Late last year Northern Sky Research (NSR) published the 11th edition of their annual report, Government and Military Satellite Communications. This past month they highlighted one of the clear findings of the report–the increasing percentage of managed services being chosen when government users procure commercial satellite services.
They drove home the point with an engaging analogy – comparing commercial bandwidth to a kitchen remodeling. How much can one do themselves, versus pay a professional to do? We’ve all encountered these situations, whether in remodeling, gardening or maintaining a vehicle. How much time and energy should I expend doing it myself, versus paying someone to simply provide the complete service?
The trend numbers are compelling. NSR reports that while bulk commercial capacity leasing represented 58 percent of government and military capacity revenues in 2013, it is expected to fall to 26 percent by 2023. Meanwhile, revenues from managed services will grow by $1.2 billion and make up almost two-thirds of all capacity revenue by 2023.
This makes intuitive sense, reflecting the macro-trend of the government leveraging commercial partners’ core competencies. Why should the military dedicate the time, money and resources necessary for managing a space communications network when the commercial industry has proven its ability to deliver this service – while also innovating at a rapid pace? Managed services also provide another value add; typically managed services are run over one cohesive network, improving communication security in today’s highly contested, global environment.
The NSR study notes there will always be military customers who will prefer to simply purchase bulk capacity and then determine how best to meet their end-to-end SATCOM requirements themselves. That market will never go away, and the commercial industry will always support that need.
However, the upcoming introduction of high-throughput satellite (HTS) system services are expected to accelerate the move to managed services. The dramatically enhanced performance of HTS will allow it to support increasingly sophisticated ISR operations, such as increased UAS and true COTM. As network operations become more complex, the value proposition of managed services becomes all the more compelling.
Space is becoming an increasingly competitive arena. We agree with NSR that increasingly, the military will be looking to the commercial industry for a partner who can help solve critical SATCOM challenges, not just provide bandwidth. And we’ll be ready to do just that.