The report, which provides an in-depth overview of satellite manufacturing in the globe by tracking demand trends, satellites on order, as well as economic and technological factors, has identified the military sector as a main revenue generator for the industry.

The military satellite market generated revenues of slightly over $1 billion, or 13 percent of overall revenues in 2002, making it the smallest segment of the world satellite market.

However, 2002 was a slow year for military launches since many satellites for the current-generation were launched in years past. The military market is actually expected to generate the largest revenues within the 2002-2007 timeframe as next-generation programs begin to be deployed.

The Post 9/11 environment, renewed fears of terrorist attacks, and activities of rogue states have prompted increased levels of military spending. Since space systems are growing in importance in conducting theater warfare and tracking the activities of terrorists and rogue states, further developments and spending for next-generation satellites will ensue in coming years. The United States specifically will lead the globe in deploying military payloads in space.

Indeed, the U.S. next generation of spy satellites under the Future Imagery Architecture (FIA) program are currently being built and are planned to be launched beginning in 2005.

The National Reconnaissance Office (NRO) plans to deploy a dozen or more new satellites that are smaller and smarter to replace the current generation. The 20-year program is estimated to cost $25 billion, making it the most expensive military space program ever mounted by the United States.

"The nature of the military satellite market is such that only a few satellites are launched annually, yet the relatively high cost of each satellite system makes this segment a highly attractive market to tap," according to Jose del Rosario, senior analyst and author of the report.

The report concludes that military satellites are expected to account for 46% of all revenues for the 2002-2007 period, compared to commercial satellites that are estimated to account for 39%, while science satellites should account for the remaining 15%.

Apart from enhancing its communications capabilities as bandwidth demand has increased substantially, the U.S. is looking to deploy a new system of electronic cameras that can be pointed on potential trouble spots anywhere on the planet on a few hours' notice or less.

More importantly, the satellites would also be able to track objects one-tenth the size of those visible in commercially available satellites so that objects roughly the size of a baseball can be detected.

The concept of waging a "netcentric war" has driven defense spending, particularly in the United States to link sensors, communication devices and weapons in a seamless digital network that boosts military effectiveness. As such, the Pentagon's growing thirst for bandwidth has led to increased business for commercial satellite companies.

During the recent war on Iraq, for instance, more bandwidth was needed to increase the ability of surveillance planes to beam live video to the dispatchers of bombs and missiles. It also enabled uncongested conduits for encrypted conversation. From the first Gulf War to the latest War in Iraq, the Pentagon's demand for bandwidth has increased roughly tenfold.

"The military as a customer base will therefore drive the commercial satellite business as well, as it relies increasingly on commercial-based systems to supplement its communications and remote sensing data needs," according to del Rosario.

As such, the science satellite sector is also expected to benefit from increased usage by government and military entities. The U.S. government sector in particular will rely more on commercial remote-sensing imagery and will bolster the satellite industry under a new White House policy released in May 2003.

The new policy states that it is meant "to advance and protect U.S. national security and foreign policy interests by maintaining the nation's leadership in remote-sensing space activities and by sustaining and enhancing the U.S. remote sensing industry.

"Global Demand for Satellite Systems in the Commercial, Military and Science Satellite Sectors" is a multi-client report now available from Northern Sky Research.

Northern Sky Research is an international market research and consulting firm specializing in satellite technology and applications. Northern Sky Research primary areas of expertise include satellite technology, IP applications, and broadcast services.

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