Question: How many satellites do you have in your constellation? Do you plan on adding more capacity?
Ruszkowski: XTAR operates at two orbital locations today. We are at 29 East where the XTAR EUR satellite operates. It is wholly owned by XTAR today, and it provides fantastic coverage throughout the Atlantic, Europe, Africa, and into Asia to about Singapore.  We also operate a satellite at 30 West, and that is our XTAR-LANT (Spainsat) payload that is actually a hosted payload, so we are the hosted payload on what’s referred to as Spainsat, and that gives us reach East/West/through Denver. So there’s an overlap of the two satellites in sort of the Europe and Africa area.  But I think more interestingly is as you can see, we were from our start built on the principle of hosted payloads.  In fact, we both host and are hosted.  LANT is a hosted payload on Spainsat, and the XTAR EUR satellite we host a backup payload for the Spanish MOD (Ministry of Defence).  So we’ve been doing this hosted payload thing for quite some time and have the opportunity to work out the kinks and the challenges, both commercially and technically of doing so. We do not today cover generally the Pacific area, but we plan to launch more capacity. We do have hopes of adding capacity to our fleet. I think it’s a good chance that we’ll do so in the southeast Asia Pacific area to fill that coverage gap.  We may do it with a hosted payload model, we may do it with a wholly owned satellite. And we also might launch more capacity to areas that we cover today where there’s high demand.  The last thing I would say that we are XTAR but we don’t feel entirely limited to operating in the X- Band frequencies.  Our mission is to support the government user and that’s what drives our thinking about how to adjust our offerings as we go forward in time.

Question: How many commercial satellites have included X, to their KU and KA bands?

Andrew:  I’m not guaranteeing that we’re going to add other frequency bands, but there are clearly, if you’d say you’re in the business to support the government user.  The government user is dependent on quite a few frequency bands, everything from X- military to KA.  In the future, we expect this to be commercial KA.  They’re heavily, dependent upon KU, C band, and then you get into other frequency bands, UHF, and the like.  So what we do when we approach growth, we are asking the question where can we provide a service that supports the user and obviously makes the business case in a solid way, and how do we do that with the right kind of tools in the right kind of market, and you start that question with geography.  I personally think that there’s a demand and a need for X-Band in the Southeast Asia area.  It is geographically and environmentally very sound for an X-Band payload, and we’re looking carefully at our options for that. You asked about how many other companies operate X-Band.  There are very few commercial entities with X-Band payloads.  One example which sort of describes the limited nature of it is that TeleSat of Canada, they operate one transponder of X-Band capacity on their Anik G1 satellite. (Anik G1 also has three X-band transponders that are fully contracted to Astrium Services for 15 years to support government applications across the Americas and much of the Pacific Ocean, including Hawaii.) So they’ve kind of stepped into X-Band in the way that some other commercial operators whose businesses are really founded on KU and C-Band have done so.  They do have a very limited basis.  There are only two entities today who are bringing large amounts of X- Band to the market whose business models are very much founded on X-Band, and we are one of them.  The other is out of the UK.  So most of the X-Band that’s available to the government user today is on government owned satellites. The ones that stand out, of course, are the US owned satellites in the WGS constellation. Well, Airbus Defence and Space operates the Sky Net Suite on behalf of the British MOD (Ministry of Defence).

So they are kind of a hybrid of commercial and government as well.  The satellites were financed by the British MOD and then turned over to a private entity, which is now owned by Air-Bus.  Their mission is to support the X-Band communications requirements of the British MOD, and then there’s a certain portion of their payloads which they make available on a commercial basis.  So they bring that to market, and they’re probably the closest thing to a commercial competitor to XSTAR.  XSTAR is very different from that in that we were founded on no public funding and are a fully private US company based in the Washington D.C. area.

Question: Are all man packs using X-band?

Andrew: No, I don’t think the definition of man packs limits them to X-Band.  However, X-Band is the ideal choice for what I like to refer to as small disadvantaged terminals which are looking to do high throughput.  That typically includes man packs.  The advantages of X-Band really boils down to the fact that the constellation of all X-Band satellites, meaning both commercial and government, are deployed so that there is greater margin between the satellites.  

Literally there’s 4 degrees orbital spacing between satellites.  That translates into the opportunity for smaller antennas pushing higher throughput, and man packs fit that definition.  When they’re working in X-Band, they’re less likely to cause interference and be subject to interference from other operators on the satellites next door.  So X-Band is, in my view, really the best choice, or not just man packs but other applications which fall into that category of sort of small and disadvantaged, and obviously that’s what drives our business.  In addition, mobility is in that category as well, and that’s probably the fastest growing part of our business— antennas which are on the move and looking to support applications that require high throughput.

