Satellite Communication Market in the Defense Sector

Market Overview

The global satellite communication market in the defense sector size was valued at USD 4.90 billion in 2022. It is estimated to reach USD 8.80 billion by 2031, growing at a CAGR of 6.73% during the forecast period (2023–2031). The increased risk of seaborne threats and ambiguous maritime security policies drive the global market growth. In addition, there is a surge in the demand for satellite communication for military and defense applications to convey essential information. Owing to this, the key players are taking initiatives like new launches and partnerships to cater to the demand, thereby creating opportunities for market growth.

Satellite communication (SATCOM) is a form of wireless communication that uses artificial satellites in space to transmit and receive signals over great distances. It includes antennas, transmitters, receivers, user terminals, monitoring systems, and network infrastructure, among other key components. It enables efficient communication in regions where terrestrial infrastructure is absent, inadequate, or economically unviable by providing coverage over a large area.

Satellite communication is used for various defense industry applications, including extending broadband coverage, installing 5G communications systems, earth observation, integrating and converging diverse wired and wireless technologies, defense and security, and surveillance. The importance of military satellite communication for conducting global military operations is growing.

Market Dynamics

Global Satellite Communication Market in the Defense Sector Drivers:

Increased Seaborne Threats and Ambiguous Maritime Security Policies

Maritime security is essential for national and human security and economic prosperity as it influences maritime traffic. The Indo-Pacific has received attention due to various connectivity initiatives focusing on the region, including those of the United States, China, Russia, Japan, Australia, India, and the Association of Southeast Asian Nations (ASEAN) countries.

Following the end of the Cold War, the Indian Ocean's maritime security ecology changed, resulting in non-traditional security threats such as piracy, human and drug trafficking, and maritime terrorism. Almost all ships operating in the Indian Ocean, Gulf of Guinea, and Southeast Asia have been impacted by piracy operations in the shipping and petroleum industries. As a result of rising seaborne threats and uncertain maritime security regulations, satellite communication will become more important, as will defensive and military interference. This will drive market growth.

Deployment of High-Throughput Satellite (HTS) Systems

Innovations in the satellite industry have been growing with the launch of high-throughput satellites using Ku-band aimed at aerospace, defense, and maritime applications. Similarly, the deployment of high-throughput satellite (HTS) systems from established players, such as Inmarsat, Intelsat, Eutelsat, and Telesat, have been instrumental in driving the satellite capacity supply, which is anticipated to be around 15 times more over maritime regions over the next few years. This incremental supply is expected to augment the growth of the market.

Global Satellite Communication Market in the Defense Sector Restraints:

Cybersecurity Threats to Satellite Communication

The delicate nature of satellite data transmission necessitates a heightened focus on cyber security in the realm of satellite communication. Moreover, the difficulty lies in the potential negative impact of such cybersecurity threats, as the vulnerabilities are mission-critical. Launch systems, communications, tracking and command, telemetry, and mission completion are examples of mission-critical vulnerabilities exposed to cyber threats. It is a serious concern that satellite communication is overly reliant on secure cyber capabilities for the satellite's life, hindering its adoption.

Global Satellite Communication Market in the Defense Sector Opportunities:

Rising Demand for Military and Defense Satellite Communication Solutions

Satellite communication has gained significant traction due to its excessive use in the defense and military sectors for transmitting information and establishing communication between military personnel. It also helps with satellite-asset tracking and remote sensing. For instance, life safety at sea has been gaining importance in the defense sector. The governments of various countries are investing in communication technology, such as navigation systems and vessel tracking. The governments of countries like China, the United States, the United Kingdom, and Indonesia play a vital role in promoting maritime security, as the maritime industry adds to the region's economic growth.

Partnership agreements can be noted between service providers to address the increasing demand for satellite communication in the military and defense fields. For instance, in December 2021, Airbus and OneWeb signed a distribution partnership agreement to offer LEO (low Earth orbit) satellite communication services for military and government utilization. Airbus aims to offer new military satellite communication services leveraging the OneWeb constellation to select the European and UK armed forces, civil protection forces, and security forces. These factors create opportunities for market growth.

Regional Analysis

Based on region, the global satellite communication market in the defense sector is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global satellite communication market shareholder and is estimated to exhibit a CAGR of 6.55% during the forecast period. Government agencies in North America have exerted considerable effort to introduce new satellite and navigation systems, which has aided in expanding the satellite communication industry. The vast coastline of North America requires constant surveillance. The region's expanding commercial activities and trade are driving the need for maritime safety and surveillance. In addition, the United States has the world's most susceptible coastal waters because of its open borders. Terrorism, criminal activity, and natural disasters pose grave dangers to this aspect of the United States' vast maritime domain. Since there is no adequate system for detecting and identifying illegal activities, they can occur from all directions across the country's maritime borders; the underlying threat presents special and significant challenges in enforcing maritime safety. The factors above are anticipated to influence the regional market during the forecast period.

Asia-Pacific is estimated to exhibit a CAGR of 7.44% over the forecast period. Numerous innovations and investments in research and development are being made in the Asia-Pacific region to strengthen satellite communication in defense organizations. For example, the Japanese government approved JPY 5.4 trillion (USD 47.2 billion) in defense spending for 2022 in December 2021. The funding will be used to purchase new defense equipment. Likewise, South Korea is vigorously enhancing its military capabilities. In addition, South Korea's defense program administration announced the development of stealth drones, satellites, and other military equipment in April 2022 in response to impending threats. This initiative is part of the nation's policy priorities to strengthen its defense and security capacities.

