Introduction
According to the Teal Group, satellite communications industry consultants, some 1,017 commercial satellites will be launched in the 10 years from 1999 to 2008. Of these, 102 satellites will be dedicated to conventional broadcasting of radio, television, and data: 82 to direct-to-home satellite broadcasting; 384 to broadband and multimedia transmissions; and 449 to mobile communications. Together, these satellites represent a total market value of US $49.8 billion (1).
Commercial communication satellites constitute the fastest growing segment of the global satellite market, including satellites for the military civilian government, and scientific applications. This rapid growth is driven by the development of new and more cost-efficient satellite technologies and the demand for more telecommunications services worldwide.
Transmission of network, independent, and cable television programming to affiliates and cable headends will continue to be a dominant application of commercial satellites. The U.S. company PanAmSat, based in Greenwich, Connecticut, for example, has 22 satellites orbiting Earth that perform this service, as well as satellite newsgathering (SNG) and transmitting live special events from around the world. The company, owns the world’s largest commercial geostationary satellite system and is the world’s largest provider of video and data broadcasting services via satellite. PanAmSat plans to expand its global fleet to at least 25 spacecraft by mid-2001. On 1 January, 2000—and on the days immediately preceding and following this date—PanAmSat delivered millenium celebrations to viewers throughout the world for more than 40 customers, including ABC, BBC, CNN, Fox, and NBC. In total, there were more than 1300 hours of live event coverage and some 300 satellite feeds. PanAmSat used a total of 12 U.S. domestic and international satellites plus 5 teleport facilities.
Since 1980, with the debut of international broadcaster Cable News Network (CNN), satellite newsgathering has been an increasingly large user of satellite time because of the world’s growing appetite for live TV coverage of breaking news. During the past 20 years, satellite technology has become a primary tool of newsgathering for television news organizations throughout the world because fiber connectivity is often difficult or impossible to arrange on short notice and from remote locations. The excitement of real-time news from anywhere is something that television viewers throughout the world have come to expect, either through local stations or news organizations like CNN. CNN is the world’s first 24-hour-a-day global news channel and is now seen in 184 million households in more than 210 countries. In recent years, CNN and other TV reporting from such venues as the Persian Gulf, Bosnia, and Chechnya have enables viewers worldwide to share live experiences and to form their own opinions based on what they hear and see via satellite. Competition among broadcasters continues to stimulate SNG. For example, the American television network ABC has about 80 SNG trucks deployed around the world.
Most SNG transmissions use the higher frequency Ku band rather than the C band, which is used for most broadcast and cable program distributions to system affiliates. There are several reasons for this. First, unlike C-band transmissions, Ku-band transmissions are largely unaffected by terrestrial microwave interference and large structures in metropolitan areas. Second, the cost of Ku-band satellite dishes for SNG broadcasting is only one-fourth of that for C-band dishes. And third, Ku-band dishes are at least three times smaller than traditional C-band dishes, making them easier to transport and set up quickly.
Another factor stimulating the growth of SNG is the technology of digital compression, one of the manipulations of data made possible by digitalization. Through digital compression, it is possible to use only a fraction of a satellite transponder for transmission. Thus, the lower costs associated with SNG have helped to expand the number of SNG broadcasts around the world.
In fact, digital technology does much more than merely allow for compression of television signals, although this is a major commercial capability. Digital television allows for CD-quality audio and cinematic-quality video, both of which generate files so dense with data that they cannot be transmitted across the airwaves without digital video and audio compression. Digital satellite technology is also making possible the transmission of high-definition television because an HDTV picture requires much more information than a conventional analog television channel can provide. In the coming decade, as consumers buy new digital television sets to replace their aging analog models and as TV production houses acquire digital cameras and other digital technologies for their studios, many more programs will be produced in the HDTV format.
As full implementation of digital technology and the compression of TV channels occur, virtually each new satellite will be able to broadcast up to six times as many programs simultaneously, using the same amount of bandwidth, compared with the older analog technology. This is putting satellites on the same footing as cable in terms of their capability to deliver hundreds of channels into the home. In fact, satellite-to-home television companies like EchoStar Communications and DIRECTV are challenging cable’s dominance and keeping cable subscriber costs down, where satellite services can easily compete. Furthermore, a measure passed by Congress in 1999 allowing satellite TV operators to provide local broadcast TV channels to their subscribers is expected to produce huge market gains for the satellite TV industry (2). It is projected that, by 2003, more North American TV households will receive digital TV signals via satellite than by cable (3). DIRECTV now delivers more than 225 digital satellite TV channels directly into the home.
Direct broadcast satellites (DBS) are a worldwide phenomenon. Today, throughout the world, more than 62 million ground receivers measuring as little as 18 inches (45 centimeters) in diameter look at more than 60 high-powered geostationary satellites that deliver direct-to-home (DTH) programming. Of these satellite dish antennas, 42.7 million are in 36 countries of Europe, North Africa, and the Middle East (4). The phenomenon of DBS was first solidly established in Europe in the early 1990s by such providers as British Sky Broadcasting (UK), SES Astra (Luxembourg), and Telenor (Norway). By the mid-1990s, the skies above Asia were also populated with direct-to-home broadcast satellites. For example, since 1990, AsiaSat of Hong Kong has launched two satellites that cover 66% of the world’s population in 53 countries that span Asia, India, and the Middle East. In the United States, four companies pioneered DBS: EchoStar, Primestar, United States Satellite Broadcasting, and DIRECTV. Subsequently, DIRECTV absorbed both Primestar and USSB, and now is the largest US DTH television company. In the coming years, DBS growth overseas is expected to exceed U.S. growth; Europe will contribute 40% of all DBS subscribers by year-end 2008 (5). In the shorter term, between 2000 and 2003, the number of DBS subscribers will triple (6).