Question: Can you give some application examples of NATO’s use of XTAR satellite services? Can you give a specific event?

Andrew Ruszkowski: After the US military and government, our biggest market is NATO.  However, among the applications which are, you know, requirements which are using XTAR, which I really appreciate, are naval forces.  We support a number of countries who are members of NATO, and we support their navies.  These are everything from larger ships of the line to slower research vessels, and those fall right into that category of systems which are on the move.  Obviously when they’re on the deck of a ship, they have to be small so as to not take up a lot of space, and we appreciate that business quite a bit.  A specific event for NATO?  Let me think about that.  I wouldn’t say it’s a specific event, but it’s an example of an application which we support today and which I’m pretty proud of. It’s one that we can talk about because so much of what we do we can’t really talk about.  Today we support a Spanish research vessel which is traveling throughout the Atlantic and transmitting up to some very low longitudes both north and south, and it’s really only with X-Band that they would be able to make any of their kind of duty requirements.  So I think that’s an example of a NATO country that we support.  That is, again, our second largest market, and we do expect it to grow in the future.

Unfortunately, I can’t go into that kind of specifics.  In some cases, I can get into specifics sometimes when it’s not revolving around military requests. I can tell you that a variety of navies are using us in the Mediterranean.  That would be no surprise.  Being more specific than that, I can’t really do so.

Question: Is it true that the Germans, French, Italians, and the Nordic Counties have their own MILSAT X-band satellites? Have you commissioned a satellite or hosted payloads?
Andrew Ruszkowski: Yep, the European governments do, just like the US government does.  Some operate XM payloads, the Italians and the French.  Syracuse and SEACO are X-Band satellites.  These are similar to, typically, well, I mean that’s the same model that the US government used for launching WGS.  We do actually think that we’re a very different sort of service for the government user than the military satellites that operate X-Band.  We’re offering a model which is sort of highly responsive to the government user’s short-term sometimes but very often urgent requirements for putting users onto the satellite within 24 hours that user’s experience when they’re going for government owned systems.  Nevertheless, I think even more important than that, the XTAR model is based on non-preempt ability. And when the user is using a government system, they typically are subject to preempt ability, meaning that there’s a priority system.  When there’s limited amount of capacity to serve all users, the government will put every user into a priority list, and if you are on the satellite and a user comes and that user has a higher priority than you, you may be bumped off of the service.  That cannot happen on XTAR because everything we do is on a non-pre-emptible basis.

I don’t accept that as being necessarily true for XTAR.  We are different than most companies operating in the government market.  In fact, I would point to 2013 where most every other operator or company in the satellite services for government use market saw dramatic decreases, on the order of 15, 20, 25 percent.  XTAR saw a 9 percent growth rate in year on year in 2013. So why are we able to do that?  Well, a couple of things; namely, one, our service supports the kinds of applications which are growing despite the general downturn in military and government spending.  Those are mainly in the mobility area, and they are especially in airborne applications.  Airborne applications are proliferating throughout the military, but also into civil uses, for example border control and other applications that are scientific and the like. X-Band is the ideal solution for communications for those kinds of applications.  We expect that to grow in the future. The other thing is that we really are focusing our efforts on those kinds of applications, and we’ve been doing so for at least the past four years or more.  When I first joined the company, XTAR had a portfolio that looked much like any other satellite operator working for government users.  There was a lot of point-to-point and trunking conductivity in the portfolio, a lot of applications which I would generally say were not on X-Band because they matched X-Band in a way that was not possible with any other frequency band.  Today, I think our portfolio is filled up with applications which really make sense for X-Band and I would be more specific and say the kind of user who enjoys the experience from XTAR one that they couldn’t get from any other commercial or government satellite operator.  And for that reason, I think our business is a little bit more robust than some of the other satellite operators who are seeing a lot of decrease in their revenues. I can’t promise that we’re going to do 10 percent of growth every year, but I think if you compare us to other businesses, we’re a little bit healthier.

Question: Is the key business growth driver, the level of military combat operations? In other words, no wars, no growth.
Andrew: To answer your question specifically, it’s kind of like a rising tide lifts all boats, right? When there’s general demand, as we saw going back 5, 10 years ago, the supply and demand equation was out of sync.  It may be it’s out of sync again and we are in the reverse way.  I think that it’s going to level out sometime relatively soon, but the unrest in the middle east today coming from (ISIS) is going to help to balance that supply and demand equation a little bit.  But what we are looking at this from the long term and saying, you know, what is the niche?  Because honestly, I think that commercial X-Band is a niche service, and we approach our business in that way. We are not trying to be everything to everybody.  We’re saying, here’s where we match the requirements of a particular set of users and we pursue those users in a very focused manner, and that has worked for us in the past few years.

