Global milsatcom market headed for upswing

C4ISR & Networks| November 23, 2015

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While civil programs account for 64 percent of the global satellite business, defense-related satellites are expected to experience a “most remarkable recovery.”

This prediction comes from the recently published “Government Space Programs: Strategic Outlook, Benchmarks & Forecasts to 2024,” from consulting firm Euroconsult 2015. The report examines a range of factors influencing present and future satellite trends, including defense-related spending.

Government investment in space programs overall decreased for the second year in a row in 2014 with $66.5 billion spent worldwide (down 4.2 percent from 2013). While cyclicality in defense programs helped drive the decline, the report predicts that the trend will reverse in the coming years: A growth cycle in defense will help drive new spending at an average rate of 2.1 percent over the next 10 years worldwide.

Some 242 defense satellites likely will launch over the next 10 years, of which 40 percent will be launched for the U.S. government. Overall, 856 government satellites are planned for launch between 2015 and 2024, up 32 percent from the last decade.

This contrasts to recent trends, in which declines in U.S. defense satellite spending have slowed activity across the sector. Budgets for defense satellite communication programs peaked at $7.5 billion in 2010 before dropping progressively to $3.5 billion in 2014 (a fall of 26 percent from 2013), the report finds.

While U.S. Department of Defense satellite spending had accounted for two-thirds of total defense spending over the past 10 years, the completion of most U.S. milsatcom programs helps to explain much of the industry slump. These programs saw their budgets decline to $1.5 billion in 2014, down from $5.4 billion in 2010.

At the same time, an increasing number of other countries have steadily increased milsatcom investing. Some 19 countries had programs in 2014 compared to only seven —the U.S., Russia, China, France, the U.K., Italy and Japan — in 2005.

While overall satellite spending has grown among these nations, few have launched dedicated defense systems, the report notes. This likely reflects the high cost to manufacture, operate and maintain a defense-focused Earth observation mission that can support accurate, high-resolution data for image intelligence (IMINT), as compared to more generic civil missions.