From earning a BS in Economics from the U.S. Air Force Academy, to the receipt of an MBA from Texas A&M University, Robert Tipton (Tip) Osterhaler has served both his country as a Brigadier General in the U.S.A.F. to becoming the CEO of AMERICOM Government Services (AGS) in 2006. The company moved from a product oriented sales channel into an end-to-end satellite solutions company under his guidance, and focuses on the needs of U.S. government clients. AGS is a wholly-owned subsidiary of SES.
Mr. Robert Tipton (Tip) Osterthaler became President and CEO of AMERICOM Government Services (AGS) in December, 2006. AMERICOM GOVERNMENT SERVICES, Inc. (AGS) is an independent corporation and wholly owned subsidiary of SES AMERICOM. During his tenure at AGS, the business has been transformed from a product oriented sales channel into an end-to-end satellite solutions company focused on the needs of its U.S. government clients. In fact, in 2008, the Company was the recipient of the largest government contract ever awarded to SES — US$286 million + — AGS also negotiated a contract with the U.S.A.F. to host a government operated payload on board a commercial aircraft.
Prior to joining AGS, Mr. Osterthaler was a Senior Vice President at Science Applications International Corporation (SAIC), a large systems, solutions and technical services company serving the needs of the U.S. government. And while serving his country, his military assignments included Vice Commander of the Air Intelligence Agency, NATO Staff Officer, and numerous command and senior staff assignments. He is also a Command Pilot, having accumulated more than 3,200 hours of flying time in fighter aircraft including multiple models of the F-4 Phantom II and the F-15 Eagle. MilsatMagazine (MSM) is delighted to present an interview with this dynamic leader.
MSM
Mr. Osterhaler, you have enjoyed a highly visible and important career, from that of a Command Pilot to becoming a general officer with the U.S.A.F. to leading a company involved in various modeling, sims and training solutions. From your involvement as a Brigadier General in the U.S.A.F., and as Deputy Assistant Secretary of Defense for European and NATO Policy, how did such prepare you for your current duties as the President and CEO of Americom Government Services? Please tell us about your background.
Robert Osterthaler
The experience I had in the Air Force, over the course of 28 years, gave me a very good appreciation for the central importance of reliable and capable communications systems. Whether I was involved as a Wing Commander in an operation, in the cockpit of an F-15, or sitting in the Pentagon making policy decisions, the ability to reach out instantaneously to obtain reliable information was central to everything we did, from tactical decisions to making longer-term policy decisions. The government at every level is more dependant on commercial communications infrastructure than probably any other single area, having an appreciation of its importance has been very valuable to me in my current position.
MSM
May we have some history of the company?
Robert Osterthaler
AGS has gone through a period of rapid change over the last couple of years. We added a significant number of people to the organization who have had direct experience in government. Prior to these changes, AGS had really been a market channel to the government that operated much like commercial market channels. AGS is a very different kind of organization now. Rather than starting with the proposition that we have bandwidth that we need to sell, we start with the proposition that the government has requirements that it needs to meet, and we look for opportunities where we can provide solutions to the problems the government is struggling with.
MSM
What were AGS’s successes over the past year, and where do you see company resources being applied over the next couple of years?
Robert Osterthaler
In 2008, AGS had the best financial year in its history. That’s a wonderful thing to say, but what it reflects is that the changes we put in place over the past couple of years have enabled us to more effectively solve the communications challenges the government faces. It’s merely a reflection of the fact that we are a better and different kind of organization than we used to be.
In 2008, we won a very large contract with the U.S. Army to continue support of their TROJAN network. We were awarded a contract with the U.S. Air Force to host an Air Force sensor payload and we found strength across our core business for all of our customers. The Army, Navy, Air Force and Marine Corps, and other agencies within the U.S. government are increasingly coming to us with their thorniest problems. The financial results really reflect the fact that we are better able to meet their demands.
MSM
How important is SATCOM’s role for NGOs, government entities, and the military? What do you see as this industry’s most crucial challenges, and how do you believe they will be overcome?
Robert Osterthaler
The commercial satellite industry is an essential part of the overall global communications infrastructure. Many NGOs and a lot of U.S. government agencies operate on a worldwide basis. They become dependant on commercial satellite infrastructure, whether it is a matter of their intent or not. The capacity on board commercial satellites represents such a large percentage of the orbit capacity total and can be used for a variety of communication applications.
It has been well publicized that for the U.S. Department of Defense (DoD) more than 80 percent of the total capacity they use to support their deployed systems actually rides on commercial capacity rather than U.S. Government-owned capacity, which can serve as a reflection of dependence.
