Global Satcom (WGS) satellite that DoD did not request. Congress added $600 million in 2018 for WGS, arguing that the Air Force at the time was not providing sufficient satcom capacity to meet user demand.
The integration line “is not huge dollars, and it’s not to buy commercial capacity, it’s just to develop standards and interfaces for the department to plan the architecture,” said Tierney, the industry consultant.
So far, it is not clear that the desired hybrid networks are any closer to becoming a reality, he said. The priorities in the budget suggest that DoD remains heavily invested in military satcom and will rely on commercial services as a “relief valve” when it needs additional capacity.
“The giant pivot people were hoping for is just not happening, at least not as quickly as commercial operators would have liked,” Tierney added.
During a panel discussion at an Air & Space Forces Association conference in March, Guetlein said there’d been a running dialogue on how DoD should operate with commercial space systems during a conflict. “When we were in Afghanistan and Iraq, it was clear to us what was military, what was intelligence, what was commercial, what was allied,” he said.
But the lines between government and commercial could become more blurred if DoD starts buying more commercial services, Guetlein said.
“As we start going into the space fight and seek space superiority, there are those in a camp that says the government has to own all the capability on orbit,” he said.
Some factions in DoD perceive commercial systems as being less cyber-secure than government-owned systems, but that thinking will change as the commercial sector continues to develop novel solutions to protect networks, said Keith Alexander, founder and chairman of IronNet, a cybersecurity consulting firm.
Alexander, a retired Army general and former director of the National Security Agency, said satcom providers have to gradually build trust with government customers much like commercial cloud providers Amazon Web Services and Microsoft Azure did more than a decade ago when they started to pursue military and intelligence contracts.
Questions about the security of commercial systems “was a big issue that we had with the cloud,” said Alexander. The government eventually warmed to the idea that it could have a “top secret cloud with a commercial vendor. I think showing that we can do the same thing with commercial satellite communications will get us to the same place.”
COMMERCIAL SATCOM INVESTMENTS
Peter Hoene, president and CEO of SES Government Solutions, said the industry is investing billions of dollars in new capabilities and DoD should be taking advantage of them.
SES, an operator of geostationary and medium-Earth-orbit communications satellites, will be adding 11 high-capacity broadband satellites to its MEO constellation between 2022 and 2025.
“Commercial satcom will likely never be a significant player in nuclear command and control and some other high-end missions,” Hoene said, but for the bulk of its satcom needs, DoD should be using commercial systems.
The Space Force procurement office, CSCO, needs to “explore effective ways to adopt longer term contracts, purchasing commercial satcom more like fiber,” he added. CSCO so far “has not met industry expectations to explore deeper partnerships to ensure critical capacity is available to the warfighter when and where they need it,” Hoene said. “The acquisition process and the way the department procures commercial satcom is not where we believe the DoD needs to be.”
SES in March made a major move to expand its military business with the $450 million acquisition of satcom integrator Leonardo DRS Global Enterprise Solutions, one of the largest providers of commercial services to the U.S. government.
Hoene said this acquisition allows SES to partner with other companies in order to meet DoD demands for multiorbit satcom.
“The satellite communications market is becoming increasingly competitive, particularly with the entrance of low Earth orbit providers like Starlink, OneWeb, Telesat and Amazon Project Kuiper,” he said. “We see the importance of integrated GEO-MEO-LEO and managed service solutions for DoD customers.”
CULTURE IS HARD TO CHANGE
Craig Miller, president of Viasat Government Systems, said the industry would have liked to see in the 2023 budget an “increased focus on commercial satellite communications, although we are seeing some motion in that direction.”
“For many years, we’ve been talking to the Air Force when they were in charge of this, and now with the formation of the Space Force, we’re working very hard to get them to understand the value of commercial,” said Miller.
Viasat is a global provider of satellite broadband and is looking to sign up military customers for its new Viasat-3 geostationary constellation of three highcapacity satellites. The first ViaSat-3, projected to launch in late 2022, will cover the Americas, to be followed later in the year by a second satellite to service Europe, the Middle East and Africa. A third satellite will cover Asia.
DoD could save money by using high-capacity commercial satellites for tactical communications instead of buying systems like PTS, said Miller. “ViaSat-3 absolutely can meet the requirements of that system and the anti-jam requirements that are associated with that.”
There are other commercial LEO, MEO and GEO systems coming online that could meet the PTS mission, Miller added.
For narrowband L-band communications, there is Iridium and Inmarsat, although they couldn’t replace MUOS because the military uses the UHF frequency band, and that spectrum is owned and operated by governments.
A spokesman for Iridium said the company’s mobile communications network could supplement MUOS coverage in the polar regions. The company in 2019 won a seven-year $738.5 million DoD contract for unlimited usage of Iridium narrowband devices for an unlimited number of subscribers.
“Since users are already on the contract, it’s an affordable option for the Iridium network to complement MUOS with Iridium narrowband services,” said the spokesman. “We have already tested the capabilities of voice-to-voice calls from Iridium devices to MUOS.”
One problem facing commercial vendors is that DoD buyers often are not aware of what the market offers, Miller said. “We’re really optimistic that they’ll open their eyes to the value of commercial satcom and they use it because they’ll see how effective it is. I think part of it is that they don’t quite know what it’s capable of yet.”
“Culture change is really hard,” Miller said. DoD doing “more of the same rather than doing something new is normal. But all in all, I think that we will see more adoption of commercial.” DoD’s strategy to build a global network known as “joint all-domain command and control” requires massive communications pipelines for data sharing that can’t be achieved only with government systems, Miller noted.
“When you think about a future peer conflict with China,” Miller said, “we have to be in a position where we can leverage our commercial technological advantage and then spend our defense dollars on the things that absolutely need defense dollars, and not duplicate things that are being developed in the commercial market.”
Brad Grady, space industry analyst at Analysys Mason, said satellite operators are encouraged by the military’s interest in commercial satcom but there are still underlying frustrations that the rhetoric doesn’t match the budget actions.
“They keep talking about how Starlink was really awesome in Ukraine, that they could do this anti-jam stuff,” Grady said. Commercial operators wonder if this might serve as a justification for buying more commercial LEO services but it appears to be more of a validation for the procurement of the SDA Transport Layer, he said. “It kind of reinforces the mindset that LEO is great, therefore, we need to own it.”
A message to be gleaned from what is happening in the world — and the increasing awareness of the value of space systems — is that DoD will remain an important customer for the satcom industry, said Grady. “Even though commercial business such as cruise ships and airlines are becoming more important, governments and militaries will still be key players in this market.”
This article originally appeared in the June 2022 issue of SpaceNews magazine.