NEW YORK-SkyBridge L.P. is building a network and a business model designed to sidestep the negatives associated with other land and space alternatives for local loop broadband communications delivery.
The Bethesda, Md., company expects to launch commercial service covering temperate latitudes sometime during 2003, at which time half its total fleet of 80 satellites will be in orbit at an altitude of 913 miles. When completed, the network also will comprise 140 land-based gateways and will offer coverage everywhere, except for the North and South poles.
Targeting a universe of 21 million end users, about two-thirds of them business customers, the system can reach the break-even point, at which sales equal costs, with just 30 percent usage. SkyBridge expects to be cash-flow positive within a year of offering commercial service, said Pascale Sourisse, president and chief executive officer.
“We are different from Globalstar and Iridium because we are not about mobile voice communications. Although we can carry voice traffic, our primary focus is on data,” she said.
Sourisse also contrasted SkyBridge with ICO Global Communications Holdings Ltd., a medium-earth-orbit satellite carrier planning to offer mobile voice communications primarily, but also alternatives to terrestrial fixed-line telecommunications.
At full deployment, the SkyBridge system will have 250 Gigabytes per second of downstream and upstream capacity, whereas ICO will have less than 1 Gbps, she said.
“It will be 1,000 times more expensive for ICO to deliver 1 (Megabyte per second) than for SkyBridge.”
The SkyBridge business plan anticipates that residential users will pay $700 for the terminal and a $30 monthly subscription fee. Business customers will pay about $2,000 per site for the terminal and $300 per month for a subscription for 10 users.
End users will have available a peak bit rate of 20 Mpbs and a standard rate of 1 Mbps. Latency is in the range of 30 milliseconds, comparable to fiber.
Usage charges for all customers will be 3 cents per Megabyte for point-to-point communications, or 1 cent for a three-minute point-to-point call at 16 kilobytes per second. For point-to-multipoint calls, the charge is proportionately less.
Sourisse said the terminal cost estimates are based on an initial production run totaling 100,000 and were provided by the three participating vendors, Sharp Corp., Thomson Multimedia and Toshiba Corp. Those prices are likely to drop as production increases, and they do not include any subsidies that carriers reselling SkyBridge service may offer, she said.
“Terrestrial solutions cannot provide universal coverage, and end users are not necessarily willing to pay more for service in underserved or unserved areas. SkyBridge means the end to the digital divide,” Sourisse said.
In Europe, where regulators are considering requirements that universal telecommunications service include broadband access, SkyBridge would be a cost-effective solution, said Jozef Cornu, executive assistant to the chairman of Alcatel. Paris-based Alcatel is the controlling general partner of SkyBridge.
The satellite company also sees opportunities in remote site access to mineral extraction companies, aboard land, sea and air transport vehicles, for backup and network recovery in cases of conventional service outages, and as rural backhaul for mobile wireless and fixed line operators.
Alcatel Space Industries is the prime contractor for most aspects of the SkyBridge system. It also “is a leader in [digital subscriber line], strong in [local multipoint distribution systems] and very strong in fiber networks,” Cornu said.
“In broadband wireless-LMDS, [multichannel multipoint distribution systems] and [third-generation] mobile-the investment cost per user is highly dependent on user density,” he said.
“Their shared medium configuration may create capacity constraints, depending on usage patterns, particularly for 3G mobile, for which horrendous (license) prices were just paid (in the United Kingdom). Shared medium creates a number of constraints because only one user can have 2 Megabits per second in any cell. The other constraint is, in order to get 2 Mbps, you can’t move, so it’s tough to call 3G `mobile communications’.”
France has approved a network and operating license for SkyBridge. The company received approval at the International Telecommunication Union’s World Radiocommunication Conference in 1997 to operate on the Ku-band between 10 and 18 Gigahertz as a nongeostationary satellite carrier. Sourisse said she expects the World Radiocommunication Conference, which convenes today in Istanbul, Turkey, to approve technical rules for protecting other users of the same band.
Sometime after this meeting, Sourisse said she anticipates the Federal Communications Commission will permit SkyBridge to operate in the Ku-band. “Another company, Northpoint, plans to use part of the spectrum, which we will use, for MMDS. In principle, they will have to protect [Direct Broadcast Satellite] services on the same band. If they do, it is clear we also will be protected. If they can use the band without creating interference, that is fine with us.”
SkyBridge has raised $1 billion toward the $6.1 billion cost of its system from 13 partners, including Alcatel and the three terminal manufacturers. Its goal is to raise an additional $3 billion from a different category of investors, telecommunications carriers, she said.
Telstra has signed an agreement in principle to become a SkyBridge equity partner and service provider in Australia, New Zealand and Southeast Asia. The Ministry of Post and Telecommunications of Lebanon has signed a memorandum of understanding for investment and service provision in that country. Discussions are under way with other carriers, but they are subject to nondisclosure agreements, Sourisse said.
SkyBridge hopes to raise the rest of the capital through an initial public offering, tentatively planned for 2002, and through debt that is a combination of vendor financing, high-yield bonds and bank loans, she said.
