Satellite Telecom Startup Targets Pentagon Market

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WASHINGTON — A startup company hoping to sell satellite communications bandwidth to the U.S. Department of Defense is seeking an upfront commitment to lease capacity that in turn would lure the private investment necessary to build and launch its spacecraft.

“We’ve contacted a number of potential investors who are all interested in financing this venture,” said Craig Weston, chief executive of U.S. Space LLC of Dulles, Va. “We are not going to lack for investors once we land a contract.”

U.S. Space was established by a group of former government and industry space officials to capitalize on the Pentagon’s burgeoning demand for satellite bandwidth. The company was founded by Mark Albrecht, former executive secretary of the White House National Space Council, who also served as chief executive of International Launch Services; and Ed Horowitz, former chief executive of SES Americom, one of two companies that provide most of the commercial satellite capacity leased today by the military. Retired Air Force Lt. Gen. Michael Hamel, former commander of the Space and Missile Systems Center, is a member of the board.

U.S Space seeks to build and launch dedicated military communications satellites on short timelines using off-the-shelf technology. U.S. Space does not aim to replace the Pentagon’s own satellites or the commercial operators that sell capacity to the military; rather, the company sees a niche for a so-called third leg to provide augmentation and surge capacity, said Weston, a retired U.S. Air Force major general.

The company’s business model is different from most other commercial satellite operators in that the U.S. government would be the sole customer on each satellite, using dedicated military channels in frequencies such as Ultra-High Frequency and Ka-band. This will enable U.S. Space satellites to be placed in orbital slots reserved for the U.S. military; these satellites also would be compatible with existing military ground terminals, Weston said in a July 1 interview.

“The time right now is essential,” Weston said. “We are involved in two major conflicts and we have standing commitments around world. At the same time, [the Defense Department] has had to cancel a major satellite procurement, T-Sat, and it is struggling to maintain coverage around the world. Not only is there a near-term shortfall, but the appetite is going to continue to grow in the future.”

T-Sat refers to the futuristic Transformational Satellite communications system, which was intended to exploit Internet Protocol and laser-optical technologies to provide a dramatic leap in communications capacity available to the military. The program was canceled earlier this year due to concerns about its feasibility and cost.

Weston said only U.S. companies will be involved in the construction, launch and operation of U.S. Space’s satellites. The company is partnered with several midtier satellite and launch services providers, including Orbital Sciences Corp., also of Dulles, but no specific spacecraft platform or launch vehicle has been chosen, he said.

The company is making its rounds through the Pentagon, having pitched the model to one of the combatant commands, two defense agencies and the Joint Staff, all of which have been enthusiastic about the proposal, Weston said.

A similar venture was started several years ago by Rockville, Md.-based Xtar LLC, which in 2005 launched an X-band communications satellite and bought an X-band payload on another satellite in hopes of selling the capacity to governments. But Xtar has struggled to win significant U.S. government business, although the company this year was selected to provide capacity to Pentagon users.

U.S. Space will not launch a satellite without its full capacity being reserved ahead of time, Weston said. This likely would entail multiyear commitments by the Pentagon, which typically shies away from such arrangements with commercial satellite operators.

Finding several hundred-million dollars in private financing in the current economic climate would be quite a trick, said Jim Cantrell, president of Strategic Space Development consultancy. But selling the Pentagon on a model identical to one that the established communications satellite operators have been unsuccessfully pitching for years would be even more impressive, he said.

“They’ve identified an interesting opportunity, but I’m not sure there’s a unique value proposition here,” Cantrell said. “I know commercial operators are actively offering the military similar arrangements.”