Northern Sky Research

A Few “What-ifs” for Military Satcom

Oct 15th, 2015 by Brad Grady   More from this Analyst | Profile

Listen to anyone involved in United States Defense Doctrine talk for long enough, and eventually the “Pivot to Asia” will come up in conversation.  Once the talk of instability in the Middle-East, recent actions in Eastern Europe, or other hot-spots or trouble-zones subside, an over-arching theme is a steady refocus of U.S. attention into Asia-Pacific.  For the satellite industry, this ‘pivot to Asia’ is only one of a few major ‘what-if’ scenarios possible in the Government and Military Markets.  Will the U.S. become more or less involved in world conflicts, or is it still ‘business as usual’?  Each scenario will create winners and losers in the satellite value-chain, but are events already in monition to move away from a ‘business as usual’ scenario, towards one of greater U.S. involvement?

Fueling the debate of ‘which what-if’, President Obama announced that the US will not reduce U.S. troop levels in Afghanistan to 1,000 personnel by 2017, but instead keep 9,800 troops currently in country through most of 2016, and focus on a sustained force of 5,500 personnel.  In yet another turn of world events, does this continue to put the ‘pivot to Asia’ on hold, or is it a sign of greater U.S. involvement in world events, again.  And, does this reset an overall theme of U.S. stepping back as a primary actor in world conflicts?

In NSR’s Government and Military Satellite Communications, 12th Edition we explored all of these potential ‘what-ifs’: “business as usual”, “Greater U.S. Involvement”, “U.S. Step-back”, and an “Asia Pivot”.   Although by all indicators recent events still fall within a ‘business as usual’ paradigm in the base scenario, have things already started to make other scenarios unlikely?  It is too early to tell, especially on the eve of a new presidential election which will bring a new perspective to the role of the U.S. overseas, but with President Obama extending troop levels in Afghanistan into the next presidency, it might be more unlikely that the U.S. will remove itself significantly from the Middle East, or world conflicts. 

What do these different scenarios mean for the satellite industry?  Quite frankly, there is more bad than good when compared to our base scenario – with both a refocus to Asia and a U.S. step-back both resulting in lower than ‘business as usual’ utilization. 

That is not to say the market will decline with any of these scenarios, as all of our scenarios result in growth over the next ten years – only the degree, location, and application is in debate.  For an Asia Pivot, fewer options for land-based operations reduces the amount of land-mobile connectivity, as well as an overall reduction in forces in other regions such as the Middle East.  For a U.S. step-back, growth is slower across the board – fewer UAS missions, maritime operations, and land-mobile or bulk leasing opportunities.  Although non-U.S. players will increase their role in a U.S. step-back scenario, they will not ramp-up as quickly or significantly to fully replace it.

With the situation on-the-ground in much of the Middle East continuously in-flux, it seems that a true pivot to Asia remains more remote and that the U.S. might become more involved again in world affairs – and maybe provide a much-needed boost to satellite service providers. It is unlikely that this redeployment/slower draw-down will reverse to reach the 100,000 plus troop levels it saw in Afghanistan during the peak of the conflict, but with a larger sustained focused on providing technical support and special operations capabilities, satellite providers are likely to see sustained bandwidth demand from the region, at least for the next few years.

Bottom Line

Although there still remains debate as to the speed or timeline in which an Asia-Pivot will occur, even in the ramp-up to the 2016 presidential elections, “China” and “Asia-Pacific” come up as a long-term strategic goal for U.S. forces.  With the U.S. a core component of the Government and Military Markets through 2024, satellite players will need to not only adjust to its changing defense priorities, but should work on developing in-roads into regional players in hot-spot regions such as the Middle East and Asia Pacific in order to capture growth regardless of the ‘what-ifs’.