This article originally appeared in the Oct. 23rd issue of SpaceNews Magazine.
Since 2010, satellite operators with U.S. defense business have posted falling government-based revenues as American troop levels have fallen in the Middle East.
As painful as the slowdown in defense business was for diversified satellite operators, it was even more acute for Xtar, a Northern Virginia venture that operates two X-band satellites whose sole business is providing secure telecommunications services to the U.S. government and its allies.
In 2015, as Xtar’s revenue shrank by double-digit percentages, its majority shareholder threatened to divest. Loral Space and Communications still owns 56 percent of Xtar, but told the U.S. Securities and Exchange Commission this August that it has “no commitment to provide further financial support to Xtar.”
That leaves Hisdesat, the Madrid-based operator that holds the balance of Xtar’s private shares — and is itself owned 30 percent by the Spanish Ministry of Defence.
Xtar’s satellites — the fully owned Xtar-Eur and a payload of X-band transponders on Hisdesat’s Spainsat spacecraft co-branded Xtar-Lant — are both about four years away from end of life. If Xtar expects to ensure continued service, replacements will need to be ordered in the next year or two.
Fortunately for Xtar, the Spanish government has a strong desire to see its services remain. Philip Harlow, Xtar president and chief operating officer, said Hisdesat’s role as a conveyor of the Spanish government’s interest in satellites is one of the primary drivers of the replacements for both satellites.
“The commitment of the Spanish government to replace those satellites is strong,” Harlow said in an interview with SpaceNews. “We are going to do that. Now we are going to figure out what we actually need to have in the replacement of those satellites.”
Spanish milsatcom demand
Harlow said the Spanish Ministry of Defence has indicated its coverage areas of interest remain the same — from the Americas east across Europe, the Middle East, Africa and parts of Asia extending almost to Singapore. Two new factors are also weighing heavily on future Spanish milsatcom — Europe’s collective Governmental Satellite Communications (Govsatcom) program and NATO’s overdue 1.5-billion-euro future satcom program.
Harlow said Hisdesat is “deeply involved” in both Govsatcom, for which the Spanish government is leading a capacity pooling study, and NATO’s CP 130 contract, for which invitations to bid are expected in the first half of next year. The Spanish government’s desire to support NATO and Govsatcom is likely to drive a massive increase in bandwidth, he said.
“Clearly they see a need purely for Spanish government capability, but then they also see this additional need for supporting NATO and the Govsatcom capability,” Harlow said. “I suspect it might go up by tenfold what they have today.”
The Spanish government is a primary customer of Xtar, using capacity on Xtar-Eur to backup capacity it has on Spainsat. Harlow declined to say how much capacity the Spanish government is using on Xtar-Eur — it was 238 MHz prior to Spainsat/Xtar-Lant’s launch in 2006 — but speculated that a jump in Spanish commitment to collective defense programs would mean a commensurate jump in Xtar demand.
“There is a fairly modest-size capability on Spainsat today that we back up on Xtar-Eur,” he said. “I see that expanding dramatically with the replacement. I see them probably going up by four to six times the amount of capacity that they have today, and I see that the backup capability will have to mirror that.”
The European Space Agency awarded Airbus Defence and Space a Govsatcom demonstration contract in September for the purpose of pooling capacity from the European Defence Agency’s 14 members, along with Norway. The Spain-guided pooling project shares satcom resources among program members while also gauging future European milsatcom needs.
Harlow said Xtar will likely have to make decisions about its replacement satellites before ESA, the European Defence Agency and the European Commission decide on Govsatcom. Xtar’s decision making will probably occur “in conjunction with the Spanish government” as a result, he said.
“I think what you’ll see is we will probably build more than we need for our direct business plan as it exists today in order to accommodate some of the potential requirements from Govsatcom,” Harlow said. “What that means for the business plan is still to be determined, but we have a prime mission which is going to be funded, and how much that extra piece will be funded by the Spanish government remains a question at this time.”
Xtar’s future business
Aside from one Ka-band transponder on Spainsat/Xtar-Lant, Xtar has built its business case entirely on X-band, a frequency reserved for government use. An advantage and selling point of X-band is its high resistance to rain fade. Another is the ability to field small user terminals — Harlow said just this month Xtar demonstrated a 40 Mbps X-band uplink from an aircraft using 40.5- to 43-centimeter antennas.
Still, military Ka-band has grown substantially in use. Given the volume of available Ka-band spectrum, investments there continue to grow. Xtar remains committed to X-band, but Harlow said he “absolutely see[s] Ka-band coming with the replacement satellites.”
Harlow said Xtar’s new satellites will have more capacity than the existing fleet, and that one area the company wants to cover is the Western Pacific, specifically the disputed South China Sea.
“We get asked on a routine basis ‘what are we doing in the Asia Pacific’,” he explained. “We are always trying to find the right combination of economic factors, business case and technical capability to give us a presence in the Western Pacific … the fact is that the eastern part of Asia is a high-rain zone, no matter what you do, and X-band is a perfect frequency for that.”
Harlow said market conditions remain tough for Xtar and for government sales in general. While not ready to say demand is rebounding, Harlow projects an increase in demand within the next 12 to 24 months. Reconnaissance aircraft — both manned and unmanned — are a major driver of Xtar capacity use, he said, as is border security for the United States and several other countries including Libya, Tunisia, Turkey and Macedonia.