Interactive TV is another powerful commercial application made available by digital television technology. Viewers at home can participate in live programs and manipulate the broadcasts: they can choose camera angles, stop, reverse, or go back to viewing a program in real time. Companies such as WebTV, TiVo, Sun Microsystems, Intel, and America Online (AOL) are forging new relationships with broadcasters and satellite operators that will showcase their new interactive services. For example, at the Consumer Electronics Show in Las Vegas in January 2000, TiVo, which has partnered with Hughes Electronics Company’s DIRECTV service, demonstrated TiVo’s VCR-like software that can pause, rewind, and fast-froward live and recorded television.
Also, Hughes and AOL formed a strategic partnership to link the satellite operator with a leading content provider. In 1999, AOL invested US $1.5 billion in Hughes to get its interactive multimedia AOL-TV product onto the DIRECTV platform and launch its AOL-Plus high-speed Internet service via DirecPC, a high data rate service from Hughes. AOL-TV will allow users to surf the Web, “chat” online, and E-mail back and forth as they watch TV. Finally, a deal struck in June 2000 between Microsoft and DIRECTV gives Microsoft’s interactive WebTV product a place on the DIRECTV platform. The two companies will offer a new VCR-like service that marries a computer hard drive and a digital TV so that viewers can record up to 30 hours of TV programming for later playback. The service, called Ultimate TV, is similar to that offered by TiVo. In addition to digital video recording, it also offers Internet access and interactive TV.
Meanwhile, Sun Microsystems has demonstrated an interactive music program from the BBC that enables viewers to vote for their favorite bands and change camera angles while watching a weekly pop music show. And Intel and WebTV possess enhanced TV technologies that can overlay statistics onto sports broadcasts, add detailed product information to commercials, and let viewers play along with game shows. Commercial interactive and enhanced TV services will generate nearly US $1 billion in revenues and reach more than five million households by 2002 (7). According to Forrester Research, within 5 years, interactive TV-based Web browsing will generate US $11 billion in advertising and billions more in commerce (8).
The digitalization of the television signal, along with the fast growth of DBS, has encourage the worldwide radio industry to launch new, satellite-delivered domestic, regional, and international radio networks that provide CD-quality sound. Two of the new services Sirius and XM Radio, are scheduled to debut hundreds of channels of enhanced audio entertainment and information programming to fixed and mobile consumers from year-end 2000 to early 2001. A third service, WorldSpace, is already operational. Its goal is to provide high-quality, multilingual digital audio programming to the emerging and underserved markets of the world. The first WorldSpace satellite to become operational (in June 2000), AsiaStar, broadcasts more than 50 channels of programming to 4-inch satellite dish antennas. Two additional commercial satellites for Africa and Latin and South America will complete the WorldStar offering.
Data transmission is big business. A team of World Trade Organization (WTO) economists has estimated that, by year-end 2000, there will be more than 300 million Internet users worldwide and that electronic commerce will amount to a US $ 300 billion a year industry. Beyond this, 80% of all business-to-business transactions will be conducted through the Internet by 2002 (9).
High-speed, interactive data transmission, which will allow real-time exchange of digital video and multimedia, is projected to become more widely available in the year-end 2001-2002 time frame. In the interim, companies such as Hughes Network Systems, Scientific-Atlanta, and Gilat Satellite Networks offer to business enterprises of all sizes satellite-based intra- and intercorporate networks that may extend across the city or around the world. Called VSAT (very small aperture terminal) networks—in recognition of their easily installed 24-inch satellite dishes—they can be used for a variety of purposes, including videoconferencing, employee and customer training, credit card authorization at the point of sale, new product introductions to marketing employees and retailers, inventory control, and electronic data interchange (EDI) for ordering merchandise from manufacturers and paying for it. There are more than 500,000 VSATs installed in the world, including those in underdeveloped nations where they may be used to provide remote villagers their first access to telephony.
For example, in a remote village in Thailand, a community telephone booth with a small VSAT dish on top can transmit and receive phone calls to and from any person or place on Earth. Operated by the Telephone Organization of Thailand (TOT), this telephone is one of 4000 remote terminals plus 21 public switched telephone network (PSTN) gateways located in Thailand’s provinces. This network is the world’s largest VSAT network dedicated to telephony. It is an example of the way satellites can provide telephony service where the existing wire-line telecommunications infrastructure is limited or non existent and/or where the population density is too low and the terrain too challenging to build a commercially viable wire-line system for rural telephony.
Once inside the PSTN, telephone calls can be routed anywhere in the world by wire-line, underwater cable, satellite, and/or fiber to the intended recipient. By using multiple gateways, the network can route calls to the nearest entry point in the PSTN, thus minimizing connection times and consumer costs. The Thai network is used mainly to provide coin-operated pay phones and private lines in villages and small communities around the country. Like other such VSAT networks in Southeast Asia and Africa and throughout the developing world, satellite telephony via VSAT networks is connecting small businesses with the global marketplace, giving them the opportunity to transmit two-way data as well as voice, no matter what the distance or terrain. In the coming years, most telephone VSAT networks will be replaced by new “bandwidth-on-demand” broadband satellite systems (see later), whose wide and spot beam antennas will provide ubiquitous coverage of Earth.
Because of the vast and ever increasing worldwide use of VSAT and Internet applications, it is sometimes said that the initials “www” stand not for the World Wide Web, but for the World Wide Wait. At this time, there is simply not enough bandwidth to meet user demands—from cable, from telephone lines, or from satellites. However, this challenge should be resolved in the next year or two, when a number ofnew satellite broadband companies are scheduled to begin operations. This is none too soon in a situation where world wide demand for digital bandwidth continues to surge. Consider China, where the number of Internet users, now 10 million (June 2000), is doubling every 6 months. By some calculations, China will have the second largest population of Web users in the world, after the United States, by 2005 (10). Overall, in Asia there are currently (June 2000) 40 million Internet users. This number is expected to grow to 375 million by 2005. Meanwhile, in the United Sates, the market for satellite-based Internet services has grown by 314% during the last year and by 858% during the last 2 years (11).
