WASHINGTON — Satellite fleet operator Intelsat has been unable to lease a UHF-frequency payload to the U.S. Defense Department despite nearly two years of effort, and whether it will ultimately secure a U.S. military customer in today’s budget climate is in question, industry officials said.
Perhaps more than any other company, Intelsat has made so-called hosted payloads the showcase example of its view of future relations between commercial satellite operators and the U.S. military.
The growing concern that Intelsat’s investment in a UHF-payload aboard its IS-27 satellite may not end well has some industry officials referring to what might be called the Xtar syndrome.
Xtar LLC of Rockville, Md., is a joint venture between Loral Space and Communications of New York and Hisdesat, a consortium of Spanish companies. Xtar launched two X-band telecommunications satellites a decade ago following verbal, but nonbinding, assurances from the U.S. military that it would purchase lots of Xtar bandwidth. X-band is a designated government frequency that has no commercial market.
As Xtar found out to its dismay, the U.S. Defense Department can be an unpredictable customer.
For multiple reasons, the big U.S. Defense Department order never came. Xtar has spent years trying to build its business without what was supposed to have been its anchor customer.
Xtar was the last thing Intelsat was considering in mid-2010 when it decided to add a UHF payload to its IS-27 satellite slated for launch at the end of this year or in early 2013.
In early 2009, Intelsat of Washington and Luxembourg had sold a portion of capacity from a similar UHF payload aboard the IS-22 satellite to the Australian Defence Force. A year later, the Australian customer added to its order with the decision to purchase the full IS-22 UHF payload capacity in a transaction that increased the total value of the Australian contract to $479 million.
IS-22 is on schedule for a launch into geostationary orbit over the Indian Ocean region at 72 degrees east in the coming weeks. Satellite builder Boeing Space and Intelligence Systems of El Segundo, Calif., which is also a believer in the hosted-payload model, points to the satellite’s quick delivery time as an example of a military customer benefiting from commercial practices.
“IS-22 is on schedule and on budget,” Stephen T. O’Neil, president of Boeing Satellite Systems International, said in a March 13 press briefing here at the Satellite 2012 conference organized by Access Intelligence LLC. “We are delivering the satellite 29 months after the ATP,” or initial authorization to proceed with the work. “Show me the last time you saw that in a government program.”
“We see too much money and too much time spent to bring into service government capacity” on government-owned satellite systems, Intelsat Chief Executive David McGlade said here March 13.
Intelsat was so pleased with its IS-22 experience that in mid-2010 it added a similar UHF payload to IS-27 in anticipation of demand from the U.S. military. The satellite is to be operated over the Atlantic Ocean region at 304.5 degrees east. Intelsat was certain that the U.S. Navy, whose next-generation UHF satellites are behind schedule, would grab the chance to secure the IS-27 opportunity.
It has not worked out that way.
“Did you not see what happened with this?” one industry official unaffiliated with Intelsat said. “As soon as it became clear that the Intelsat UHF offer was a threat to the Navy’s own satellite program, the Navy circled the wagons. IS-27 became the adversary. That’s the lesson to take away.”
Intelsat officials say they are still hopeful that a sale can be closed, with the U.S. Navy or some other customer, before IS-27 is launched.
Intelsat issued the following statement March 16 in response to Space News inquiries about IS-27: “In an era when space-based capabilities are increasingly important and in limited supply, Intelsat believes that hosted payloads offer a compelling alternative and complement to government programs. The IS-27 UHF payload has many potential government customers, U.S. and non-U.S. Thus, the question is not one of demand for the bandwidth.
“In our experience, some governments have been more open to moving aggressively into commercial solutions —and these are the entities that are achieving their missions in a more cost-efficient manner. Our soon-to-be-launched IS-22 satellite, which carries an on-time, on-budget UHF payload for the Australian Defence Force, is a great example of the benefits that accrue to those who are willing to challenge the status quo. Indeed, the U.S. government, recognizing the value of the IS-22 UHF payload, has entered into an agreement with the Australian government to use half of the payload for the life of the satellite.”