Question: Is this a good rule: Only build to the demand that you can predict?

Andrew: If you’re asking whether or not your business case should have little margin in it, I would agree entirely. In addition, I will say honestly that if you look back on XTAR’s experience—and I wasn’t there at the beginning of XTAR, I joined about four and a half years ago—the experience of XTAR as a company was one of learning some lessons, in some cases the hard way.  There was a little bit of “build it and they will come” thinking in there at the beginning, and it took quite some time for  what do we do well and really focus on that.  But I think as a general rule your question is a good one, which is, you know, how much speculation do you want to do on the market?  I think XTAR’s experience will dictate that in the future we will not do a lot of speculation; we will have a very high standard for our business case for growth and bringing new services to market.

Question: Is it true today as it was five years ago, that the DOD’s mission requirements are 97% carried by commercial satellite providers? What is the % today?
Andrew Ruszkowski: I couldn’t give you an exact number, but I do know that it’s clearly reduced. If you just look at the KU- band market, and if price is any indication, there’s a lot less demand for KU- band than there was a couple of years ago.  That’s mainly due to the reduction of operations in the middle east and southeast Asia.  So I don’t think commercial can claim to be supporting that much capacity. There’s an interesting question here, and that is, what really is the right mix of commercial, Com-SatCom and MILSat Com going forward, regardless of the frequency band.  Moreover, this is something that XTAR asks on a regular basis and we talk about within our communities of both government and commercial operators. What XTAR and I think I can say on behalf of the rest of the commercial satellite community, you know, is saying, let’s sit down at the table and determine what is the right architecture that’s going to fulfill the government user’s needs long into the future?  What’s the right mix of commercial and government capacity that’s going to make is so that in the future no user has to limit their mission or compromise their mission for lack of bandwidth. In addition, we’re making some progress on that conversation, but there’s a lot of work to do as well.

Question: With X-band in Defense Satellite Communications System (DSCS) and WGS, and considering the drawdown, do you see XTAR seeking new markets in Americas, India, or Asia Pacific?
Andrew: Absolutely! I believe that there is growth in all of the markets that we are in today, but I also believe that the potential for rapid growth is greater outside of North America.  And I would highlight Africa and Latin America as places that we cover today where we anticipate significant growth, both from US and European governments that are operating in those parts of the world, say, in the pursuit of terrorists, but also from local governments who are looking to enhance their own security capabilities. Interestingly, three years ago there were probably no governments in Africa who operated any airborne (ISR) systems of note.  That is changing today and there are militaries and governments within Africa who are using airborne (ISR) to address security requirements within their borders and along their borders, and that has a lot to do with portability and the effectiveness of those systems today versus not long ago, and in many cases commercial X-Band is a big part of that.

Question: DSCS and WGS are “old technologies”.  What is your opinion on commercial, hosted payloads, or free flying satellites as a better procurement for the DOD?
Andrew: Well, there are a couple questions in there.  First, on DSCS and WGS, well, there is no question that DSCS is older.  WGS was launched in part to fill the void as DSCS was retired.  However, WGS itself, however, is built on technology, which is, you know, approximately 20 years old at this point.  Therefore, I will admit some surprise that there is continued talk about launching more WGS satellites.  They just do not have the capacity that is available today on the market and that is being brought to market by commercial satellite operators like XTAR and others.  Therefore, the question there is, yes, those are older technologies, which in my view should probably be retired.  Now, you get to the other question that is, what kind of capacity should be launched to support the government user?  Moreover, I go back to my point earlier that that is going to depend upon the requirement of the mission, the user, what kind of capacity do they need. What kind of user experience do they need?  Do they need one, which calls for nuclear hardened space segments?  If so, that is probably the domain of the government user, and so can it be met by AEHF or do they need a broadband system?  If so, that is missing in the market today.  As DSCS is retired, there is no nuclear hardened constellation that can provide broadband X-band and KA-band to the government user.  So how do we fill that void?  Nevertheless, maybe that user requires a non-hardened high throughput experience. Perhaps a commercial operator can provide that just as effectively and maybe more affordably you could by launching a government system.  So these are the kinds of conversations that we are having with the government today, and they kind of go in fits and starts.  I am quite confident that 20 years from now we will be at a point where there’s, I hope, a healthy mix of both government and commercial directing the requirements of all the users who exist.