Despite laudable efforts by cable and telephony organizations worldwide to convert their narrowband telecommunications infrastructures to broadband speed (defined as at least 1.544 megabits per second), satellite companies are accomplishing this more quickly and at lower costs. For example, U.S. telephone service provider SBC Communications is in the midst of a 3-year program to build a US $6 billion fiber broadband system that will cover only the western
United States. By comparison, current estimates indicate that a satellite broadband system covering the entire United States will cost US $1.4 billion (12).
At least seven satellite companies, Astrolink LLC, @ Home in the Sky, EuroSkyWay, INMARSAT’s Broadband Global Area Network (B-GAN), iSky, Spaceway, and Teledesic, plan to provide broadband multimedia services from new Ka-band satellites to customers in the Americas, Europe, Africa, Asia, and the Middle East. Another company, called SkyBridge, will provide broadband services using the Ku band, a set of frequencies that is much used today, principally by commercial TV broadcasters. SkyBridge has engineered its system so that no interference will be created by frequency sharing.
It is projected that business-to-business electronic exchanges alone will constitute a US $1.1 trillion market worldwide by 2003 (13). Also stimulating this growth will be the new, consumer-oriented concept of ”bandwidth on demand,” which enables users to pay only for the amount of satellite bandwidth they actually use. Their link into the satellite system will be via a low-cost satellite dish as small as 26 in. (66 cm) in diameter. It is likely that, together, bandwidth on demand plus low access charges will draw cost-conscious consumers and businesses away from cable and telephone connections for their broadband requirements. There is an additional feature of a bandwidth-on-demand satellite system. Because capacity is released only when needed, satellite systems will be able to support a much higher number of users compared with cable and wire-line technologies.
The launch of these next-generation Ka- and Ku-band broadband systems is expected to usher in a ”golden age” for the satellite industry (14). The new systems could enhance broadcasting with data and multimedia services, deliver Internet content, and deliver business communications with high-power spot beams that can provide two-way, real-time communications. It is projected that revenues from broadband-over-satellite services will rise from US $25 million in 2000 to US $21 billion in 2007 (15).
As VSAT networks for rural telephony continue to be built throughout the world, new regional and global handheld systems for mobile satellite telephony are now being demonstrated. Proponents of mobile handheld satellite telephony have stated that data delivery by phone will be the next big commercial boom among consumers. Already, individuals can be in touch by voice virtually anywhere in the world anytime. In addition, their handheld phone sets can also enable E-mail, Internet access, and one-on-one videoconferencing with a small, built-in TV screen.
According to the financial services company, Morgan Stanley Dean Witter, satellite-based mobile phone use could explode from a few thousand users today to around 17 million by 2007 (16). It is projected that, nongeostationary (GEO) systems will produce revenues of US $62 billion in the next 5 to 10 years (17). How quickly that money will materialize, or if it will materialize at all, is a question open to much debate after the failure of Iridium, a US $5 billion, low Earth orbit satellite global telephony system of 66 satellites that ceased operations in February 2000, not long after its start-up in November 1998. Industry analysts attribute Iridium’s fate to large and heavy phone sets that did not operate indoors or in cars and heavy capital expenditures that necessitated high usage fees of up to US $7 per minute.
Iridium did, however, successfully demonstrate its pioneering technology. The 66 satellites were cross-linked and could perform onboard switching to relay signals directly to and from handheld phones where that was feasible. The satellites acted like cellular towers in the sky, wireless signals moved overhead instead of through ground-based cells. The Iridium network also integrated land-based phone lines and local cellular facilities to provide the quickest and most efficient call routing.
As of May 2000, a new global mobile satellite telephony system started operations, and another project will start up early in 2001. Both the Globalstar and New ICO systems (described in detail later) will not be as technologically sophisticated (or costly) as that of Iridium. Both will make more use of existing terrestrial systems, so that the telephony signals will not be beamed up to or down from the satellite directly. Each will use existing terrestrial wire-line and cellular phone paths for originating and receiving calls.
In the meantime, four regional—as opposed to global—mobile satellite telephony systems are either planning to serve or are already serving customers in North America, Asia, the Middle East, Europe, and Africa. Dual-mode cellular/ satellite mobile phones provide access to a vast array of consumer services and serve as the basic connection for the new ”office in the car.” For example, the 2000 Ferrari model 550 Maranello is a prototype equipped with all of the latest in multimedia and navigation gadgets. The car’s cockpit is equipped with a personal computer hooked up to a swiveling satellite antenna to navigate the Internet; send and receive E-mail and exchange documents; download road maps; read weather forecasts and traffic news; topic hotels, theaters, and restaurants; and even obtain bank balances and the latest stock quotes. This prototype was created to show the potential of EuroSkyWay, the first European broadband satellite network completely reserved for interactive multimedia services. Developed by Alenia Aerospazio, the system is scheduled to begin operations in 2002. EuroSkyWay’s satellites will allow real-time video communications for videoconferencing, high-quality image transfer, and access to the Internet that is 30 times faster than terrestrial modes, according to the company. EuroSkyWay’s target customers are business people who need to be in touch with the office and cannot stop working, even while in traffic (18).
In the coming years, satellite antennas mounted on car roofs will become virtually omnipresent because of important and potentially life-saving new technologies first introduced by the U.S. Department of Defense and now in full development by the commercial sector. For example, General Motors (GM) now equips many of its car models with a dual cellular/satellite communications system called OnStar™. Using OnStar, drivers can navigate efficiently to their destinations with a series of maps and audio commands. More importantly, wherever they are, they can contact local police, fire, and rescue departments, as well as AAA operators, and their precise geographical location will be relayed simultaneously via satellite. This is accomplished by using the Global Positioning System (GPS), a constellation of 24 satellites that has evolved well beyond its U.S. military origins. For the U.S. military, GPS provides situational awareness for troops in the field anywhere in the world and precision weapon guidance. Through GPS-based data, voice, and video communications, military personnel can interact with commanders at headquarters and receive real-time maps of allied and enemy positions, weather maps and forecasts, and progress images of guided weaponry advancing toward their targets.