For the commercial industry, the challenge has always been to try to understand what the government is going to need so such can be taken into account in the decisions made about where to invest in satellite capacity. The difference in the way the U.S. Government (USG) and commercial customers purchase capacity is substantially different. The challenge has been to develop business models that will enable us to continue to develop the USG market in an environment where such different buying habits are commonplace. The reason this is such an important issue is that while the government is highly dependent on deployed commercial capacity, commercial industry is much more focused on its commercial customers. This is due to commercial customers consuming almost 95 percent of the total global commercial capacity on orbit. This creates a somewhat asymmetric situation where the government is more dependant on commercial industry than commercial industry is dependant on the government to buy their capacity.
Another challenge the government is faced with, and an area where commercial industry can help, is the risk associated with some of the larger programs. In terms of hosted payload opportunities, the government has a strong and understandable desire to reduce the risk associated with fielding their own space systems. There have been a number of high-profile government satellite programs which have been criticized for being behind schedule and over budget.
One of the challenges the government has is the need to reduce risk by initiating technology development in sort of a spiral manner, rather than just fielding a constellation block-buy, which is the way the government purchases a lot of satellite systems. The Commercially Hosted Infrared Program (CHIRP) AGS is currently working on for the U.S. Air Force, is an example of how commercial industry can partner with government to provide timely and affordable access to space in order for government systems to be spaced-qualified before the government has to make major financial commitments, only to then learn that the technology they have used is not mature, or that it fails on orbit.
That is one area where I believe there is a potential for strong partnerships — somewhere along the lines of what we are doing with the CHIRP program. The government will look with increasing frequency at the commercial side’s ability to provide needed capacity, especially in areas that don’t require extensive technology development, such as spacecraft busses or in terms of actual transponders.
The recent UHF procurement conducted by SPAWAR is an example of a future where commercial industry, using its proven PM capabilities and high reliability, can provide hosted bandwidth on its spacecraft — whether that be on its entire spacecraft or on a partial area of the spacecraft — it may be in traditional commercial frequency ranges or it may be traditional government frequency ranges such as military Ka- or X-band, for example. There is a lot of potential for the government to obtain the needed capacity by working with industry to produce spacecraft that meet its specific requirements, rather than simply depend on the availability of commercial bandwidth to support its systems.
MSM
Americom GS is currently working with a number of important clients, such as AFRTS, the FAA, NASA, NOAA, and the South Korean armed forces. Could you tell us a little bit about your company’s work with these entities?
Robert Osterthaler
What we are able to do for all of our government customers is provide a significant amount of capacity that will support very demanding applications, either point-to-point, point-to-multipoint, or multipoint-to-multipoint. Satellites can manage all of these needs — the way a satellite is configured may make it better suited for one set of applications than another. Users such as AFRTS are interested in the kinds of capabilities we routinely deploy for our direct to home customers on the SES ASTRA fleet and on portions of the SES AMERICOM fleet. Other users are more interested in the kinds of capabilities we provide our cable customers, or to our telecommunications partners who require very large pipes to move large quantities of data point-to-point. The application really determines exactly how ASG responds.
We have the capability across the fleet to meet a number of different demands. We have examples of our capabilities with all of our government customers. It starts with what the government customer needs, not necessarily what we have to sell. In the short term, we have many different kinds of capabilities on our deployed fleet. In the longer term, we have the ability to invest in the kinds of capacity that will be most suitable for the applications we think people will be dependent upon in the future.
MSM
The Space Segment, Global Information Grid, and a plethora of other services designed to assist the Warfighter are crucial to success. With the amount of capacity required to service mission critical undertakings constantly being assaulted by various needs (i.e., surveillance and intelligence missions by satellites and UAV/UAS as well as COTM and COTH), how does AGS continue to ensure bandwidth availability for your projects in theater as well as for NGOs and first responders elsewhere?
Robert Osterthaler
AGS is always focused on the customer’s requirement, not necessarily just on the task of selling available unused bandwidth. We respond in a number of different ways. For near-term, immediate needs, we look to the SES fleet to determine whether or not appropriate capacity is available, and in sufficient quantities, to satisfy the requirements of the customer’s application. If it is not available, we function in the market as an integrator and reseller and we have sources across the industry with whom we work every day to ensure the customer’s needs are satisfied, regardless of the source of the capacity.
AGS is focused on providing the solution to the problem. We are an integral part of the SES family, and we endeavor to ensure the SES capacity is used whenever it is appropriate, however our number one concern is the customer’s need.
MSM
AGS offers launch, satellite, ops and support for your strategic satellite solutions. Could you please outline those services and the role they play for your government and military customers?
Robert Osterthaler
At the corporate level, SES is really in the business of buying and operating satellites on behalf of customers who buy capacity off those satellites. AGS is involved in the investment decision making of our company and is always trying to gain insights as to what the government is going to require in the future in order for those insights to be brought into the discussions at the SES level. The intent of all this activity is to ensure we stay ahead of the government’s needs for tomorrow and that we have suitable capacity available when and where the government is most likely to need it.