Let me give you a specific statistic that you can use.  If you look at a WGS satellite today, and maybe Jennifer can help me with these numbers, I think the WGS satellites are bringing something like 2.1 Gbps worth of throughput to the market today.  Now there is some debate about whether or not they actually achieve that full 2.1 GB worth of throughput, but they are very proud about that compared to they often state that one WGS satellite is capable of doing the throughput of all the DSCS satellites that existed previously combined.  Therefore, that sounds impressive.  However, if you look at one of your typical high throughput satellites that’s being launched these days—you know, take something like ViaSat 1, ViaSat 2, Jupiter from Hughes, and there’s a variety of others— those satellites are doing easily over 100 Gb worth of throughput.  So an amazing difference between the kinds of resources that are being brought to the market by these two different systems.  There may be reasons why something like a typical commercial high throughput satellite does not make sense for the government user and it is not going to solve all of their problems.  However, I’m sure there is some design between 21 GB and 100 GB  that make a lot more sense for the government, and at the moment there’s sort of, I think, a bit of throwing bad money after good, if that’s the term, into the WGS system where there’s really an opportunity to bring the government user a better experience in terms of throughput and cost, and the government needs to sit down and really ask itself what do they need going forward, and it probably does not include a lot more WGS satellites.

Question: The Commercial world does end of life leases or ten-year leases, but the DISA DOD does only one-year leases.  What is your opinion regarding this disparity?
Andrew: Any long-term leasing would be a useful tool for the DOD.  It would reduce the cost of their services.  Moreover, it would present them as a more dependable customer and partner to the commercial operator, which would lead to the commercial operators making their own investments in capabilities on their satellites, which are designed to support the government user, the military user.  Let us take, for example, advanced systems to reduce and mitigate interference of all kinds, both potentially intentional or accident interference.  Today, satellite operators look at the government user as a one- year business, and typically a commercial entity is not going to make large capital investments on a one-year business. Therefore, I think long-term contracting could be a very useful tool.  However, I think too often as a community and that both the commercial entities and the government entity is too focused on long-term leasing as the silver bullet to get to where we could potentially go in terms of the government commercial partnership. Therefore, it is a useful tool, but again, I come back to the bigger question of what is the architecture that is needed for the future?  That dialogue starts with the military and the government accepting the fact that they are going to be dependent on commercial for the long-term.  I think there are too many people in government who still hold onto the illusion that military satellites can fulfill all bandwidth requirements for the government user in the future.  That is, in my view, kind of a ridiculous thought, especially as requirements for bandwidth continue to grow, even as we see the drawdown of activity in, say, Afghanistan and Iraq and elsewhere. Therefore, I think that is really the most important thing that the government user can do, to get to a point where satellites for the user are there when they need it in the form that they need it and that the taxpayer can afford to provide that kind of service to the military and the other government users.

Questions: Do you see a shift to X-band from global service providers versus the US Military and its allies?
Andrew:  So I think that there are many requirements, which are being served by KU- band today which may not be suited for KU band.  However, there is no question in my mind that there is a need for all of the frequency bands, KU, X, KA, and all the others. What I would like to see happen is that there is a matching up of requirements with frequency band in a way that really has not occurred in the past.  I will give you one example.  Today the US government’s unmanned aerial vehicle UAV fleets are almost exclusively on KU- band, and they operate reasonably well there.  They are so imbedded with KU-band that it would be extremely expensive to shift to another frequency band. But the truth of it is they don’t really operate best in KU- band other than the fact that KU- band is, you know, kind of ubiquitous out there in the market, and so there was an investment decision made there years ago, perhaps a decade or more, about using the KU- band.  The truth of it is a certain portion of those systems, in fact a large portion of those systems, really should be operating in X-Band, but at the time that decision was made there was not the level of volume of X-Band available nor were the military systems operating their X-Band satellites in a way that accommodated UAV’s.  So today, with a greater amount of commercial X-Band available or X-Band of all kinds available and that growing in the future, I hope that applications which really make sense for X- Band will end up on X-Band.  We are seeing that strikingly in the area of manned aircraft, which are increasingly being put on X-Band.  Therefore, I think there will be a shift, but I think it would be more a matter of balancing or matching requirements with frequency bands in the future.  There is going to be a huge requirement for KU- band and C- band and X-Band and every other frequency band.  They are not going to go away.