A galaxy of new wireless services may soon beam down on the telephony-poor regions of the world.
Mobile satellite systems-just like terrestrial-based wireless networks-are evolving from serving specialized markets to providing consumer pocket telephony as well as plain old telephone service. Right now, many of the targeted markets for MSS have no POTS at all.
Since 1979, the 77 member-nation treaty group now known as the International Mobile Satellite Organization, or Inmarsat, has provided a range of services from its geostationary satellite system, primarily to the maritime industry.
Inmarsat has more than 50,000 customers and 1994 revenues of $334 million, with about 30 percent of that revenue coming from land mobile services, according to Elizabeth Hess, manager of media relations.
Comsat Mobile Communications, which holds 22 percent ownership in Inmarsat, said it will begin launching third-generation Inmarsat-3 satellites this March. The new constellation will deliver the company’s Planet 1 service.
Comsat said it designed Planet 1 for international business travelers and national roamers who travel outside of cellular coverage and for users who need mobile communications but live outside of cellular service areas. Planet 1’s airtime will be $3 per minute.
But Inmarsat does not have the heavens to itself any longer. American Mobile Satellite Corp. launched its own geostationary satellite last April.
AMSC is licensed to operate a total of three satellites to serve North America. Major investors in the publicly traded company include Hughes Communications Inc., AT&T Wireless Services, Mobile Telecommunication Technologies Corp. and Singapore Telecom.
“Our service cost is so much less than Inmarsat’s that we think we’re going to cause a lot of competitive consternation for them,” said Earl Galleher, AMSC’s director of marketing. Airtime for the service will cost $1.49 per minute, he said.
Besides five different satellite-only phone configurations available now, Galleher said a dual-band terminal is expected to be available in April to provide fill-in service for cellular networks. AMSC said it has signed agreements with 155 cellular carriers to distribute the Skycell service.
Daniel Ernst, an analyst at Malarkey Taylor Associates-Economic and Management Consultants International Inc., said that geostationary satellite systems are becoming popular for providing regional wireless local loop services and basic telephone infrastructure, somewhat overriding the original desire for mobility.
A four-nation consortium signed agreements in December to set up the first pan-Asian mobile satellite network. The Asia Pacific Mobile Telecommunications project reportedly will begin service in 1998 with a coverage footprint stretching from Pakistan in the west to Japan and Indonesia in the east.
“Satellite telecommunications will make communications more accessible in countries where the … infrastructure is not so developed. This way, the economic dynamism of the region can be further enhanced,” according to Singapore Communications Minister Mah Bow Tan.
Six companies from Singapore and China will make a total initial investment of between $500 million and $800 million in the project. Thailand-based Asia Mobile Telecommunications Co. Ltd. and Japan’s Mitsubishi Corp. have signed memorandums of understanding to join the project at a later stage.
Geostationary satellites stay fixed above a particular geographic region by rotating in sync with the earth at an altitude of about 22,000 feet. They can launch to serve just one region.
EMCI’s Ernst said, “Geostationary systems are a much more affordable way to reach concentrated areas than global medium-earth-orbit or low-earth-orbit systems.”
But there is a trade-off imposed by the high altitude they operate at.
“They’re not the same quality services as LEOs in terms of power requirements for the terminal and time-delay in transmission. An AMSC-type system can’t access a portable phone,” Ernst said.
LEOs and MEOs operate like cellular systems in the sky using small, low-power satellites that orbit the earth at lower altitudes and make possible direct communications with small handheld terminals. Their hurdle is the sheer number of satellites that must be rocketed into orbit before they can begin offering service and the huge upfront financing required to do it.
Four such systems have so far been licensed by the Federal Communications Commission for commercial service.
Orbital Communications Corp. is licensed for a 36-satellite LEO system to provide two-way, low-speed, data-only services for asset tracking, sensor monitoring and messaging.
The company launched two of the satellites last April and will begin commercial service on Feb. 1, according to Anton Reut, director of government services. Data communicators will cost less than $1,000 and data monitoring services, for example, will cost between $10 and $30 per month depending on the application, he said.
Iridium Inc.-backed by Motorola Inc.-has plans to build a 66-satellite LEO system at a cost of nearly $4 billion. Globalstar L.P.-backed by Loral Corp. and Qualcomm Inc.-wants to put up a 48-satellite LEO system for about $2 billion. Both companies said they will introduce service by 1998.
Recent attempts by each company to secure debt financing were rebuffed by unfavorable ratings handed down by Standard & Poor’s Ratings Group (RCR, Oct. 23, 1995, p.42).
Iridium said it will seek more internal financing from its equity backers while Globalstar secured additional bank financing.
Odyssey Telecommunications International-backed by TRW Inc.-is trying to strike a happy medium between the cost of LEO systems and the signal-delay problems of geostationary systems with a 12-satellite constellation in medium earth orbit.
If launched in 1999, Odyssey said it plans to begin providing service in the year 2000 with six satellites serving three noncontiguous regions, according to Ed Nowacki, TRW’s project manager for the Odyssey Systems Program.
With fewer satellites, fewer launches and longer-lived satellites, Nowacki said MEOs are “far more cost effective than LEOs.”
Odyssey said its total system cost is expected to be $2.5 billion including the full ground network. Equity financing is being pursued now from service providers but debt will have to be issued later, Nowacki said.
The company said its prime markets are the developing countries that have no existing wireline or wireless service. This market could have as many as 35 to 40 million users by 2008, Nowacki said.
Inmarsat-the original provider of mobile satellite services-also is backing a MEO (also called intermediate-circular-orbit) system.
Formerly known as Inmarsat-P, the new ICO Global was spun off in September 1994 with Inmarsat retaining a 15 percent interest.
The company plans to begin service in 1999 with a 10-satellite constellation at a cost of $2.6 billion.
Inmarsat views all of this as part of a continuum, noted Hess. “Inmarsat was developed for safety and distress at sea, not the mass market. With ICO pocket-phones your talking about a truly mass-market product,” she said.
Other MSS hopefuls are in various stages of fund-raising and licensing, including Constellation Communications Inc., Leo One USA , Mobile Communications Holdings Inc. and Starsys Global Positioning Inc.
Hughes Spaceway and Teledesic Corp. are planning to launch geostationary and LEO fixed-terminal data systems, respectively.
Volunteers in Technical Assistance Inc. has been operating a LEO satellite since 1991.
In the blink of an eye, satellite-based wireless telephony has evolved from scarcity to the verge of abundance. Many of the technologies are unproven. Funding is uncertain. Marketing assumptions are just that. But there can be no doubt, mobile satellite systems will help propel the global explosion in telecommunications, with un
known consequences for the world’s social and economic fabric.
