NEW YORK-As the new year approaches in the horse race that is commercial deployment of low earth orbit mobile satellite systems, “we’re still at the first half-mile, with the finish line at 2000,” said Timothy Logue, a satellite analyst for Coudert Brothers, Washington, D.C.
There are four major satellite systems getting formed in the LEO MSS universe, “and as far as I’m concerned, all the rest are everyone else,” said Ed Martin of Rockville Center, Md., who recently retired after many years as president of the Mobile Satellite Users Association. His pick-four comprises Orbcomm from Orbital Communications Corp., Iridium Inc., ICO Global Communications and Globalstar L.P.
“This will be a true industry shortly. So far, it’s been a specialty product with a few specialty players,” said Derrick Rowe, president and chief executive officer of Stratos Mobile Networks, Ottawa. Stratos, which has targeted large business customers with remote facilities, is both an Inmarsat owner and a value-added reseller that has, or is in negotiations for agreements with many MSS systems, like Iridium and Orbcomm.
Rowe, in effect, concurred with the characterization of also-ran players articulated by Martin. “There is a lot of fragmentation from the ownership and distribution standpoint that hasn’t yet been rationalized,” he said. “1998 will see the start of industry consolidation, and our position is to be an industry consolidator.”
As to the four major players in the LEO orbit, Martin characterized them this way: “Orbcomm is in business on an extremely limited basis with a good, simple plan that appears to be on schedule. Iridium appears to be on target with its plans for a (pre-commercial) rollout late next year.
“ICO also appears to be on target for a downstream service launch in 2000. Globalstar has … the simplest technology and a good partner.”
Globalstar, in Logue’s view, followed “a wise course of action” when the company decided to postpone until February its planned initial launch of satellites “to make sure the deployment works.”
Both Logue and Martin, however, expressed their doubts about Odyssey Telecommunications International Inc. Martin said he has “never taken Odyssey seriously,” while Logue described its status as “idling by the rail.”
Beyond the question of which individual carrier will win the commercial service launch horse race, Logue said there is a larger question for the entire field of entrants. That is, whether modifying their marketing strategies will undermine the economics envisioned in their original business plans.
Iridium, for example, planned its financing around the idea of a single flat-rate of $3 per minute. Because of competitive pressures, it has since moved in the direction of market-based pricing, “and the question now is over how many customers will you need to spread your costs,” Logue said.
Value added resellers that also are carriers are poised to provide the solution, said Rowe of Stratos Mobile and Julie Williamson, manager of customer communications for British Telecommunications plc Aeronautical and Maritime, London.
An Inmarsat owner, “BT just invested in ICO, one of the LEOs, to secure those services,” she said.
“The ICO system will enable you to have a dual satellite and cellular phone, but it won’t be available on a global scale until 2000.”
Meanwhile, satellite terminals are getting smaller and cheaper, she said.
As big corporate users, the early adapters of MSS, drive down cost and broaden the market, Alan L. Parker, president and chief executive officer of Orbcomm, Dulles, Va., said he envisions the day of “the shrink-wrapped phone in a box.”
Asked if he sees his industry as competition for land-based wireless services, Parker responded: “Sometimes we’re viewed as a threat, but terrestrial carriers have a lower cost per bit than we do. By forging relationships with the RAMs, the ARDIS’, the CDPDs, the Nextels, the SkyTels of the world, I’m happy to take 10 (percent) to 20 percent of the (growing) market. Thank you very much. I’m not voracious.
“Coverage is king if you’re mobile, and we are the extension of voice, Internet, paging, data and video to the ends of the earth, even if [they] stay primarily on the ground.”
