Fear over Y2K effects has become quite a boon for the satellite telecommunications industry, even during a time when a negative cloud looms over the industry in light of Iridium L.L.C.’s bankruptcy woes.
The blessing came by accident. Satellite companies stumbled upon this new market earlier this year as representatives from multinational corporations began inquiring about using satellite phones as a communications backup in case landline networks fail after Jan. 1. The result is a huge demand for satellite phones and a promising market for satellite services post Y2K.
“When we started the year, [Y2K marketing] wasn’t on the horizon, and we weren’t thinking that it was something that fit in there,” said Jim Walz, president and chief executive officer of Iridium North America. “Going after international accounts, we started talking to people in emergency disaster areas and found out these companies had Y2K contacts.”
Comsat Mobile Communications didn’t have the idea to specifically market its Planet 1 Mini M phones, which provide voice, fax and email service, as a Y2K solution either-until companies began calling the provider.
“We have sold out of our entire inventory of Planet 1 phones,” said Tom Surface, spokesman for satellite operator Comsat Mobile Communications. “We still have a number of requests and are working with some of the other terminal suppliers.”
Mobile-phone rental companies also are dealing with high demand. Canadian company Rent Express Communications Inc. teamed up with Iridium in late October and has found demand for Iridium phones is far exceeding its typical run rates for the product line. The company had to source additional equipment to meet demand.
Demand is exceeding supply, said Lynn Klar, director of international business development with InTouch USA, a Chantilly, Va.-based rental company that offers Comsat phones.
“I think it’s been hard to anticipate what will happen,” said Klar of the Y2K scare. “Things happen, you read them in the newspaper, and you think everything’s fine. But it’s a gamble to determine which house will win in the end.”
Satellite phones are appealing to multinational companies and government agencies since satellite systems don’t require access to landline networks to complete a call. Many large corporations earlier this year began setting up Y2K contingency groups responsible for finding alternatives for telecommunications and computer needs in case systems around the world shut down after Jan. 1.
“Our system is not necessarily the first line of back up, but [customers] really see the Iridium system as an ultimatum in case everything fails,” said Walz. “Iridium will still be up unless someone shoots our satellites down.”
Iridium N.A.’s customers include IBM and most recently AT&T Local Services’ Disaster Recovery Division. As companies began indicating they needed internal systems to back up landline communications networks, Iridium N.A. offered its maritime product, which allows users to plug their private branch exchange networks into a box with an antenna that leads to Iridium’s satellites.
“One of the funny things is we can’t get a lot of these companies to do press releases because they are emotional about Y2K,” said Walz. “This is the greatest press story in the world, but we can’t say anything.”
Good press is something Iridium N.A. needs of late since Iridium filed for Chapter 11 bankruptcy months ago. In light of the slow uptake of customers Iridium experienced earlier this year, the telecommunications industry today wonders if satellite voice service has a niche in the world. Y2K sales could help change this, though Walz said Iridium N.A.’s customer base is growing significantly outside Y2K sales in light of its shift to sell to vertical markets and lower pricing plans earlier this year.
“We’re working with these companies to utilize these products ongoing in other areas,” said Walz. “It should bode well for us in the year 2000.”
Iridium N.A. and Comsat believe the Y2K scare allows them to get product into many potential customers’ hands-those that otherwise may not have touched a satellite phone. The appeal will be a security back up for people traveling outside the United States.
“Now you have something sitting in the supply room that you can send out with employees going through remote locations of the world,” said Comsat’s Surface.