We maintain very close contact with the government in order to gain the type of insights needed to make informed investment decisions. We also understand the government doesn’t always know where it is going to need capacity a couple of years into the future, so there is somewhat of an inherent risk in this process. Even with our commercial customers, there is some inherent risk in investment decision making — we are not uncomfortable with this process. We are getting better all the time with future thought, and this is really one of the primary activities I spend my personal time on — trying to understand how we can better serve the needs of the government user.
MSM
With custom networks built for our armed forces, NASA, and the FAA, would you take us through how the specific solutions were devised, tested, and implemented? How was AGS selected to bring these solutions to these various organizations?
Robert Osterthaler
One of the elements we focused a lot of attention on over the past couple of years is enhancing our abilities to design and deliver complex solutions. AGS has been in the solutions business for quite a long time, but providing end-to-end solutions requires a better understanding of the government’s mission and operating concepts than just selling capacity. We have invested a tremendous amount of effort into strengthening our engineering team and into strengthening our design and delivery capabilities. This has been accomplished by putting into place disciplined processes which will ensure we can deliver what we sell at the price agreed upon and on the schedule promised to our government customers.
We have experienced a great deal of success with the processes we put in place and this is, in large measure, responsible for the government showing their continued confidence in AGS, such as with the award of the Army TROJAN contract, which is an extremely complex system. The AGS proposal was extremely detailed and demanding to write and is an excellent indicator of where I believe the Company has arrived as an organization.
MSM
How is capacity via SES satellite constellations apportioned to your clientele? With SES AMERICOM, SES NEW SKIES, and SES ASTRA all working hard to deliver communication solutions, how does each division determine need for capacity when so many projects need the satellites? With the AMC, Ciel, SATCOM, NSS, IS, Astra and SIRIUS satellites, could you explain how Americom GS works with each of the SES divisions to determine transponder priorities?
Robert Osterthaler
As recent press reports have indicated, SES AMERICOM and SES NEW SKIES are consolidating their operations. This will bring the spacecraft of those two operating companies together into a single fleet. AGS has direct access to capacity on that fleet and we have visibility into the current status on the transponders, availability, and current pricing. It is a somewhat more indirect relationship with the SES ASTRA fleet, as their primary focus is on the European direct-to-home (DTH) market.
What that means for AGS is that much of the capacity on the SES ASTRA portion of the overall fleet is not necessarily suitable for the applications that our customers are looking for; nevertheless, we do have the ability to obtain capacity on the SES ASTRA fleet. We have visibility as to what is available and pricing as well — it is just done through a separate process than with the SES AMERICOM-NEW SKIES fleet.
MSM
Lastly, Mr. Osterthaler, what is Americom GS’ future in MILSATCOM and SATCOM? And how do current global financial concerns affect your company’s ability to consider growth?
Robert Osterthaler
AGS is going to continue to be the direct market channel to the U.S. government customer. In the coming year, AGS will focus on ensuring the future capacity of the fleet is suitable for the U.S. government. In terms of the current global economic situation, no one is unaffected by these financial concerns. Our customers are affected to a degree, and our business partners are affected. SES is unique among global operators in that the company is publicly owned and financially quite stable.
The condition of the credit markets makes it very important SES continues to operate in the predictable, somewhat conservative manner it always has, and such has served us very well over the past year. What AGS is doing right now is taking into account the fact that some of our commercial customers are likely to be placed under pressure by some of the current economic conditions. We will expand our fleet somewhat more conservatively with the probability that most likely will be the case.
The impact on our government customers I expect to be minimal. However, as the government will need to continue to provide bandwidth to systems that are already deployed in the field, I expect they will continue to depend on us in the near and intermediate-term to support the systems they have fielded and to support the new systems they have in the pipeline. To the extent that the government were to reduce its overall satellite bandwidth needs, then I’m sure we’d be affected by that. The reality is that such a move is unlikely to occur anytime soon.
Developing government applications continues to require significant supporting commercial capacity and nothing has been happening in the credit markets or the overall economy that is likely to change that very much. In the longer term, the ability of the government to continue to place its own owned capacity on orbit might actually require us to provide even more capacity as a total percentage than we have historically managed before.
As government budgets come under pressure in the coming years, the ability of the government to invest in multi-billion dollar owned systems could result in an increase in reliance on commercial systems. Therefore, I don’t believe we’ll see a lot changing in the near term as the government will continue to require our support. In the longer term, I think it is conceivable that the commercial side of this dynamic business will become even more of an integral part of the overall architecture.
MSM
Thank you for your time, Mr. Osterthaler.
