Northern Sky Research

X-(Band) Marks the Spot in Asia-Pacific

Feb 2nd, 2017 by Brad Grady   More from this Analyst | Profile

On the footsteps of the successful launch of Japan’s DCN-2 satellite with its X-band payload (Japan’s first dedicated MILSATCOM satellite), a new resurgence of MILSATCOM capabilities is on the horizon.  While NSR already covered some of the challenges in larger proprietary military satellite constellation replenishments such as “WGS 2.0” and “Skynet 6”, new ‘players’ are entering the market looking to provide their own capabilities.

Japan’s DCN program is one such example of nation-states looking to provide their own capabilities.  While the DCN program uses a Public Finance Initiative (PFI) model in the same vein as the UK’s Airbus D&S owned and operated Skynet-5 constellation, the primary customer for the DCN program is the Japanese Self Defense Forces.   Focused on delivering capacity over the Asia-Pacific and Indian Ocean regions (where Japanese Forces operate the most), the capacity will help provide additional throughput in an increasingly tense region.  Just as China is expanding their ‘blue water’ operations in the South China Sea, increasing force projection capabilities through their new aircraft carrier, building new relationships with traditional U.S.-allies such as the Philippines, and on-going tensions between the U.S.-China – a serious question should be on the minds of all players in the military and government satellite markets: Are we finally going to see a ‘pivot to Asia’?

The “short answer” is that the Middle East & Africa will remain a core-market for the vast majority of military and government satellite communications demand, and the most significant source for capacity revenues from 2015 – 2025. 

According to NSR’s Government and Military Satellite Communications, 13th Edition, despite changing dynamics on the ground – from troop draw-downs to changing capacity pricing – the Middle East & Africa generated almost $275 Million in capacity revenues in 2015, and will increase to $360 Million annually by 2025.  Yet, the growth story for capacity revenues from Gov & Mil markets will be within Asia-Pacific.

Looking at Asia-Pacific, capacity revenues between 2015 – 2025 will increase by more than $190M – greater than both Europe and Middle East & Africa.  Why do we see such growth from Asia-Pacific?  Just as we have seen with the Japanese launch of the DSN dedicated military satcom system, ongoing and increasing tension within the region is spurring the deployment of airborne, maritime, and other Gov & Mil assets into the region.  Driven by the need for ISR and C2-type applications, which capacities and which markets will help drive growth in Asia Pacific?

For FSS capacity, X-band will be the ‘growth story’ for Asia-Pacific, with bulk leasing applications – where governments lease ‘raw capacity’ to support their own networks – leading the charge for growth.  The growth comes at the expense of a shifting preference from FSS C-band capacity and FSS Ku-band capacity towards HTS, FSS Ka-band, and FSS X-band.  As more focus is given towards operating in a ‘contested’ environment and allied interoperability, FSS X-band represents a strong value proposition within Asia-Pacific.

Just as nation-States invest in increasing X-band capacity in the region like Japan’s DSN, the system joins other X-band capacity from the UK’s Skynet and the USA’s WGS constellations.  Although within the Gov & Mil FSS markets there is a clear growth story for X-band, the impact from GEO and Non-GEO HTS is not to be underestimated.

With a net-growth of almost 28 Gbps from HTS capacity between 2015 – 2025, HTS capacity revenues and FSS Capacity revenues will be nearly equal by 2025.  Unlike the FSS X-band story where bulk leasing plays a significant role, HTS capacity demand comes from managed services – providing ‘end-to-end’ networks to maritime, UAS and manned aero platforms operating within the region.  With 9 Gbps of demand on GEO-HTS Ka-band capacity, of which some will use terminals that are compatible with other military systems such as WGS, there is a clear sign that designing commercial systems to work alongside proprietary military systems is a winning combination.

Bottom Line

With compatibility with a growing number of proprietary military satellite systems covering Asia-Pacific today and over the next ten years,  there is clear demand for designing and deploying systems compatible with these networks.  Although Ku-band in FSS and HTS for Asia Pacific will be a significant source of capacity demand and revenues, FSS X-band offers this compatibility, and it should be on the spot for Asia-Pacific growth in the coming decade.