Besides GM, Ford, DaimlerChrysler, and other car manufacturers also provide “telematics” systems, “telematics” is the buzzword for the convergence of wireless technology, global satellite positioning, and onboard electronics in automobiles. But to date, the General Motors system is the most technologically advanced. For example, if keys are locked inside the car, OnStar will unlock the doors via satellite. OnStar also offers a voice-activated Internet access package that, via an onboard computer, enables sending and receiving data, voice, imaging, and E-mail. OnStar is expected to have four million users by 2002, and there is analyst speculation that GM will spin off OnStar as a separate tracking stock.
As of May 2000, there were four million GPS users worldwide. The market for GPS applications is expected to double by 2003, rising from US $8 billion in revenues to US $16 billion. This can be attributed in part to the fast-growing demand for GPS features to be outfitted in cell phones (19). As of June 2000, the GPS feature will be incorporated in as many as 18 satellites that are awaiting launch or are in production. The U.S. government currently provides this service free of charge to users worldwide.
As shown, the worldwide demand for bandwidth is growing exponentially. Among the chief factors fueling the need for bandwidth is the skyrocketing demand for two-way, high-speed Internet access. Despite the large investments made by cable and telephone industries to expand their network capacities, the demand for high-speed bandwidth far outstrips the supply (20). Satellites will be used extensively to take up the slack and to provide unique services that only satellites can provide because of their ubiquitous reach and cost-insensitivity to distance.
As can be seen, new commercial satellite communications applications are developing rapidly, fueled by new technologies. Most of these applications will require major capital investments and involve significant technical and business risks. It is likely that some of the new applications discussed in this article— written in mid-2000—will undergo major changes or will even fail. Iridium is an example. It is equally likely that new applications not discussed here will develop. It is certain that commercial satellite communications applications will continue to evolve rapidly. The following sections provide a road map for these developments.
Digital Satellite Television Broadcasting
As mentioned previously (see article in this volume on Communications Satellites, Technology of), television programs in the United States have been transmitted from network hubs to affiliates and cable headends since the 1970s. In recent years, a growing number of U.S. households also receive TV broadcasts directly from satellites, using rooftop antennas for Ku-band satellites and backyard antennas for C-band transmission. The United States is not alone in using satellites to broadcast TV programming. A 1999 annual Eutelsat survey of 36 countries in Europe, North Africa, and large parts of the Middle East showed that 107 million households also get satellite-delivered TV, either through a dish or a local cable company. This is up from 95 million homes in 1998. A total of 42.7 million households in these regions are dish homes (21). Asian direct-to-home broadcasts also are plentiful, due in great part to Rupert Murdoch’s Star TV satellite system. In fact, News Corporation (of which Rupert Murdoch is chairman) controls 100% of Star TV, 40% of British Sky Broadcasting, and 36% of Sky Latin America. All are DTH systems, and there are more than 100 million subscribers on these platforms alone. The number of dish homes around the world will continue to grow quickly because of the 800 million TV households in the world, nearly 700 million are in regions that have limited access to multichannel television. Terrestrial systems, such as cable or multipoint microwave distribution service (MMDS), are too costly and time-consuming to install, compared with direct satellite transmission.
Today, around the world, more than 62 million ground receivers that are as small as 18 inches (45 centimeters) in diameter look at more than 60 high-powered geostationary satellites that deliver DTH TV. Many of the DTH satellites can deliver more than 100 channels of premium digital video entertainment and information directly to consumer households. For example, since 1990, Asia-Sat of Hong Kong launched two satellites that cover 66% of the world’s population in 53 countries that span Asia, India, and the Middle East. AsiaSat’s biggest customer for its satellites is programmer STAR TV, also of Hong Kong. Along with Asian-originated programming, STAR and other Asian DTH broadcasters use AsiaSat’s satellites (along with those of competitor APT Satellite Company, Ltd.) to transmit such American TV fare as HBO, MTV, ESPN, CNN, and The Disney Channel, along with the programming of the BBC and other major international programmers.
DBS is thriving throughout the developed world. In Japan, Sky PerfecTV!, which uses two high-power JCSAT satellites for its DBS service, has more than two million subscribers. Malaysia is served by a fully digital DTH TV service that is carried on two MEASAT (Malaysia-East Asia Satellite System) satellites. The coverage pattern also includes the region from Malaysia to the Philippines and from Beijing to Indonesia. In November 1998, Russia’s first commercial communication satellite, BONUM-1, was launched from Cape Canaveral, Florida, and is providing multiple-language DBS TV in European Russia, the Urals, and western Siberia. In Central and South America and the Caribbean, the Hughes Galaxy Latin America DIRECTV service delivers up to 232 channels of programming to more than one million subscribers in 27 countries.
Two EUTELSAT satellites launched in 2000 will meet market demands for new digital TV platforms and Internet Protocol (IP)-based services in Russia and Africa. Nineteen transponders on EUTELSAT W4 constitute a high-power fixed beam across Russia. Sixteen of these transponders are used for DTH digital TV broadcasting by the Russian media group Media Most. Twelve transponders are pointed over sub-Saharan Africa, where they are used for digital pay TV and broadband Internet access (22). EUTELSAT is Europe’s leading satellite operator and ranks as one of the largest globally. It reaches across Europe, large parts of Africa and the Middle East and has connectivity with North America. Currently, EUTELSAT satellites can broadcast more than 600 analog and digital channels to more than 81 million satellite and cable homes. In addition to DBS,
EUTELSAT satellites are used for high-speed Internet connections, Internet backbone traffic, inter- and intracorporate networks, SNG, telephony, and mobile voice, data, and positioning services.
