by Jose del Rosario
Senior Analyst + Regional Director, Asia-Pacific, NSR
Communications-on-the-move (COTM), broadband-on-the-move, or next-generation mobile satellite systems, have been discussed for a number of years, particularly for military use. COTM generally refers to on-the-move systems of at least 60 mph with throughput levels of 2 Mbps for inbound and outbound traffic.
The main driver for government/military COTM systems has been proprietary military systems. However, commercial solutions are required as well for redundancy and flexibility. And, due to budget considerations as well as the continuing capacity gap between the militarys requirements and their ability to address their internal needs, commercial solutions are becoming key components of the COTM ecosystem. In speaking to Inmarsat for instance, the company indicated to NSR that it was exploring cooperative and collaborative efforts with the major prime contractors including Raytheon and Boeing, in incorporating commercial L-band solutions in multi-band system development. Moreover, the recent budget challenges faced by the U.S. Militarys Transformational Communications Satellite System (TSAT), which according to an Air Force official took a serious hit in FY2009 and beyond, will adversely impact the militarys internal systems development for COTM capabilities.
Commercial COTM equipment and services should continue to serve many needs within the government/military sector due to the flexibility and convenience that military staff, soldiers, aid agencies, as well as other civil government personnel demand. Government use of broadband mobile terminals is expected to increase, particularly when the technology has established a record of accomplishment. To say that there is pent-up demand within the government for true or on-the-move broadband solutions is an understatement and indeed, the military has signed contracts with prime contractors over the next decade in the $billions for true COTM systems.
In forecasting the market, some key restraints are important to outline that impact demand. Apart from budgetary challenges, some limiting factors are, by nature, technological such as antenna systems that are, or should be, compact, which have not been fully developed. In Ku-band for instance, market penetration has been limited since land mobile units have not been deployed in significant numbers, due to the issue of the ability of antennas to point to the right satellite while traveling at high speeds. Moreover, the ability to throughput at 2 Mbps while moving at 60 Mph has also been difficult. As such, the strict definition of COTM in terms of operational requirements is still not a hard and fast rule. For current operational requirements by the U.S. Military, COTM is often defined as on-the-move communications of at least 60 mph for throughput rates of 128 Kbps. These rates are generally accepted today and historically; however, military entities will demand much higher throughput levels from prime contractors for terminals and systems over the next one to two-years.
Finally, development costs that are highly expensive are part of contract awards from the DoD. There are contracts as well that include only the development of prototype systems before full-scale or large orders are placed by the DoD. Although initiatives within the private sector are taking place for prototype development intended for commercial use, the immediate need to fund COTM systems rests currently with the military sector, since it has the most pressing needs for such systems. But as mentioned previously, the military is currently facing budgetary challenges. On the private sectors development for the commercial market, the current economic outlook also has a limiting factor in terms of investment risk.
Having outlined some market challenges, the need for commercial COTM going forward for military use remains healthy. The delivery of high data rate communications to current operational forces, all the while providing a solid architectural baseline for the migration of these systems to support future Homeland Security objectives and important military programs such as Future Combat Systems (FCS), and Warfighter Information NetworkTactical (WIN-T), is crucial.
Based on the market potential by 2015 (and beyond), historical market performance, thus far, indicates a market that is still on the developmental stages of the business cycle. Both the number of units and revenues are expected to exhibit high growth within the forecast period. The forecast assumes that technical challenges will be overcome within the next few years, leading to greater procurement, and the fulfillment of deliveries for contracts signed thus far, between the DoD and system developers, or prime contractors.
Expectations are that the United States will lead procurement, and by a wide margin, with the forecast. The contracts currently being signed, as well as in the future, will originate from U.S. agencies, specifically, the DoD. Historically, this trend has already taken place where the United States procured or accounted for over 90 percent of the COTM market. Over time, although entities outside the United States are expected to procure COTM equipment in greater quantities, the U.S. will likewise accelerate its contracting with the major primes which will lead to a sustained share of the market as compared to other nations.
COTM by Platform
COTM is embedded in the U.S. Military as well as military agencies outside the United States in current operations. In the future, this will become even more pronounced as the mobile soldier, as well as unmanned assets for intelligence gathering and reconnaissance missions, increases.
At the heart of this capability are land mobile systems since wars, peacekeeping missions and the footprint necessary for intelligence gathering rests in landmasses. The land mobile sector is expected to account for the vast majority of in-service units as well as revenues until 2015. The other sectors (maritime, aeronautical and UAVs), although accounting for a relatively small part of the market, are expected to exhibit healthy growth as well. It is worth noting that the entire COTM market is expected to be a large market segment, and the small slices of market share for these other segments represent healthy, and sustainable, annual growth.
The UAV Market
Although small in terms of its share of in-service COTM units, the unmanned aerial vehicle (UAV) is expected to become one of the most important COTM platforms over time, in terms of military missions, as well as revenue generation. Most of the globes UAV programs that have been contracted belong to the U.S. Military, and this should continue to remain so until 2015. NSR foresees three scenarios that will likely take place in terms of affecting U.S.-based procurement:
UAVs will likely take the place of troops, especially once the technology for tactical, or weaponized, UAVs become more stable and reliable. For Afghanistan and Iraq, reconnaissance missions will probably continue even if, or when, the troop pullout takes place. U.S. support for friendly forces using UAV systems will likely continue in order to remain engaged in these regions.The DHS, DEA and border patrols will likely enhance demand for UAVs going forward, as evidenced by some contract announcements since 2006.
Reconnaissance satellites will play a large and growing role in surveillance activities and here, UAVs that rely heavily on commercial satellite capacity, will sustain demand for commercial COTM. According to the U.S. Military: Class III UAVs are to be multifunctional systems intended to be employed at the battalion level. A Class III UAV is planned to also provide an enhanced communications relay capability, mine detection, chemical, biological, radiological, and nuclear detection, and meteorological survey. The Class III UAV is to be able to take off and land without a dedicated airfield, and is intended to be able to stay aloft for six hours over a 40 kilometer area with a maximum ceiling of 12,000 feet. Class IV UAVs are intended to provide the UA (brigade) commander with a long endurance capability encompassing all functions in Class I through Class III UAVs. It is intended to stay aloft for 72 continuous hours and operate over a 75 kilometer radius with a maximum ceiling of 16,500 feet. It is also planned to interface with other manned and unmanned aerial vehicles, and be able to take off and land without a dedicated airfield.
Of the close to 1,500 Class III and Class IV UAVs that weigh over 500 pounds that NSR expects to be in-service by 2015, the Africa/Middle East region should account for half of demand due to the growing concerns and potential flashpoints in the region. The continuing security situation in Iraq, growing concerns in Iran, Israeli conflicts with its neighbors, and the all important politics of oil, should lead to increased deployment and missions for UAVs for situation assessment. In light of troop pullouts in Iraq, the need for UAVs in terms of fleet expansion, number of missions and flight hours, should also likely increase.
In NSRs view, commercial COTM will remain an important, if not permanent, component of military COTM capabilities. The ingredients for military COTM that have a mix of unique systems engineering as well as off-the-shelf and plug-and-play elements, necessitate the role of commercial development and participation within the COTM industry. In fact, some commercial initiatives are ahead of military developments, where the military has enjoyed the benefits of reduced cost and speed in helping run their missions. For the long term, the partnership between the military and the commercial industry for COTM should become even stronger to the mutual benefit of both entities.