For several years, it seems there has been little good news to report about the mobile satellite industry. It is one that has been marked by marginal peaks and inconceivable valleys. Losses in this industry are talked about in terms of billions of dollars, and a company has yet to come along that can prove, at least on paper, that the dozens of satellites orbiting the earth right now aren’t just large pieces of floating debt.
MSS pioneer Globalstar Telecommunications Ltd. has a bleak future ahead of it, with several lawsuits pending, billions in losses and less than 45,000 subscribers to help pay the bills.
After succumbing to its debt, Iridium Satellite Co. managed to rise from the ashes and become an exclusive provider of voice and data services to the U.S. Department of Defense and gas, oil, maritime and other such industries that actually have operations out of range of conventional cellular networks, and can afford to pay $1.50 per minute. But analysts have questioned its future as well, especially if the DoD contract ever falls through.
Jay Pultz, analyst with the enterprise network strategies group at Gartner Group Corp., even warned that “enterprises deciding to use Iridium should carefully monitor its progress toward achieving critical mass and be ready to invoke a viable backup plan in late 2002 in case Iridium does not achieve critical mass.”
So what will kick-start this industry again? The ever-present Craig McCaw thinks he has the answer. MSS needs a major makeover.
“It was always more about getting the satellites up and running and less about service to customers,” said Gerry Salemme, vice president of external affairs for New ICO, formerly ICO Global Communications before it filed for bankruptcy in 1999 and McCaw’s private investment company, Eagle River Investments L.L.C., swooped in to save it.
But since New ICO inherited 10 operational medium-earth-orbit satellites, the company has been able to concentrate on how to better deliver third-generation-type services to industrial and consumer markets, which it plans to do in 2003. New ICO is entrenched in efforts to get the Federal Communications Commission to allow all MSS operators to reuse their own 2 GHz spectrum for ancillary terrestrial services.
In a letter addressed to FCC Chairman Michael Powell and sent April 24, four U.S. senators on the Committee on Commerce, Science and Transportation said such an allowance would “ensure the financial viability and the efficient use of 2 GHz spectrum by MSS operators.”
“2 GHz MSS operators will not be able to attract the billions of dollars in financial capital necessary to build and launch their systems without the ability to maximize their spectrum efficiency through an ancillary component,” the letter said. “Ancillary terrestrial service will enhance the ability of MSS operators to serve customers by improving the economics of MSS.”
Indeed, New ICO thinks the chink in MSS’ armor is that a user cannot access the service in a city or anywhere else where there is not direct line of sight to the satellite.
“One of the things we recognized as a problem is that the satellite technology forced the equipment manufacturer to make handsets that were custom made … and it also forced you to have antennas that gave you line-of-site to the satellite,” said Salemme. “We have taken advantage of unlicensed spectrum and taken the phone and broken it into two component parts.”
New ICO will offer a handset as well as a personal base station that a user can put in a window or other open area to gain signal access. New ICO also intends to use Bluetooth technology so customers can use their own mobile phones and personal digital assistants inside buildings. This seamless approach to mobile satellite service is what is missing today, and what New ICO and McCaw are betting will make MSS a viable technology for the masses.
Salemme said New ICO handsets will be priced to compete with most conventional cellular phones, and the personal base station will start at around $150. Talk time won’t be quite as compatible, however. Salemme said per-minute use will still be priced higher than cellular minutes, but he believes people will pay because MSS is a premium service.
“We really need to create the demand and offer the service that has both the price and quality that they (consumers) have grown to expect,” said Salemme.
New ICO is still waiting for the FCC to take action on its request, but is working with the agency to gather more information.
Among McCaw’s other satellite interests is Teledesic, which is building a self-proclaimed “Internet-in-the-Sky.” Teledesic owns spectrum in the 18 GHz and 24 GHz frequency bands, also known as the Ka band, and is backed by heavyweights such as Bill Gates, Motorola Inc., Boeing Corp. and Saudi Prince Alwaleed Bin Tala. With approximately 288 low-earth-orbit satellites in operation, the Teledesic constellation will offer broadband connectivity at data rates around 64 Megabits per second on the downlink and up to 2 Mbps on the uplink when it launches in 2005, the company said.