In the United States, two companies dominate the DTH satellite services market: DIRECTV from Hughes Electronics Corporation in EI Segundo, California, and EchoStar Communications Corporation in Litteton, Colorado. At the end of 1999, DIRECTV, which debuted in 1994, offered some 210 channels of programming from four proprietary DBS satellites. The company estimates it will have 10 million subscribers by 2001. In addition, DIRECTV also offers a service called DIRECTV Para Todos (For Everyone), a Spanish-language programming service that consists of 30 additional channels. DIRECTV Para Todos is aimed at the growing number of bilingual households in the United States. Through alliances with America Online, TiVo, and Wink Communications, DIRECTV plans shortly to introduce a portfolio of new interactive and data-enhanced television services, including data-enhanced video, electronic commerce, webcasting, software downloads, and two-way Internet access. DIRECTV is also helping to accelerate the advent of high-definition TV by introducing this year two channels of HDTV programming and integrated DIRECTV/HDTV television sets and set-top electronics.
EchoStar, which began operations in 1990 with large C-band satellite backyard antennas, today broadcasts from five proprietary DBS satellites under the trademark DISH Network. These five satellites give DISH Network the capacity for more than 500 channels of digital video delivered to homes in the continental United States via a single satellite dish. As of year-end 1999, DISH Network boasted more than three million subscribers. At the same time, EchoStar introduced DISHPlayer, which it claims is the world’s first combined interactive Internet device, satellite TV receiver, personal video recorder, and game player. DISHPlayer was developed jointly with Microsoft’s WebTV Networks.
As described before, by the early 2000s, we will see the second generation of digital direct-to-home TV, which will have a satellite return path and Internet access. As mentioned earlier, through this new interactive system, consumers will be able to access companion data for sports, documentaries, news, and other programming. For example, viewers watching CNN could use their remote control devices to request the latest sports scores and local weather forecasts. Viewers of live sports telecasts will be able to access up-to-the-minute player and team statistics. When an advertiser’s commercial’s broadcast, viewers will be able to use their remotes to order more information or a coupon for the product or the product itself. Also in the early 2000s, digital satellite TV receivers will be built into newly manufactured TV sets, making these TV sets ”satellite ready.” They will require only an antenna to receive multichannel, even multinational, TV.
The 1999 Satellite Home Viewer Act is a major factor that will increase DTH broadcasting growth in the United States. This U.S. Federal Communications Commission (FCC) regulation, signed into law by President Clinton, mandates that local broadcasters make their local and network signals available to DBS providers. The intent of the regulation is to increase competition in the cable industry and to keep cable TV rates ”reasonable,” according to the FCC. In 1999, satellite TV reached about 14 million U.S. households, compared with about 70 million homes reached by cable service. It is projected that by 2003 more
North American TV households will receive digital TV signals via satellite than by cable. Moreover, it is projected that the number of DBS subscribers will triple between 2000 and 2003 (23).
Two satellite technologies, in particular, will fuel the growth of DBS: (1) spot beams aboard Ku-band satellites, and (2) Ka-band satellites. Current satellite technology will allow designing a spot beam satellite that has up to 50 spot beams to cover the continental United Sates. This technology of using spot beams enables frequency reuse and allows for an increased number of local program offerings to DBS subscribers. The introduction of Ka-band satellites with spot beams and real-time traffic management information will increase local channel availability and enable implementation of broadband interactive TV.
Digital Audio Broadcasting
Satellite-delivered digital audio services are beginning to emerge that provide 100 or more channels of CD-quality radio programming in multiple languages to both fixed and mobile receivers. The technology of digital audio radio service (DARS) was first demonstrated commercially in 1999 by WorldSpace International Network, a Washington, D.C.-based company that launched AfriStar, the first of three planned geostationary satellites. AsiaStar was launched in early 2000 and is expected to become operational by year’s end. AmeriStar is planned for launch during the first half of 2001. When all three WorldStar satellites are operational, they will provide digital audio broadcasting service to 80% of the world’s population. WorldSpace’s three GEO satellites are intended to provide service to the emerging and underserved markets of the world, including Africa, the Middle East, Asia, Latin America, South America, and the Caribbean. Each WorldSpace satellite has three regional beams, and each beam can broadcast more than 50 channels of crystal clear audio directly to palm-sized portable receivers. Programming options include channels for entertainment, news, information, education, sports, and culture. On AfriStar, for example, there are 23 broadcast services in 16 different languages. The first generation of WorldSpace satellites will provide only stationary reception via small receivers. The AsiaStar service, for example, will be broadcast to 4-inch dish antennas built into small radios. Future generation receivers will be designed for mobile reception.
In late 2000, two more DARS operators, Sirius Satellite Radio and XM Satellite Radio, plan to begin commercial operations to provide CD-quality music, news, and variety programming in the United States. Seeking to accelerate the growth ofthe DARS industry and to achieve the largest possible audience for their products, Sirius and XM Radio formed an alliance in 2000 to develop a uniform standard for satellite radios. New York-based Sirius Satellite Radio, formerly CD Radio, plans a three-satellite constellation. The first satellite, Sir-ius-1, was successfully launched in June 2000. Sirius-2 is slated for launching in September 2000, and Sirius-3 in October 2000. All three Sirius satellites were designed specifically for satellite radio broadcasting and will be among the first in the world to use the S band to deliver audio content. Sirius intends to have 100 channels operational by year-end 2000.
The Sirius satellites will be placed in inclined elliptical orbits—rather than GEO orbits over the equator—to maximize the line of sight to the satellites. The elliptical path will ensure that each satellite spends about 16 hours a day north of the equator and that two satellites are right over the United States all the time. These orbits enable the satellites to relay the Sirius broadcast signal to the United States from a much higher angle than GEO satellites. This will result in improved signal strength and coast-to-coast coverage. Content will be fed simultaneously to several transmitters in major urban areas. These terrestrial repeaters supplement satellite coverage in urban areas, where tall buildings may block the satellite signal. The Sirius satellite system is designed to broadcast as many as 100 music, news, information, and entertainment programming channels to motorists throughout the continental United States. Inside the car, drivers will find a digital display showing, for instance, the song’s title, artist, record label, and running time. As with XM Satellite Radio as well, listeners driving from coast to coast will be able to stay on their favorite channels all the way. Ford Motor Company, BMW, and Daimler Chrysler all have agreements in place with Sirius to install new Sirius/XM-ready radios in new cars as standard equipment. Space Systems Loral built the three Sirius orbiting satellite plus one ground spare.
