Pentagon Urged To Budget for Commercial Satcom

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WASHINGTON — With the White House signaling its intent to gradually reduce the use of supplemental appropriations to fund military operations overseas, commercial satellite operators continue to urge the U.S. Defense Department to provide dedicated funding for their services in the baseline defense budget.

For the last several years, the Defense Department has relied on commercial services for some 80 percent of its global demand for satellite connectivity, and in regions such as Southwest Asia that percentage could be even higher. The Navy is the only U.S. military service that budgets annually for commercial satellite communications services; the rest of the military has been paying for commercial services primarily out of supplemental war funding, which will account for about 20 percent of the Pentagon’s $636.3 billion budget this year.

As supplemental funding is reduced, the Defense Department should develop a more comprehensive strategy for providing satellite communications services that involves both military and commercial craft, said Rebecca Cowen-Hirsch, vice president of global government services for London-based satellite operator Inmarsat.

“There is a real opportunity, and obligation from a taxpayer perspective, for the department to look holistically at how it provides an integrated communications capability,” Cowen-Hirsch said in a Jan. 6 interview. “As a provider of this critical resource, we’re interested in where the department is heading with integrating an architecture that takes the greatest advantage of and funds for commercial satcom as an essential component of the communications architecture.”

Satellite operators are widely in agreement on this issue because predictable funding profiles would enable them to better tailor their fleet infrastructure to meet government needs. With cancellation of the Air Force’s Transformational Satellite communications system last year, the military has no firm plans to develop a next-generation satellite communications system, and thus should be even more inclined to work with industry to ensure the proper features are built into new commercial satellites, said Bill Schmidt, vice president of government services for satellite operator Xtar LLC of Rockville, Md.

“From an industry standpoint, building, launching and operating satellites is a pretty expensive proposition,” Schmidt said in a Jan. 7 interview. “If we are to build to meet military requirements, then we need to have some idea as to what the military needs and when they need it and where they need it.

“In the commercial world you don’t just go to your investors and say, ‘I want to put up a satellite,’ because they’re going to ask you the usual business questions. And if there’s no long-range funding with that requirement, then it makes it real tough to build that business case. So the capacity that is built and launched tends to be driven by the commercial marketplace, and the military ends up with capacity that may or may not be appropriate for its uses.”

But because of the short-term nature of the Defense Department’s budget process and the uncertainty of how much commercial capacity will be needed and where, creating a dedicated funding line for commercial satellite capacity in the baseline defense budget may be a difficult task, Tip Osterthaler, president of satellite services provider Americom Government Services of McLean, Va., said in a Jan. 7 interview.

“I have often heard commercial satellite industry people advocate the creation of a [defense] budget line item to fund commercial satellite capacity purchases,” Osterthaler said via e-mail. “The problem that the industry struggles with is that satellite capacity is now normally purchased out of annually appropriated operations and maintenance accounts or supplemental appropriations which are also inherently short-term, and those purchasing processes make it hard for satellite operators to plan ahead.

“The proposed industry single-line-item solution would reduce uncertainty and help ensure an adequate return on investment,” Osterthaler said. But it would be a great challenge to get each of the many organizations within the Defense Department that rely on commercial satellite capacity to accurately forecast and budget for their needs, he said.

“While it would not be impossible to create a single line item, another reality is that commercial satellite capacity demand is often driven by contingency operations that are inherently unpredictable,” Osterthaler said. “In short, the often-heard industry suggestion may not be entirely practical.”

Even if a single line item in the defense budget for commercial satellite services is not practical or feasible, it is very much in the Pentagon’s interest to come up with some alternative to its current practice, lest it find itself in a situation where the capacity it needs is not available, Osterthaler said.