DoD Urged To Sign Long-Term Commercial Satellite Contracts

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The man in charge of selling SES Americom’s satellite services to the U.S. government added his voice last week to the industry chorus urging the U.S. Defense Department to stop wasting its money and start buying satellite time with contracts of five years or even longer.

The Pentagon currently buys its commercial satellite capacity and related services on a year-by-year basis that fails to give satellite operators the assured revenue stream they need required to justify the launch of additional new satellites, said David Helfgott, president and CEO of Americom Government Services , a business unit of Princeton, N.J.-based satellite operator SES Americom, which itself is an arm of SES Global, the world’s largest commercial satellite services company.

Speaking at the Washington Space Business Roundtable luncheon June 23, Helfgott said there is a real risk that the Defense Department will need capacity during a critical time only to find that none is available.

Were it not for the fact that Paris-based satellite operator Eutelsat has the equivalent of nearly one-and-half unused satellites with transponders that can provide service in the Middle East, the Defense Department would not have been able to obtain the bandwidth it has needed in recent years for military operations in the region, Helfgott said.

Rather than wait for a crisis and hope capacity is available, the Defense Department needs to revamp its existing policies to agree to long-term commitments much the way that commercial broadcasters do, Helfgott said.

“DoD’s biggest problem is that it cannot predict the next war and say: ‘Give me 100 transponders over Ruritania from 2010 to 2020′,” said speech attendee David Whalen, a vice president of satellite systems consulting with IOT Systems LLC, of Clarksburg, Md. “With a few accidental exceptions, satellite operators cannot put coverage into effect in any geographic area — even with five years’ notice. The sky is already full.”

Major broadcasters, such as NBA, Viacom and the BBC, often buy transponder capacity for the life of a satellite, Helfgott said. The Defense Department and other U.S. government agencies may not be able to make such lengthy commitments, but multi-year pacts certainty would give the government the best value for its money, he explained, noting that the Defense Department now often uses the auction-style spot market pricing that causes it to pay the highest possible prices for capacity.

Network-centric warfare is driving demand for commercial satellite services for applications that include imagery, video and unmanned aerial vehicles. However, a long-term gap in wide-band capacity is forecasted and the only way to fill the void would be with commercial satellites, Helfgott said. He acknowledged, however, that gaining long-term satellite transponder contracts from the Defense Department will be a tough “nut to crack.”