Northern Sky Research

A Hosted Payload Boost

Jun 20th, 2012 by Jose Del Rosario   More from this Analyst | Profile

Iridium’s unveiling of the Aireon service could be the boost that the hosted payload ecosystem needed.  After years of talk with little to show in terms of actual contracts or deployments, the deal could signify an inflection point for the hosted payload industry and show the way forward in terms of innovative government-enterprise partnerships.

Aireon is a planned joint venture between Iridium and NAV CANADA with support from the U.S. Federal Aviation Administration (FAA) and suppliers Harris Corporation and ITT Exelis. Aireon will use Automatic Dependent Surveillance-Broadcast (ADS-B) receivers built into each of the 66 satellites in Iridium NEXT to deliver surveillance capability to Air Navigation Service Providers (ANSPs) and their commercial airline customers.

The announcement is in line with NSR’s forecasts in its latest market study, Hosted Payloads on Commercial Satellites, 2nd Edition.  Moreover, it reflects NSR’s conclusion that innovative mix of government and enterprise risk taking will be key to the hosted payload (HP) proposition over the long term.  The deal is an important milestone in the marketplace given the relatively slow uptake of the HP option over the past 3-4 years.  HPs have been discussed quite extensively among a host of key market players including satellite operators, satellite manufacturers, government clients, military entities, technology companies and even the venture capital community.  However prior to this deal, numerous HP discussions have not materialized into actual contracts

Iridium is key in terms of market numbers as it dominates NSR’s projected number of instruments as well as in-service units over the long term.  NSR forecasts approx. 100 total instruments deployed on Iridium NEXT.  The ADS-B instruments take a large chunk of the forecast numbers, but it does leave room for more instruments that can be launched.  In its press briefing, Iridium indicated that other instruments can still be carried on NEXT (apart from the ADS-B), and NSR projects further announcements to come before the window of opportunity closes.

Technically speaking, the deal is also important as the ADS-B hosted payload is not a single instrument but a system, which opens up a systems approach for future HPs whether on LEOs, MEOs or GEOs.  In a military requirement, for instance, that needs global coverage to address unpredictable hotspots, a systems approach to an agency’s network architecture could be implemented.

Finally and perhaps the greatest impact of the announced deal is the confidence generated for the hosted payload proposition, which should lead to a market impetus that will likely translate to further contracts.  Entities and pending contracts vetting a proposed hosted payload instrument or system can point to the ADB-S deal. Private enterprises that are likewise looking to make an HP investment but are unsure of the ROI component could point to the latest announcement as well.

Bottom Line

The ADS-B announcement is a tremendous boost to the HP proposition, and a mix of government and private enterprise risk taking is expected to continue to impact the HP market significantly over the long term. Indeed, without Iridium’s hosted payloads, the HP market in GEO and MEO is projected to remain quite low. 

The largest tests for Iridium and its partners are yet to come, however, and that is the performance of the system once launched and operational.  Thus, although the announcement should certainly be lauded, the work of Iridium and its partners are just beginning including the engineering, installation & testing of the system, launching the NEXT constellation, operating the system as well as establishing a solid track record for the ADS-B. Nevertheless, some of the key challenges including contractual, legal, funding and other important elements have been done, and these are certainly no small achievements.