South Korea has also allowed KRW 266.4 billion (USD 220 million) to support the development of stealth drones and other military assets. In November 2021, China announced the launch of a tactical military Communications Satellite, Zhongxing-1D (ChinaSat-1D), built by the state-owned China Aerospace Science and Technology Corporation (CASC). It will provide Chinese forces with secure data and voice transmission via C-band and UHF. Such developments will significantly propel market growth.

In Europe, increasing dependence by government and military on SATCOM constitutes a significant demand for satellite communication systems. GOVSATCOM is part of the EU Space Programme (2021-2027), which uses space's capabilities in satellite communications to allow and facilitate the implementation of Member States' or EU policies connected to citizen security. In regions with no ground infrastructure (e.g., sea, air, rural areas, the Arctic region), or if the current ground infrastructure is unstable, damaged, or destroyed, access to GOVSATCOM is essential (e.g., due to natural disasters, crises, conflicts). The initiative seeks to provide secure and cost-effective communications capabilities to the European Union and its Member States' security and safety-critical missions and operations, including EU institutions, national security actors, and agencies. The aggregation of demand, consistent EU-level security requirements and accreditation, and the pooling and sharing of federal and commercial resources are at the heart of EU GOVSATCOM. Such initiatives are anticipated to increase the region's satellite communication equipment and service market during the forecast period.

In Latin America, the satellite industry is still active, a continent with enormous swaths of unconnected land. Many governments have invested in developing nanosatellites for scientific reasons and satellites for communication and climate monitoring. Although there is already growth in the region, most projects, including manufacturing, are carried out in collaboration with – and occasionally with funding from – other governments and foreign firms. In addition, Mexico launched the nanosatellite D2/AtlaCom-1 in June 2021 for agricultural surveillance. It will monitor natural calamities and forest fires and reduce crop production costs. The project also involves collaborating with the space agency and local colleges to teach students how to analyze and handle satellite data. Such developments are anticipated to expedite the market in the region.

Segmental Analysis

The global satellite communication market in the defense sector is segmented by type and application.

Based on type, the global satellite communication market in the defense sector is bifurcated into ground equipment and service. 

The ground equipment segment dominates the global market and is projected to exhibit a CAGR of 6.33% over the forecast period. The ground equipment for satellite communication consists of a variety of electronic systems. A few of them are Satellite Gateways, Very Small Aperture Terminal (VSAT) Equipment, and Satellite News Gathering (SNG) Equipment. A satellite gateway (called a teleport or hub) is a ground station that sends and receives data from and to the satellite through the local area network. The antennas and equipment that convert the radio frequency (RF) signal to an Internet Protocol (IP) signal for terrestrial access are housed there.

In addition, VSAT data throughput speeds have risen over the years, and it can now deliver multi-megabit downstream and upstream services. The diameter of an antenna/dish typically ranges from 1.2 meters to 3 meters. The employment of mobile communications equipment for international newscasting is called satellite newsgathering (SNG). Satellite News Gathering (SNG) is an audio-visual service that caters to the needs of broadcast television.

A mobile satellite service (MSS) is a constellation of communication satellites designed for mobile and portable wireless phones. Aeronautical MSS, terrestrial MSS, and sea MSS are the three main types. MSS provides two-way audio and data communications to global users on the go or in remote areas. The terminal size can range from a portable device to a laptop. Terminals can also be put in a vehicle, allowing for continuous communication while the vehicle is in motion. MSS runs in the L-band, far enough down the frequency spectrum to escape the rain fade that plagues fixed satellite systems in the Ku- and Ka-bands.

Based on application, the global satellite communication market in the defense sector is segmented into surveillance and tracking, remote sensing, disaster recovery, and other applications. 

The surveillance and tracking segment owns the highest market share and is estimated to exhibit a CAGR of 6.58% during the forecast period. The battlefield surveillance mission is to detect, locate, identify, and monitor changes in the enemy's resources, such as tanks and other vehicles, helicopters, motorized soldiers, air defense batteries, and so on, throughout the war. The mission of the Space Tracking and Surveillance System is to track missiles throughout all three phases of flight (boost, midcourse, and terminal), differentiate between warheads and decoys, transfer data to other systems that will cue radars and provide intercept handoffs, and provide data for missile defense interceptors to hit their target. In addition, satellite sensors detected and tracked ballistic missiles for interception. They tracked targets, assisted in the differentiation of real threats, guided interceptors to targets, assessed interceptor hits, collected data on launches, on-orbit satellites, satellite re-entries, and other space-based missions, and participated in one of MDA's integrated Ballistic Missile Defense System flight tests.

The defense, military, and aerospace industries utilize remote sensing to collect data. Navigating ships use remote sensing technology like wind-wave information, ship proximity, routing analysis, and GPS to avoid sinking when striking an iceberg. Every day, numerous satellites orbit the Earth and collect data that can be used to locate lost or destroyed aircraft. In addition, the utilization of remote sensing as a surveillance technique has been employed for numerous centuries. Hot air balloons equipped with remote sensors were flown over enemy cities prior to World War One. Specialized satellites with an extensive array of capabilities are used for remote sensing. Notable examples include optical satellites, radar imaging satellites, ultraviolet and infrared imagery satellites, and signal-intercepting communication satellites.

Recent Developments

• September 2023- SpaceX successfully launched from California's Vandenberg Space Force Base a Falcon 9 rocket transporting the Space Development Agency's newest batch of miniature missile defense satellites.
• May 2023- Early in 2024, Maxar Technologies will deliver the first of sixteen satellite vehicles ordered by L3Harris for a U.S. Space Development Agency-managed military constellation in low Earth orbit (LEO).