WASHINGTON-Mobile Satellite Ventures, despite legal and regulatory challenges, is aggressively moving forward with its business plan and appears poised to be first to market with a potentially disruptive technology comprised of satellite and land-based facilities that will bring wireless signals to areas of the country not served by wireless carriers today.
To date, mobile satellite service firms have struggled financially due to outmoded business models. MSV’s business approach is radically different from unsuccessful MSS operators. Whether the firm will compete directly with mobile-phone carriers or complement them-or both-has yet to be determined, but introducing satellite capability into the wireless business has major financial and operational implications.
MSV is putting all the pieces of the puzzle in place in hopes of capturing early market leadership.
Today, MSV announced it has secured $21 million in additional financing to accelerate the trial later this year of the hybrid satellite-terrestrial network. In addition, the company has received a key patent covering mechanisms for terrestrial reuse of satellite band frequencies in a way that minimizes interference to Global Positioning System and other satellite-based communications.
Last Friday, MSV appointed Alexander Good-former executive president of Bell Atlantic Corp. (now Verizon Communications Inc.)-as its new vice chairman and chief executive officer. Gary Parsons, formerly chairman and CEO, will remain chairman of MSV.
“I have always focused on building high-growth businesses and that’s why I am excited about leading Mobile Satellite Ventures at this time,” said Good. “We are moving ahead to develop a stand-alone business that will redefine the wireless industry and deliver on the promise to provide wireless everywhere.”
Indeed, that promise has yet to be truly fulfilled.
While the six national mobile-phone operators provide significant coverage to much of the country, there are still geographic areas unserved by wireless. Early mobile satellite entrants-Iridium, Globalstar L.P. and ICO Global Communications-were supposed to answer the call with multibillion-dollar systems that circled the globe with constellations of low-earth-orbiting satellites. But the handsets these players offered were big and expensive, and the service was not cheap. Only a select few customers-such as the Department of Defense and Osama bin Laden-could afford satellite phones.
The grand vision of mobile satellite service-advocated by NASA in the early 1980s-ultimately was defeated by widespread deployment of land-based wireless infrastructure, inexpensive (subsidized) handsets and a steady decline in the cost of mobile-phone service for consumers.
Good said MSV’s business model is fundamentally different than those embraced by other mobile satellite firms in the past. By using two high-powered satellites covering North America in conjunction with terrestrial base stations, MSV’s customers are able to use traditional mobile-phone handsets on its network.
It is unclear how MSV will fit into the wireless space. In addition to fleet management and telematics, MSV intends to enter the competitive mobile-phone sector. One immediate value proposition MSV offers is roaming, which some medium- and small-sized carriers fear will become more difficult as a result of major carrier consolidation.
“It’s not out of the question that certain individual players will work with us,” said Good. Commercial service could begin 18 months after the Federal Communications Commission acts on MSV’s application to integrate a controversial ancillary terrestrial component, or ATC, into its satellite system, he added.
Inmarsat, a global mobile satellite company likely to face competition from MSV, complained to the FCC that MSV’s hybrid satellite system would cause interference its operations.
For now, national mobile-phone carriers do not appear in the mood to talk business with MSV. The Cellular Telecommunications & Internet Association-which represents top wireless operators-is awaiting an FCC ruling on its petition for reconsideration of the ATC rule.
In addition, AT&T Wireless Services Inc., Cingular Wireless L.L.C. and Verizon Wireless have challenged the ATC rule in the U.S. Court of Appeals the for District of Columbia Circuit.
Last month, the court granted a motion by the three mobile-phone carriers to dismiss a separate appeal of the FCC’s mobile satellite licensing order. The ATC appeal will not move forward until the FCC rules on ATC reconsideration petitions. Mobile-phone operators argue the FCC ran afoul of the law by not subjecting terrestrial spectrum rights to auctions.
