The Dynamics of Growth in Worldwide Satellite Communications Capacity
RAND CORP SANTA MONICA CA
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The Department of Defense DoD cannot afford to own all the satellite communications capacity it might possibly need in all areas of the world. As noted in a previous RAND report Bonds et al., 2000, DoD planners estimate that they will need to provide about 16 Gigabits per second Gbps of bandwidth by 2010 to effectively support a joint-service operation. However, given current procurement plans, the DoD will only own only one-eighth of its projected desired capacity. Therefore, for the foreseeable future, the DoD will need to buy at least some of its communications capacity from commercial vendors. An ability to understand what drives growth in worldwide satellite capacity and to predict capacity would be useful to military communications planners in making decisions in advance to purchase and lease communications capacity in various parts of the world. In the empirical analysis in this report, we show that there is a strong relationship between growth in total satellite communications capacity and economic growth, as measured by Gross Domestic Product GDP. Adjustment to change is quite rapid if there is an imbalance in the long-run equilibrium between supply and demand, we estimate that on average 25 percent of the adjustment is made within one year, although there is some regional variation. The analysis indicates that the market can adjust swiftly to a surge in demand, and thus there may be little need to buy satellite capacity in advance simply to ensure that capacity will be there if needed.
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