Official says Defense can save millions with in-house satellites

The Defense Department could save a total of $600 million from fiscal 2010 to fiscal 2016 by shifting much of the traffic currently handled by commercial communications satellite operators to Wideband Global System satellites, a top Pentagon official told Nextgov.

Commercial satellite operators disagreed, and said they can provide capacity cheaper and more quickly than the WGS satellites, which are built by Boeing and owned and operated by the Defense Department.

Defense currently leases 6.2 GHz of commercial satellite capacity, wrote Danny Price, deputy director of communications, network programs and policies in the Office of the Assistant Secretary of Defense for Networks and Information Integration, in an email. An internal study by the Defense Information Systems Agency obtained by Nextgov said that the lease costs $317 million annually.

Price said an ongoing Defense study set to be completed in May indicates two-thirds of that commercial capacity could be shifted to just three out of the six WGS satellites that Defense currently plans to buy through a $1.8 billion contract with Boeing.

But Britt Lewis, vice president of marketing at Intelsat General Corp., whose fleet of 50 commercial satellites supports Defense operations worldwide, disagreed that shifting to WGS satellites was more cost effective. He said 6.2 GHz of commercial capacity translates into roughly 6.2 gigabits per second of throughput (gbps), or the equivalent of 866 broadband home Internet connections at a data rate of 7 megabits per second (mpbs). Boeing estimated the capacity of a single WGS satellite at between 2.4 and 3.6 gbps. Defense plans to shift about 4 gpbs of traffic to WGS, according to estimates provided by Price. Lewis said that based on projected demand, Defense only will be able to handle about half of its traffic on WGS satellites by 2010.

DISA, in a program note for its Customer Partnership conference in Anaheim, Calif., this April, said "WGS ... provides the opportunity to lower overall operations cost and increase responsiveness, while delivering superior capability."

Lewis disagreed with that assessment, pointing out that WGS satellites are not configured to support the biggest demands on satellite bandwidth now -- the Global Hawk and Predator unmanned aerial vehicles (UAVs), which are used extensively in Afghanistan and Iraq to transmit battlefield imagery.

The WGS satellites operate in the X-band and Ka-band, while the UAVs operate in the Ku-band. Only commercial satellite operators -- not Defense -- have international frequency allocations to operate in the Ku-band, Lewis said. Reconfiguration of the UAV fleet to operate in the Ka-band would be an expensive and time-consuming proposition, Lewis said.

Even in that scenario Defense would have a hard time keeping pace with the growing bandwidth demands of the UAV fleet as more sophisticated sensors are added to their payloads. Lewis said Predator UAVs now use 3.2 mpbs of satellite throughput and in the future he expects Predators to require 45 mpbs of bandwidth.

Lewis said that Defense also based its cost estimates on the premise that WGS service to end users is viewed as free, as they do not have to pay the commercial satellite bill. But he pointed out that the Air Force has pay the $1.8 billion bill for the WGS constellation.

Robert Tipton"Tip" Osterthaler, chief executive officer of Americom Government, a subsidiary of SES New Skies, which provides services to Defense users from a fleet of 40 satellites worldwide, agreed with Lewis that comparisons between buying and leasing do not truly represent the true cost differentials. He urged either the Government Accountability Office or the Congressional Budget Office to conduct and complete a cost analysis between leasing and buying, and believes such an analysis would show leasing is cheaper than buying.

Lewis suggested that Defense could get more bang for its satellite by entering into long-term agreements with commercial satellite operators, which could cut current leasing costs in half. Commercial operators also could build and launch with a payload configured to support a Defense mission in just three years, Lewis said.