Military demand is redrawing the satellite industry

Satellite communications were once divided along relatively clear lines. Governments relied primarily on their own systems for military communications, while commercial operators served television networks, telecommunications providers, businesses and consumers. Now those two worlds are moving closer together. Armed forces are turning to privately operated satellite networks for some communications once handled more exclusively by government systems, while commercial space companies are developing services with military customers in mind.

Space-industry consulting firm Novaspace expects the amount of satellite communications capacity used by militaries to rise sharply over the next decade. Its Satellite Communications for Defense and Security report forecasts that commercial satellite operators will generate more than $22.6 billion in service revenues from defense and security customers by 2035, with more than 95% coming from newer constellations operating closer to Earth.

“There are many factors behind the increase in military demand for satellite communications,” Santiago Perez, Senior Manager at Novaspace and an author of the report, told The Beiruter. 

The first is obviously the security environment, which is deteriorating, and there is also an increase in the use of satellite communications in the doctrine of military forces.

Defense is becoming a much more important customer for the commercial space industry, pushing civilian-focused companies toward military services and forcing governments to decide how much critical infrastructure to entrust to private operators.

A larger military customer

The satellite industry's turn toward defense is occurring against an unusually strong expansion in military spending.

World military expenditure reached $2.887 trillion in 2025, according to the Stockholm International Peace Research Institute's April 2026 Trends in World Military Expenditure report. 

Spending rose 2.9% in real terms from 2024, marking an 11th consecutive annual increase, and was 41% higher than a decade earlier. European expenditure alone rose 14% to $864 billion, while spending across Asia and Oceania increased 8.1% to $681 billion.

Satellite communications are capturing part of that spending as militaries require greater connectivity across dispersed forces. Novaspace expects commercial service revenues from defense users across both geostationary orbit, or GEO, satellites and non-geostationary orbit, or NGSO, systems to grow sharply over the coming decade. NGSO revenues alone are projected to reach more than $21.3 billion by 2035, an annual growth rate above 34%.

The geography of demand, however, remains concentrated. Novaspace forecasts that U.S. forces will account for more than half of global defense satcom demand and more than 48% of revenues in 2035. China is expected to account for roughly 30% of each. But commercial adoption is also spreading well beyond the two largest markets.

“Globally, we see that the price of these systems is decreasing,” Perez said. 

This decline in costs facilitates greater adoption of commercial satcom by nations that were already using it, but also allows new countries and defense ministries to incorporate it into their doctrines.

Lower costs allow governments to add commercial capacity without constructing entire constellations of their own, while opening a once heavily state-dominated market to private companies.

The Starlink advantage

SpaceX has pushed this convergence between commercial and military satellite communications further than any of its major competitors.

Starlink began launching satellites in 2019 as a commercial broadband network. AAfter Russia's full-scale invasion in February 2022, Starlink became an important communications tool for Ukraine, demonstrating the military utility of privately owned satellite infrastructure. SpaceX had also begun developing Starshield by 2022, adapting technology and capabilities from its commercial satellite business for government and national-security customers.

“One of the major advantages of the SpaceX and Starlink business model compared with competitors is that they control the whole value chain,” Perez said. 

Space X’s vertical integration allows them to make changes and adapt very quickly.

Since SpaceX builds both satellites and the rockets that launch them, the company is able to deploy, replace or modify spacecraft faster than operators reliant on separate suppliers.

Consolidation among its competitors, however, has accelerated. SES, based in Luxembourg, completed its $2.6 billion acquisition of Intelsat in July 2025, combining two major satellite businesses with networks operating at different distances above Earth. Perez said satellite operators are also looking toward greater vertical integration as they contend with Starlink's model.

The strategic autonomy calculation

For European governments, using networks such as Starlink can mean relying on a foreign private company for communications that may become critical during conflict, making performance and price only part of the calculation.

Perez said European governments weigh that dependence differently, balancing the price and availability of commercial systems against the value they place on strategic autonomy. The European Union's IRIS²,  a planned secure multi-orbit constellation, is intended to reduce reliance on foreign providers for government communications.

“IRIS² will provide autonomy and capacity to European member states,” Perez said. “But it is not a competitor to Starlink.”

China has largely avoided this particular dependence by keeping satellite capacity within a domestic space industry that remains closely tied to the state.

“China depends only on their own satellites,” Perez said. 

China is a different story compared with other nations, because even commercial companies are somehow state-controlled.

As commercial networks assume more military functions, these differences in ownership determine not only who provides the technology, but how much control governments retain over communications they may need during a crisis.

Commercial satellites move closer to defense

Military demand is beginning to influence what commercial satellite companies build, not simply who buys their services.

Canada's Telesat, for instance, decided in March 2026 to dedicate part of its planned Lightspeed constellation specifically to military communications, citing rising demand from allied defense customers.

By August, Telesat had signed a C$2.3 billion contract with Canada's Defence Investment Agency to provide secure military connectivity in the Arctic, the largest contract in its six-decade history. The agreement will also expand Lightspeed from its initial 156 satellites to 225, a 44% increase.

Yet the growing role of private operators does not necessarily imply that governments will outsource their most sensitive communications. Perez expects a hierarchy to persist, with sovereign systems retaining the missions for which governments cannot tolerate dependence on an outside provider and commercial capacity filling a growing range of other requirements.

“The commercialization of space raises the question of whether there is a risk of depending too much on commercial systems,” Perez said.

But at the end of the day, military users will always depend on their own controlled systems for critical missions.

The commercial satellite industry is therefore not replacing military space infrastructure, but moving closer to it. As defense becomes a larger source of revenue, the boundary between the two markets will be defined less by who built a satellite than by which missions governments are willing to place aboard it.