New Boeing Unit Focused on Hosted Payload Market
PARIS — Boeing Satellite Systems International on Feb. 22 announced it is forming a new division to market to the U.S. government extra space on satellites the company builds for commercial satellite fleet operators.
In a conference call announcing the creation of the Boeing Commercial Satellite Services division, Boeing officials said they hope to turn what has been an episodic business in selling “hosted payload” capacity into a regular service. They described several scenarios for how it would work.
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In one scenario, which Boeing transformed into a four-satellite order with Intelsat of Luxembourg and Washington, Boeing would provide technology enabling its commercial satellite customer to offer hosted payloads to government customers.
Boeing is building for Intelsat a standard commercial telecommunications satellite with a UHF-frequency hosted payload owned by Australia’s military. A second Intelsat satellite features a similar payload for which Intelsat has no announced customer. Both satellites are under construction. In both cases, Boeing’s role is limited to that of a hardware builder.
A second scenario is one Boeing used with London-based mobile satellite services provider purchase 10 percent of the capacity on Inmarsat’s Ka-band Global Xpress spacecraft for the satellites’ first five years of operations. Boeing expects to sell this capacity to U.S. government customers. Boeing also has agreed to sell a portion of Inmarsat’s L-band capacity on existing satellites, a contract that Jim Mitchell, Boeing vice president for commercial satellite systems, said would be signed in the coming weeks.. To clinch the three-satellite deal, Boeing offered to
In a third scenario, Boeing would purchase the right to find and manage a hosted payload customer at the time it sells a commercial satellite to an established fleet operator.
Steve O’Neill, president of Boeing Satellite Systems International, said the new services division is ready to use Boeing resources to purchase such spare capacity well in advance of having a customer standing by. In this case, Boeing would pay the satellite’s owner a fee for making power and space available on the satellite, and a percentage of the satellite’s launch costs.
“We’re not just packaging existing C- and Ku-band capacity and selling it” to the government, Mitchell said during the conference call.
Craig Cooning, chief executive of Boeing Satellite Systems International, said the new endeavor should be seen in the context of what Boeing views as the start of a decline in U.S. military spending, a development that is forcing Boeing to take a fresh look at the commercial satellite market. Cooning said Boeing Space and Intelligence Systems, which includes the satellite division, derives 82 percent of its revenue from government customers, and just 18 percent from commercial work. But not long ago, he said, the ratio was 90 percent to 0 percent.
Hosted payload opportunities, Cooning said, permit government agencies to field sensors in three years or less, for substantially less money than they would pay if they opted to build their own satellite.
Cooning said the services division now counts about 20 people and will not grow much beyond 40 employees. Currently stationed in El Segundo, Calif., with the rest of the satellite division, the services team likely will be moving to the Washington region to be closer to its intended customer.