Similar to Sirius is XM Satellite Radio, which will also use terrestrial repeaters and will operate in the S band. XM’s first satellite is scheduled to be launched in November 2000, and commercial service is set to begin during the first half of 2001. XM Satellite Radio was founded in 1992 and has its headquarters in Washington, D.C. Its major investors are American Mobile Satellite Corporation (now called “MOTIENT”), General Motors, DIRECTV, and Clear Channel Communications. XM Satellite Radio plans to broadcast as many as 100 brand-new radio channels to consumers in their cars, homes, and offices using two high-power Hughes HS 702 geostationary satellites and very small antennas. Listeners using portable and fixed home radios will be served by built-in antennas that are 2.4 inches in diameter. Programming is scheduled to include music, news, talk, sports, entertainment, ethnic, and children’s channels, 24 hours each day. XM estimates its potential market at 60 million subscribers, who will pay about US $10 per month. XM has already contracted with General Motors to place XM satellite receivers in all GM cars and trucks. The XM satellites have a communications payload built by Alcatel in partnership with Hughes Electronics; they will be operated by Telecast Canada. The future generation of XM satellites will deliver messages, transmit E-mail, and provide E-commerce applications to mobile platforms, thereby supplementing and augmenting other mobile services. In addition, simple two-way connectivity using the XM spectrum may be possible.
VSAT Networks and Digital Data
In the developed world, VSAT technology is widely used to establish quick, reliable, and cost-effective two-way data, voice, and video distribution networks. Networks can be citywide or worldwide, regional or domestic. Typically, they are used by large organizations that want to communicate in real time with their local or regional branch offices and geographically dispersed customers, suppliers, and employees. Among the world’s leading automakers—Ford, Chrysler, General Motors, Toyota, Fiat, Saab, Volkswagen, and Peugeot—all have proprietary VSAT networks. Other major VSAT networks include those operated by the Bank of China, Federal Express, Hewlett-Packard, IBM, Texas Instruments, Xerox, Home Depot, and the China People’s Daily newspaper. VSAT networks perform a myriad of functions. These include electronic funds transfer; credit card authorizations at the point of sale, including ”pay at the pump” gas stations; inventory control; ordering parts and products from a company’s distribution center; providing corporate headquarters with up-to-the-minute sales data from all outlets; and telecasting corporatewide announcements from the organization’s key executives at headquarters. There are currently thousands of VSAT networks in operation. Most were installed by one of three major competitors: Hughes Network Systems, Scientific-Atlanta, and Gilat Satellite Networks.
The use of VSAT networks is also very important for distance learning in both the developed and developing regions of the world. Distance learning via VSAT networks is used extensively in the developed world primarily for corporate training. A geographically dispersed sales force no longer has to fly to corporate headquarters to learn about a new product, for example. And auto service technicians can receive instruction from experts at major manufacturing centers without ever leaving their local dealerships. Through interactivity, questions can be asked from any remote site and relayed instantaneously to all remote sites and to the presenter at the originating location. In addition, VSAT networks enable corporate employees to earn an academic degree from a university across town or across the continent. The return audio path is used to ask or answer questions, and the return data path is used to take examinations. Universities, such as the National Technological University in Colorado, now exist specifically to provide instructional programming via VSAT and other types of distance learning networks.
Using VSAT networks for distance learning may be most valuable when they are located in less populated regions of the world, where children and adults can be taught to read, write, speak their national language, and practice a trade. Indonesia was one of the first countries to use a VSAT network for distance learning. Its citizens, spread out over more than 10,000 islands, continue to have the opportunity to learn the national language, Bahasa Indonesia, by VSAT. In the less developed world, VSAT networks can also play a vital role in health care. A patient’s chart and X-ray films can be transmitted to a consulting specialist, who may issue a diagnosis from halfway around the world. Special medicines can be ordered instantly. And programming about good nutrition and proper dental care can help teach preventive medicine. Recently, the U.S. TV programmer, Discovery Communications, began funding VSAT-based satellite education in developing countries, providing advanced technological resources and training to rural and disadvantaged schools and community centers around the world. Discovery’s first efforts are focused on sub-Saharan Africa and Latin America (24).
The worldwide VSAT market will continue to increase—until, gradually in the coming years—it is superseded by the ultra-high-speed broadband networks expected to debut in the 2002-2005 time frame. In the meantime, to manage the increasing demand for fast two-way Internet links, driven in large part by the exploding growth of business-to-business E-commerce, companies such as Hughes Network Systems and EchoStar Communications Corporation are coming up with satellite solutions. In fact, more than 11% of the world’s Internet Service Providers (ISPs) now use satellite links to connect to the Internet backbone. In 1999, the total value of the ”Internet Prototcol (IP) Over Satellite” market was US $210.4 million. By 2000, that value had risen to US $710.9 million. Increasing use of two-way satellite terminals to provide high-speed Internet access among intra- and intercorporate sites allows network owners to bypass telephone and cable companies and maintain end-to-end control over their networks (25).
As stated in the introduction to this article, Hughes Electronics plans to roll out an ultra-high-speed broadband satellite system in 2003. But Hughes will not have to attract Spaceway subscribers from scratch. In the intervening years, Hughes is offering DirecPC, a two-way satellite-based broadband Internet delivery system that delivers Web pages and software programs to home and small office satellite dishes at the rate of 400 kilobits per second. For downloads, that is faster than an ordinary telephone line but slower than a cable modem. Upstream requests, once handled by ordinary telephone, can now travel by satellite at a rate that is three times faster than a dedicated ISDN line. When customers of the ”old DirecPC” are switched over to Spaceway, data will be delivered at up to six megabits a second. This is faster than today’s cable modem delivery. Space-way also promises an uplink capability of two megabits per second. In June 1999, America Online said it was investing US $1.5 billion in Hughes Electronics to partner with Hughes to offer AOL’s new broadband service, AOL Plus, over DirecPC.
