Evolving Needs of Warfare Spur Demand for Commercial Off-the-Shelf Technology and Increase Revenues in European Strategic Military Communications Mark

Frost: The reliance of militaries on commercial R&D and commercial off-the-shelf technology (COTS) in a bid to reduce R&D costs is driving the European strategic military communications market. This trend is, at the same time, encouraging non-defence firms to step into the European strategic military communications market and provide COTS technology and services. Even as traditional European defence contractors grapple with the challenge posed by COTS manufacturers, they will also have to face intensifying competition from their U.S counterparts. European militaries are awakening to the need for up-to-date information and communication technology. However, the advanced nature of U.S technology is a cause for concern for European contractors, as in parts of Europe, such as Eastern Europe, U.S. defence and non-defence firms have succeeded in creating a monopoly over the market through foreign military funding.

Despite these challenges, traditional market participants can still look forward to a host of growth opportunities. As European militaries increasingly focus on expeditionary operations and network-centric warfare (NCW), European nations are expected to boost investments in their strategic military communications markets to meet these evolving needs of warfare.

Developments in sensor technology, enabling the transmission of increasing amounts of data to create an efficient network in the battlespace, are also set to drive market expansion. These factors will fuel existent competition while pushing overall revenues from an estimated $1.91 billion in 2005 to $2.56 billion in 2014.

The switch from territorial defence to expeditionary warfare has resulted in greater need for data transmission, initiating an increased demand for military satellite communications (MILSATCOM). Accordingly, the MILSATCOM segment, which currently represents 50.0 percent of the total market revenues, is projected to grow strongly over the next ten years, with estimated earnings of $1,362.2 million in 2014.

The MILSATCOM market will continue to mature due to the benefits of owning a dedicated military-specific communications satellite constellation. Countries such as the United Kingdom, France, Germany, Italy and Spain possess, or have plans to procure their own dedicated military satellites, while countries such as the Netherlands, Turkey and Greece have procured their own ground stations to minimise costs and reduce the involvement of commercial companies, in their SATCOM.

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