Profile: A New Game Plan Pays Dividends

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  Space News Business

Profile: A New Game Plan Pays Dividends

By TURNER BRINTON
Space News Staff Writer
posted: 14 October 2008
07:10 pm ET






Tom Eaton

President, Arrowhead Global Solutions

When Arrowhead Global Solutions was acquired by CapRock Communications of Houston in February 2007, Arrowhead gained access to a ground infrastructure it could incorporate into the communications solutions it offers the government. The gamble has paid off so far, with both companies seeing double-digit percentage growths in revenue for 2008 and expanding the services they offer.

CapRock Communications provides companies in the oil, gas and maritime industries with satellite and terrestrial communications in remote areas of the world. Fairfax, Va.- based Arrowhead is one of the three small businesses included in the Defense Satellite Transmission Services Global (DSTS-G) contract, which since 2001 has been the Pentagon’s primary vehicle for buying commercial satellite communications capacity. Arrowhead used to engineer communications solutions with a hodgepodge of other companies’ components. Today it can leverage the teleports, terminals and other ground hardware owned by its parent company, according to Arrowhead President Tom Eaton.

Arrowhead’s heritage is in satellite communications, but a big driver of the company’s future growth will be in its offerings to the government in the areas of terrestrial services and professional staffing support. The company now provides the access channels to the Pentagon’s Global Information Grid for all military locations in the eastern United States. Arrowhead also operates a Defense Department teleport in that formerly was manned by military personnel, Eaton said.

But much uncertainty lies ahead for Arrowhead and the satellite communications industry. New military communications satellites now are launching. The Pentagon is deciding how it wants to acquire commercial bandwidth after the DSTS-G contracts expire in 2011.

In addition, the supply of commercial Ku- band capacity now is drying up in some regions, recently leading the government to purchase a significant amount of commercial X-band capacity for the first time. Next- generation terrestrial capabilities could compete in the traditional domains of communications satellites.

Eaton has been running the company since October 2007. He previously served�� as president of PanAmSat subsidiary G2 Satellite Solutions. Eaton recently spoke about the future of the company and the industry with Space News staff writer Turner Brinton.

How will Arrowhead be different a year or two from now?

In three areas. As part of the CapRock family, our primary area of growth will be doing more with the investments our parent company has made in its global network infrastructure. Second, we’re not going to ignore the trend of outsourcing. Customers who rely on us for communications also want us to provide them with subject matter experts so we deploy people to theater when necessary to support satcom missions.

I see more of that for the Defense Department and the intelligence communities. And the third growth area is in terrestrial services. We’re extremely well-positioned as one of the providers under DSTS-G to provide terrestrial services and put all of the ribbons and bows around them to create an integrated solution.

The Defense Information Systems Agency (DISA) believes the new generations of military communications satellites will allow the Pentagon to draw down its use of commercial capacity. What balance do you see emerging?

There may be a drawdown on the capacity for the current set of applications, but as I step back and look at it, there are a couple of recent trends that don’t support that notion. While new satellites might supply some Ka-band applications, all they are doing is freeing up some Ku-band capacity. As soon as that Ku-band is freed up, it’s used for other applications. So I’m not so sure there’s going to be a significant drawdown or a significant decline in the reliance on the commercial market.

The largest task order in the history of DSTS-G was awarded earlier in the year for X-band capacity. So despite the fact that we have these new milsatcom deployments, there’s still an outreach to industry for satellite capability. Demand is going to continue to drive the requirement for commercial to augment milsatcom.

What future do you see for commercial X-band?

Commercial Ku-band has been the most ubiquitous, historically. Since the beginning of the year there’s been fairly sizable demand for commercial X-band and Ka-band capability. But it’s all related to what’s on the ground. What’s been deployed over the last five or six years is largely Ku-band for those assets that use the commercial fleets. So that’s a barrier that has to be considered.

The choice would be more Ku-band capacity, because we have the ground systems to support the missions. But if prices continue to go up and supply continues to decline, then what’s very unique about our contract vehicle is we have the ability to go out and look at other alternatives. So it’s really driven by what’s going to happen with Ku-band supply in the commercial arena.

DISA recently ran into a situation where it was not able to obtain the commercial Ku-band capacity it desired in a certain region. Is this an aberration or the beginning of a trend?

I personally believe it’s not an aberration. It’s something the operators have been predicting for some time. We need to be pragmatic about it. In the Defense Department world, there are really two or three predominant operators, Intelsat, SES and Eutelsat. But that doesn’t mean you’ve covered every possible option out there, and that’s where Arrowhead comes into play.

There’s not enough capacity available to meet the need. So I think there’s a bit of triage that’s going to have to take place. The mission that requires all that Ku-band capacity is critical.

With the new military assets that are being launched, there’s going to have to be some calculation of what you are going to take off of commercial and put onto milsatcom, freeing up the commercial and then using it for some of these requirements. So there’s a balancing act ahead of us, but I don’t see a huge change in the market bringing it back to the way it was around 2000 and 2001.

Planning is under way for the next DSTS-G contract. What direction is DISA likely to go for this contract?

If I could answer that question I’d be somewhere else making a lot more money. My sense is that there are a few things in the current contract vehicle that work well: the two-tiered competition and the small number of vendors. I think the way that success may manifest itself in the next contract is by having an optimized minimum number of providers allowed into the contract with a broader scope of what they can offer, including not only fixed satellite services but mobile satellite services and end-to-end services as well.

They’re smart people. If they believe it’s in their best interest to do some long-term buys in another way, they’ll certainly do that. But all of the data today, including the GSA [U.S. General Services Administration] reviews, indicate the current vehicle has worked extremely well for the Defense Department. Even in today’s environment of tightened capacity, there are benefits in the current construct.

Is the need for commercial capacity increasing in and decreasing in ? Where else is the demand changing?

We haven’t seen a real decline in , but there has been increased demand in . We’re seeing a lot of growth in other parts of the world like and the Asia-Pacific region.

We’re also doing a lot more business today in the intelligence community than we were two or three years ago. The intelligence community customers are in extremely remote locations and need rapid deployment capability for tactical operations.

See full profile on www.spacenews.com.