The acceptance of hosted payloads is an idea that is “way behind” its time, said Jimmy Schaeffler, chairman and senior research analyst at The Carmel Group, a telecommunications consulting firm in Carmel-by-the-Sea, Calif.

“Hosted payloads should have already been on most people’s radar screens decades ago, rather than simply during the past few years,” Schaeffler said. It is “odd” that hosted payloads have been late in gaining broad adoption because it is a “basic and common sense” concept, he added.

In contrast, the strategy of enlisting partners to spread the risks and share the benefits of major business projects is routinely used in other industries, such as insurance, housing and transportation. If such partnerships are implemented successfully, “everyone wins,” he added.

In general, hosted payloads create additional manufacturing and launch opportunities for the space industry, while governments and companies that arrange for their payloads to be hosted on commercial satellites gain access to space less expensively, Schaeffler said.

One of the realities of partnering with others is reduced control, compared to when a company or a government is solely responsible for a mission, Schaeffler cautioned. That situation commonly affects both governments and businesses involved in hosted payloads or any kind of joint venture, he added. “When you add partners to a business, especially those with substantial vested interests, you correspondingly cede control,” Schaeffler explained.

“Put another way, in a hosted payload relationship, when important decisions pre-, during, or post-launch occur, you can’t just make that decision yourself and be done with it. Often that means additional overall expenses, and time delay, for example. But, don’t forget to balance that with the shared costs, which in these times of tighter government and company budgets, can make or break a project.”

The satellite television and radio companies already have demonstrated the merits of partnering with others, said Schaeffler, who has analyzed those companies from their launch in the 1990s.

One of the best examples of a successful partnership in the satellite television industry occurred during its earliest days when DirecTV entered into an agreement in the 1990s to provide in-orbit transponder capacity to U.S. Satellite Broadcasting (USSB). DirecTV, a Direct Broadcast Satellite (DBS) provider, offered more than 100 digital quality channels to compete with cable operators, while its partner, USSB, provided supplemental premium movie channels. “But back then, that was more of a hosted payload anomaly,” Schaeffler said. “That was a rare event and has remained so for the better part of the past 10 years.”

The partnership created so much value that DirecTV agreed in 1998 to purchase USSB for more than $1.3 billion in stock and cash. The merger gave DirecTV ownership of USSB’s premium movie channels and helped the surviving satellite TV provider boost its available channels from 185 to 210. “I like the example of DBS providers like DISH Network and DirecTV, or a satellite radio provider, like Sirius-XM, where those companies lease or license parts of their transponders for the delivery of program content,” Schaeffler said.

“The same concept applies to a commercial satellite operator that can reach out to a particular segment of an industry, and for a price that lessee or license could never by itself afford, and give it a place on a satellite.” The result can be the creation of a “new business,” Schaeffler said.

“Hosted payloads make that possible,” Schaeffler said. Downsides to hosted payloads for commercial satellite operators include typical business relationship issues, such as implementing and enforcing agreements, including making sure payments are paid on a timely basis, Schaeffler said. For governments, hosted payloads are a way to save taxpayer money and to deploy important space-based capabilities faster than otherwise could be achieved, Schaeffler said. But the U.S. government, in particular, still needs to make progress at the policy level to avail itself of hosted payload arrangements, Schaeffler said.

The U.S. government is starting to make progress by working with organizations such as the Hosted Payload Alliance to delve into contractual and policy issues to avoid any remaining “roadblocks,” Schaeffler said.

“Hosted Payloads allow companies and government entities with lesser resources or other motives to pursue their interests, and allow those same organizations to save money in the process.”

Schaeffler has spent more than four decades in the telecommunications, computer, and media industries, after starting his professional career with ABC Sports during the 1972 Munich Olympics. Schaeffler was the DBS analyst for Paul Kagan Associates during 1992-1995; the principal author, researcher, and analyst for a monthly DBS newsletter; and the author of three data books.

His books, published by The Carmel Group, are: “2002 DBS North America, Trends, Analysis, Projections,” “DVRs 2006: Time in a Magical Box; Unlocking Cable’s True Potential: A Guide to Revenue Growth in an Age of Piracy,” and “DVRs 2007: Time In A Magical Box.”