Just last year, the US Department of Defense launched the military programme ‘Proliferated Low Earth Orbit (PLEO) Satellite-Based Services’. At that time, a budget ceiling of $900 million was set. Recently though, the Pentagon announced that this ceiling will be raised more than tenfold to $13 billion. AST SpaceMobile (NASDAQ: ASTS, WKN: A3CL8W) is part of this program and one of 20 suppliers selected by the Department for cooperation.
With this decision, the US Department of Defense is responding to the increasing demand from the entire US military. The Defense Information Systems Agency (DISA) is responsible for the programme. For AST SpaceMobile, which recently released five new satellites into low-Earth orbit and then deployed them ahead of schedule (Learn more), the massive expansion of the programme is effectively an official endorsement of its business idea by the Department of Defense.
The company is focused on closing the gap in the market for low-Earth communications satellites. The fact that the Pentagon had to increase the amount of funding provided by a factor of more than ten after just one year shows how much the various parts of the US military demand corresponding services.
War in Ukraine highlights the importance of simple, secure and easily accessible internet access in the field
This is happening against the backdrop of the war in Ukraine, which has shown from the outset how important it is to have unrestricted and uninterrupted access to the internet at all times. Here, it was primarily the Starlink satellites provided by SpaceX that gave the Ukrainian military a communications advantage over Russian forces.
The events in Ukraine are currently being closely monitored and evaluated by all the world’s armies, and it is clear to all that in the event of war, fast and secure communication represents a key advantage and thus a greater chance of survival.
The Pentagon’s investments are therefore more than understandable, especially since the US military is present worldwide. This also necessitates fast communication across great distances and continents. It is obvious that communication via satellite is the method of choice here.
Flexible and cost-effective applications are favoured by the PLEO programme
The PLEO programme takes this need into account. It is an indefinite delivery contract from the Defense Information Systems Agency and the Commercial Satellite Communications Office of the Space Systems Command. So far, 20 providers have been selected to compete for contracts for specific tasks over a period of five years. AST SpaceMobile is one of these providers and there is an option to extend these contracts for a further five years.
Last year, 660 million of the 900 million US dollars provided were already spent, with the bulk of the orders being awarded to Starshield, the military variant of the Starlink service. In the future, Pentagon orders are likely to go primarily to those providers that can provide easy access to the Internet. It must also be easy and quick to set up in the field under the most difficult conditions.
Like SpaceX, AST SpaceMobile will also offer a product that can be used for both commercial and military purposes. The expanded programme fits perfectly with this idea, because instead of defining specific product specifications, the PLEO contract gives providers the flexibility to define services. The model thus enables providers to identify the most cost-effective options for providing functions.
AST SpaceMobile has the chance to secure large lucrative contracts
At the same time, the contract allows the US government to achieve more favourable prices for its military by bundling demand and handling it more flexibly than would be possible with traditional one-off contracts. For Jeff Rowlison, an industry consultant at American Defense International, the PLEO contract is a breakthrough for the use of commercial technologies in military applications.
Today, AST SpaceMobile already offers its customers the option of dialling into satellite communication from any mobile phone. The service has been designed particularly for those regions that have no or only inadequate coverage from mobile phone masts.
This is the classic situation for a soldier in the field, who suddenly finds himself in the middle of nowhere and needs to send an important message to his superiors or call for help from his comrades. It is therefore not unrealistic to expect that AST SpaceMobile might secure a not insignificant share of the Pentagon’s 13 billion US dollar pie.