ATLANTA (Reuters) - U.S. government spending on defense and space is coming under pressure, but some technology companies are finding ways to find new business by providing data services to defense and civil agencies.
Companies such as Iridium Communications Inc, a mobile satellite service provider, want to leverage their technical know-how to meet emerging needs.
In March, Iridium won a $13.4 million Defense Department contract to enhance its Netted Iridium satellite communication system, which powers tactical radios used by more than 5,600 U.S. soldiers. The radios on the Iridium network can transmit voice or data signals to and from multiple users simultaneously via satellite.
The company is part of an alliance that is urging the government to work with private industry to send sensors and other equipment into space on satellites already built for commercial use. Such arrangements could be a way for government agencies to gain space-based data at a fraction of the cost of establishing proprietary satellites.
“There’s going to be a lot of pressure over the next couple of years, which is why we’ve been talking about hosted payloads being so important,” Iridium CEO Matt Desch said in an interview. “It’s a cheaper, smarter way of doing things.”
Iridium said its next-generation satellite system will enable it to offer more data services. Iridium NEXT, which will include 66 operational satellites and six spare satellites in low Earth orbit, is due to be up and operational starting in 2015. The company has reserved space on each satellite for third-party payloads.
While senior U.S. military officials saw the value of so-called hosted payloads on commercial satellites, Desch said, current budget pressures and generally slow decision-making were hindrances to greater government involvement.
Officials “are frustrated in their organization’s ability to react quickly,” Desch said.
Even so, Iridium is eyeing other potential deals. Efforts are under way on behalf of organizations such as the U.S. Federal Aviation Administration, Eurocontrol and Nav Canada to place a special receiver on Iridium NEXT satellites that would track aircraft movement in real time for air traffic control purposes.
“We estimate that the FAA opportunity alone could generate tens of millions of dollars annually,” Raymond James analyst Chris Quilty said in a note to clients last week.
Inmarsat Plc, an Iridium rival, said the earthquake in Haiti and conflicts in the Middle East spurred government demand for its satellite voice and video transmissions.
“If we find creative ways to bring our services to market, the outlook is actually quite good in that the requirements are not going away,” said Leo Mondale, managing director of the Inmarsat GX wireless broadband network subsidiary.
“There’s an increasing acceptance and even embrace by governments, both defense and civil agencies, of commercial capacity and services as a long-term part of their portfolio,” he said.
Harris Corp, which makes telecommunications gear such as antenna reflectors deployed on orbit and tactical radios for soldiers that distribute voice and data in an encrypted form, said it won more than $300 million in new space-related contracts in the current fiscal year.
Sheldon Fox, president of the government communications systems business at Harris, said government customers were hungry for ways to obtain new capabilities in space without having to launch large new programs.
“If you look at the government market in general, there is no question that it’s going to be facing headwinds because of the budget position,” Fox added.
Reporting by Karen Jacobs; editing by Andre Grenon