In the fourth quarter of 2000, Hughes Network Systems intends to supercharge DirecPC with two-way satellite capability. This is necessary to allow consumers to downstream movies, games, and concerts into the home over the personal computer and to allow businesses to hold real-time video-conferences without the slow motion, blurry, and jittery video seen on today’s VSAT networks. Offering ”always on” capability, the new two-way high-speed satellite service will allow consumers to bypass the dial-up telephone or cable system completely and avoid land-based bottlenecks on the Internet. The two-way satellite version of DirecPC will operate on the current medium-power Ku-band satellites operated by PanAmSat, which is 81% owned by Hughes Electronics. This early entry two-way satellite service will be offered to enterprises around the world. For example, S Kumars.com, an Internet kiosk operator in India, has bought 50,000 DirecPC terminals for use throughout India.
Satellite Broadband Communications
According to the Teal Group, satellite industry consultants, some 384 satellites dedicated to broadband multimedia will be launched between 2000 and 2008. This constitutes 38% of all satellites launched during this period. These new Ka-and Ku-band satellites will help create a market for new GEO and LEO broadband satellite services worth more than US $9 billion annually by 2004 (26). As stated before, advanced satellite broadband communication systems provide significantly more bandwidth and much higher data bit rates than the broadband and narrowband systems currently in service. Broadband technology also allows multitasking of applications, that is, satellite-based broadband communication systems can handle numerous applications at the same time, for example, a live, full-motion digital videoconference and data exchange.
Broadband satellite users will be able to accomplish a variety of digital interchanges ranging from data to voice to video and multimedia. They will be able to download entire CD-ROM databases in a fraction of the time it currently takes. For example, in 2000, it takes 9 minutes on a 28.8-kbps phone line to download the Sunday edition of the Washington Post. By using a 1.5 Mbps satellite link instead, the time is reduced to about 10.4 seconds. The interactive multimedia capabilities of these systems will dramatically change and speed up the way we work. For example, broadband satellite users will have simultaneous access to high-data-rate on-line computer networking and low-cost, high-resolution interactive desktop videoconferencing. This means that an architect in China, for example, can work via broadband technology with one or more colleagues anywhere in the world, exchanging CAD/CAM images instantaneously. Currently, 2 megabits of CAD/CAM content can take 70 seconds to transmit on conventional phone lines. A broadband satellite link will reduce that time to just 1.4 seconds.
Remote manufacturing and control will be another workplace application for satellite broadband networks. In today’s global economy, goods are often designed, manufactured, and marketed in different distant locations, and raw materials and consumers are located in still other venues. A broadband remote manufacturing/control system will allow an electronic toy designer in Seattle, for instance, to send specifications for a new toy directly to a manufacturing plant in Korea. In turn, the manufacturer could order the necessary microchips on a timely basis. The manufacturer also could use the same satellite broadband network to send production status data to the worldwide distribution network to allow for just-in-time delivery and better inventory control. Finally, the manufacturer, together with the distributor, could keep marketing and advertising agencies apprised of exact product delivery dates in different regions of the nation or the world.
As chip prices fall and compression rates soar, more and more companies are announcing plans for global satellite broadband systems and services. According to Pioneer Consulting, total global broadband revenues will increase from around US $200 million in 1999 to US $37 billion in 2008 (27). Virtually all international satellite operators, such as PanAmSat, EUTELSAT, INMARSAT, Telesat (Canada), and New Skies (the commercial spinoff from INTELSAT) already have plans to acquire broadband satellites. INMARSAT (the International Maritime Satellite Organization), for example, has announced the purchase of three global mobile broadband satellites for its new Broadband Global Area Network, which is to become operational during 2004. The INMARSAT satellites will be 100 times more powerful than INMARSAT’s current world-leading global mobile 64-kbit/s network. In addition, the Broadband Global Area Network (B-GAN) will provide at least 10 times more capacity for new users, enabling INMARSAT to fulfill the growing need of global corporate enterprises for on-line high-speed access to information and communications. INMARSAT projects high demand for mobile broadband services, and its satellites will also provide a seamless extension to fixed networks. According to a year 2000 forecast from ING Barings, the mobile satellite market will be worth more than US $4 billion in 2004 and will double to more than US $8 billion in 2009.
It is forecast that business-to-business E-commerce will be a $US1 trillion market by 2003 (28). Six companies—Astrolink, EuroSkyWay, iSky, SkyBridge, Spaceway, and Teledesic—have announced plans for new satellite broadband networks, which they believe will give them a piece ofthis lucrative new market. Teledesic was one of the first to announce such plans, a US $10 billion project funded by cellular pioneer Craig McCaw, Microsoft Chairman Bill Gates, Saudi Prince Alwaleed Bin Talal, the Abu Dhabi Investment Company, Motorola, and Boeing. Teledesic is building what it calls a global broadband ”Internet-in-the-Sky” that is scheduled to become operational in late 2003. In addition to providing advanced business services, Teledesic aims to accelerate the spread of knowledge throughout the world and facilitate improvements in global education, health care, and the environment. The ambitious system will comprise 288 low Earth orbit (LEO) operational satellites, plus in-orbit spares, operating in the uncrowded, high-frequency Ka band of the radio spectrum. (In this frequency band, it is possible to achieve compact antenna terminals half the size of traditional VSAT Ku-band systems.) To use the radio spectrum efficiently, the Teledesic system will allocate frequencies dynamically and reuse them many times within each satellite footprint. The 288 LEO satellites will be divided into 12 planes; each will have 24 satellites orbiting at 1375 km (854 mi) above Earth.
