In the decade since mobile satellite services operator Inmarsat was first granted broad access to the U.S. government market, the company has become a dominant player, bringing in more than a quarter of the estimated $750 million the federal government spends each year on commercial satellite capacity.
Originally established as a nonprofit organization to provide satellite services to the maritime community, London-based Inmarsat was privatized in 1999. The company operates a fleet of 11 L-band communications satellites along the geostationary belt, and it sells its services to government and commercial customers through hundreds of resellers around the world.
The company’s three newest satellites, which comprise the Inmarsat 4 constellation, were launched between 2005 and 2008. Those satellites deliver the Broadband Global Area Network (BGAN) service, which provides connectivity rates up to 492 kilobits per second to mobile land, maritime and aeronautical users. Inmarsat in 2012 plans to launch another L-band satellite in partnership with the European Space Agency, and the company is keeping a close eye on government needs as it contemplates its next-generation constellation.
In June the company will debut its first global satellite phone, manufactured by Stratos Global of Bethesda, Md., which Inmarsat acquired in 2009. Inmarsat also plans to enter the asset tracking services market through its acquisition of SkyWave Mobile Communications of Canada, which it bought last year.
Inmarsat’s business with the U.S. government is now in flux as the U.S. Navy will soon transition from Inmarsat’s L-band fleet services to wideband X-, C- and Ku-band services. The new services will be provided under the new Commercial Broadband Satellite Program contract that was awarded to a U.S. subsidiary of satellite operator Intelsat, and subsequently protested by three companies, including Inmarsat subsidiary Segovia Inc. The protest has not been resolved.
Meanwhile, the U.S. Defense Information Systems Agency (DISA), which procures satellite services for the other military services, will soon begin use of a new, more flexible contracting vehicle for buying commercial satellite bandwidth and services.
Helping Inmarsat navigate these changing market conditions is Rebecca Cowen-Hirsch, who joined the company in late 2008 as head of its Washington-based Government Services division. Prior to that, she spent 20 years at the U.S. Department of Defense, most recently serving as the lead for commercial satellite communications acquisition at DISA.
Cowen-Hirsch recently spoke with Space News staff writer Turner Brinton.
How much of Inmarsat’s business is government related?
Inmarsat’s revenue was a bit more than $1 billion last year, and our government business is on the order of 40 percent of that. It’s predominantly defense-related, and the U.S. government accounts for roughly half of our government revenue across the company. Our other major government customers include the United Kingdom, Australia, Japan, South Korea, Singapore and other navies.
The Pentagon has a growing need for communications-on-the-move capabilities. Can the BGAN service satisfy all of the requirements for tactical war fighting?
The BGAN service is ideally suited for the tactical communication operations. The gear is small, about half the size of a laptop, and our satellites and user terminals are fully capable of operating with every standard encryption, whether it’s commercial grade or military grade. We’ve had some very innovative capabilities developed over time. We have a watertight Pelican case that we developed with one of our manufacturing partners that includes a BGAN terminal and a ruggedized laptop with fully embedded cryptography. You can put it on an aircraft or boat and take it wherever you need a deployed land-mobile terminal.
Additionally, the Pentagon’s Ultra High Frequency communications satellites are 500 percent oversubscribed. The next-generation Mobile User Objective System won’t be launched until 2011, and then it will only be accessible for a time period with the legacy capability as the next-generation terminals lag behind. So there’s a place for BGAN to continue to support critical tactical communications as a gap-filler and a complimentary capability today and even after that new system comes online.
The BGAN service became available worldwide last year after the satellites were repositioned. Have you seen subscription increase since then?
Last year our BGAN service grew 33 percent in terms of revenue. The number of users and deployed terminals increased correspondingly. We’re starting to see the shift from our legacy capabilities into the Internet Protocol, data-centric family of services. But there are a number of users still enjoying the Global Area Network, our preceding service, and it’s our objective to help those users over time transition to BGAN. They’ll get far better data rates and throughput.
Has the U.S. Navy begun to draw down its use of L-band Inmarsat services?
The Navy recently awarded the Commercial Broadband Satellite Program contract to Intelsat General, requirements for which drove the service toward a wideband solution. Inmarsat will not be a part of that program. As that contract was protested, we have not yet seen a drawdown of our services. While we anticipate some of that leased traffic will decrease over time, we recognize that the coverage of the wideband capabilities is not global, and L-band gets through when you need to get through, whether it’s adverse sea conditions, high humidity, etc. We fully anticipate it will continue to be used by the U.S. Navy. And other navies have increased their use of the services.
Has the U.S. Navy told you how much it anticipates buying from you in the future?
We are aware of what their plans are and we’re working to make sure their needs are met. I won’t give their specific expectations.
The Inmarsat resellers contract that DISA now uses will be replaced in 2012 by the Future Comsatcom Services Acquisition. How do you anticipate this will affect your Pentagon business?
As a satellite owner and operator, Inmarsat will maintain its wholesaler status under the new contract. So we will not directly contract and sell to the government. We will continue to rely on our service providers to engage as our retail arm.
The new contract will have three tiers: one for pure bandwidth, one for subscription-based services and an indefinite-delivery, indefinite-quantity aspect for managed network services. We fully anticipate Inmarsat services will be available through all three tiers of the contract.
Have you seen any changes in the way the U.S. government buys or budgets for commercial satellite services?
Sadly, there have been no changes. One of the challenges I think for the federal government going forward is making sure commercial satcom is budgeted for. Today, the vast majority of satellite services including Inmarsat’s are acquired via supplemental funds. While we know those funds will be available for use in 2011, for the out years that remains unclear. Commercial satcom is a critical part of war fighting operations.
From the perspective of someone who has worked this from the government side, where do you see the roadblock here?
DISA doesn’t have responsibility to fund satcom acquisition; they are the storefront where you actually go to buy it. And right now with what they’re putting forward it looks as though they’re viewing satcom as a commodity. When you actually look at what other impediments exist in the department, I would say that it is somewhat the old bullets-versus-bytes debate. Certainly when you begin to roll these resources into the appropriated budget, there are trades that have to be made. You can see this on a much larger scale right now as entitlement programs and defense budgets are flattening and major programs of record are being re-evaluated and canceled.
The policy challenge is to establish whether communications is integral to net-centric operations, and I contend that it is, and then fund for it intentionally rather than just letting it happen by accident. It’s a very sticky policy debate and a very difficult decision to make given the environment we’re seeing today. But it is a decision that must need to be made at some point in the future.
Do you have any lessons learned in your first couple of years working these issues from the commercial side?
Since I ran the commercial satcom business for the Department of Defense, there haven’t been a great number of surprises on this side. And yet, now as I’m involved with Inmarsat’s decision-making process, I would say when we launch satellites and develop new services, we don’t take huge technology risks. We launch capabilities that are well developed and very mature, so that when we put something on orbit it can be used immediately. There’s agility on the industrial side of commercial satcom that’s taken for granted within the Department of Defense. So having been on both sides, there are some pretty big assumptions industry makes on the part of the department and vice versa that are just patently wrong.
Now, there is a rich dialogue taking place. What I would like to see is that conversation turn into reality, so it’s not just an exchange of ideas but a collaboration and partnership to do something new and innovative.
