Satellite Internet Service: Worth the Billions?

SAN FRANCISCO (05/24/2000) - Service providers have wanted to bypass terrestrial networks and political domains for years, but the cost of the necessary equipment alone is estimated to be not in the millions of dollars, but in the billions. Add to that the risks of a pioneer market, and an investor's concern can be easily understood.

As the number of service subscribers grows, more satellites will need to be launched, a costly endeavor that must be amortized over a long period. It takes time to build and launch these systems, and customers may have to wait awhile.

Nevertheless, companies such as Iridium LLC, Globalstar LP, and Teledesic LLC are still attempting to launch large constellations of satellites in anticipation of global customer demand. One of them, the doomed Iridium, found out the hard way that you can't rely on a "build it and they will come" approach.

Iridium's main goal was to use compact telephone units to provide total satellite-based telephone service for most of the populated areas of the world.

Thus a customer would be able to make a call from almost anywhere on earth, even a remote island in the South Seas. That type of service makes sense for many types of businesses, such as mining operations, oil explorations, ocean-going traffic, and so on.

Partly contributing to Iridium's downfall was the size of the initial telephone units. Several times the size of modern cell phones and a few pounds heavier, the set was bulky for everyday use. Data service was available through Iridium, but at low rates of around 2.4 Kbps, which most users abandoned in the late 1980s. Finally, Iridium's aggressive projection of the number of customers it would get led to a faulty business model. Iridium finally had to program its satellites to burn up in the atmosphere, a billion-dollar meteor-shower light show.

Globalstar on the go

Globalstar, which has been in operation for a short while, offers consumers a number of systems for connecting to its services. Primarily focusing on satellite telephone communications, its involvement with Qualcomm and Ericsson is apparent in the new telephone-set system.

Qualcomm offers multiservice portable telephones with analog cellular, CDMA (Code Division Multiple Access) digital cellular, and Globalstar satellite communications, all on the same phone, with the ability to automatically roam between any of these services. Ericsson offers a similar phone that has GSM (Global System for Mobile Communications) instead of CDMA. Both vendors provide fixed-location phone systems that include the satellite service as an option for remote offices. Those systems can hook up to a local key system in the office and even to a PBX. One other partner, Schlumberger, offers pay phones that use the satellite service rather than terrestrial lines, which makes them suitable for remote towns and sites.

Data services with Globalstar is fairly limited at 9,600 bps. That limitation makes it insufficient for long-term or heavy network use for mobile users. On the other hand, the service is one of the best deals available for the truly mobile user who needs to connect from anywhere globally, at any time, without concern for different phone connectors, regional ISP demands, or other complications.

Teledesic and others

Teledesic has some big names behind it, including Craig McCaw (who practically created the wireless cell phone industry), Bill Gates of Microsoft, Saudi prince Alwaleed Bin Talal, Motorola, and Boeing. This service isn't targeted to begin until 2004, which gives competitors like Globalstar a head start on the market. With more than 288 planned operational satellites plus additional backup and spare satellites, the service will cover 95 percent of the world's land mass and almost all its population.

Teledesic is making bigger promises on bandwidth for users. At the high end, fixed-location users will be able to receive data at up to 64 Mbps and transmit at 2 Mbps. Teledesic also offers support for mobile applications such as phone and data connections but at rates similar to those of Globalstar.

Aside from the large efforts, other companies have been using satellites for Internet services quite well. As the first of these, Hughes DirecPC started offering Internet connection services for end users and small businesses back in 1996. Hughes's system provides only a downlink from a Hughes-operated satellite service at a rate of 400 Kbps. The uplink to the Internet goes through a standard modem line of about 56 Kbps. This asymmetric path is suitable for users but not for companies that wish to host their Internet sites through this service.

High-speed satellite Internet now

Tachyon.net, a new company formed by ex-Hughes employees and others, is offering high-speed connections for end users and small networks, as well as ISPs. Tachyon.net offers bidirectional satellite data rates of 200 Kbps, 800 Kbps, and 2 Mbps from fixed ground locations. It offers its services through a Tachyon Access Point (TAP) with a local satellite dish not much different from what you use for digital satellite service television.

Tachyon recently presented two demonstrations on the use of its technology. At a conference in Rio de Janeiro it placed a TAP on the rooftop of a shack that had no phone lines but was instantly able to connect to the Internet at broadband speeds. In another demonstration, President Clinton was able to talk to elementary school children on a Navajo reservation in New Mexico that previously had no Internet access.

This ability to connect services in places where telephone and network services are poorly developed demonstrates that companies can create new customer bases instead of having to compete against the large number of ISPs in major towns and cities.

Pricing for Tachyon services is comparable to that of T1 lines at the high end, but they are more expensive than DSL or cable modems. That would limit such services primarily to businesses rather than consumers.

A lot of air

As business becomes more mobile, the need for satellite services is becoming more and more apparent. What these pioneer companies offer may be limited in some fashion, but they are suitable for many purposes today. Just as terrestrial wireless services like cell phones and pagers have opened up opportunities for new types of businesses, so too will these global-coverage services.

About the author

Rawn Shah is an independent consultant in Tucson, Ariz. He has written for years on Unix-to-PC connectivity and has watched many of today's systems come into being. He has worked as a systems and network administrator in heterogeneous computing environments since 1990.

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