Teledesic chose a low orbit to eliminate the signal delay that can be experienced in communications through traditional geostationary satellites and that could seriously impair interactive communications. A low orbit also enables using small, low-power terminals and antennas. The laptop-size terminals will mount flat on a rooftop and connect inside to a computer network or personal computer. Ground-based gateways will enable service providers to offer seamless links to wire-line and wireless networks, although fewer terrestrial facilities will be needed because all 288 satellites will be interconnected via intersatellite crosslinks. This reduces the time it takes to establish a connection. The Teledesic network is designed so that from anywhere on Earth, a Teledesic ground terminal can always ”see” a satellite nearly directly overhead and without obstruction. This is accomplished by having an elevation angle of 40° or higher at all times in all locations. A lower elevation angle would increase the likelihood of obstruction by surrounding buildings, trees, hills, or other topographic features.
Most Teledesic users will have two-way connections that provide up to 64 Mbps on the downlink and up to 2 Mbps on the uplink. Sixty-four Mbps represents access speeds that are more than 2000 times faster than those available via today’s standard analog modems. A key technical challenge for Teledesic will be to develop low-cost antennae that can track moving satellites. Unlike narrowband mobile satellite terminals, which can use simple omnidirectional antennae, broadband Teledesic antennae must be continuously repositioned so that they point to the correct satellite. Like all of the other satellite broadband systems announced, Teledesic will offer ”bandwidth on demand.” This means that users pay only for the bandwidth they actually use and do not have to reserve bandwidth in advance or agree to a minimum monthly or annual service agreement.
For the network operator, bandwidth on demand means that the network can support a much higher number of users because capacity is released only when needed. The Teledesic network will cover nearly 100% of Earth’s population and 95% of the landmass. It is designed to support millions of simultaneous users. Teledesic, founded in 1990, is based in Bellevue, Washington. In mid-2000, Teledesic was behind in its deployment schedule, and it was rumored that the company was considering reducing the number of satellites to be deployed.
By comparison, the EuroSkyWay global satellite broadband system will use a cluster of five operational satellites, all in geostationary orbit. It will offer an aggregate capacity of 45 Gbps, which will be available either on an on-demand or reserved basis. EuroSkyWay’s Ka-band satellites will feature digital onboard processing, which has already been successfully tested in orbit since 1991 aboard two Italsat satellites built by EuroSkyWay’s founding company, Alenia Aero-spazio. In fact, Alenia Aerospazio has been developing payloads and satellites using the Ka band and onboard processors since 1984 as the prime contractor of the European Space Agency. Alenia Aerospazio developed the first commercial multimedia onboard processor in the world. It has been operating in orbit since March 1998 onboard the Eutelsat Hot Bird 4 satellite.
Like Teledesic, EuroSkyWay’s satellites will also be interlinked. Using digital onboard processing and intersatellite links, EuroSkyWay satellites will provide full connectivity between any pair of spot beams. The satellites will also handle any packet-type switching, such as that required for two-way Internet communications. To overcome the so-called latency problem generated by the use of the Internet protocol TCP/IP for GEO satellites, EuroSkyWay will use a proprietary system based on the asynchronous transfer mode (ATM) protocol. In the first of two projected operational phases, EuroSkyWay will provide coverage across Europe, the Middle East, Greece, Turkey, Africa, and some former USSR countries. The first satellite is planned for launching by the year 2001. In the second and final operational phase, three additional satellites will provide increased capacity plus coverage across Africa and Asia. EuroSkyWay was founded in Italy in March 1997 by Alenia Aerospazio Space Division, the satellite manufacturing company of the Finmeccanica Group.
In addition to providing fixed services, EuroSkyWay will also bring broadband services to mobile users by offering communication links at a speed that is up to 200 times faster than traditional cellular phones. The company identifies its key potential customers as large telecommunications companies and Internet services providers, large multinational corporations, and social service users. In this latter category, EuroSkyWay specifies hospitals, research centers, universities, and all users that require multimedia interactive connections for social needs. The provision of medical services is a special directive. The company’s slogan is ”move information, not patients.” In fact, using existing Alenia Aerospazio satellite facilities, technical support has been provided in such areas as Sarajevo, Bosnia-Herzogovina, and Kosovo. Doctors at medical institutes in Milan and Rome assisted the injured via satellite-based telemedicine.
As mentioned, Teledesic intends to fly an all-LEO system, and EuroSkyWay an all-GEO system. The global Ka-band Spaceway system from Hughes Electronics Company will consist of eight GEO satellites and additional satellites that will operate in lower Earth orbits. Ground stations will range from user terminals with antennas approximately 26 in. in diameter to larger gateways for connectivity to terrestrial backbone networks. The initial Spaceway GEO satellite system will provide ubiquitous coverage in four main regions of the world. North America will be first to be brought on line, as early as 2002-2003 with two Hughes-built HS702 geosynchronous satellites plus an in-orbit spare. Hughes plans to work with global strategic partners to extend the system into other regions as markets develop, including Europe, the Middle East and Africa, Latin America, and Asia. Once this initial system is operating and producing sufficient revenue, the complementary non-GEO system will be introduced. It will expand the network capability to offer additional broadband and interactive multimedia services in high-traffic markets. Spaceway will extend the reach of traditional VSAT networks. It will seamlessly integrate with existing land-based systems and will be fully compatible with a wide range of terrestrial transmission standards. Spaceway will allow corporations to consolidate their local and wide area networks into single high-speed networks. Uplink rates will be between 16 Kbps and 6 Mbps. The satellite system will employ onboard digital processing, packet switching, frequency reuse, and spot beam technology, and will offer mesh connectivity throughout the service area. This connectivity, for example, will allow customers to communicate directly via satellite with other customers without having to go through a terrestrial retransmission hub. It also permits direct, full broadcast capability throughout the service area. Hughes and its subsidiaries own and operate the largest privately owned fleet of commercial satellites in the world. The company is also the world leader in providing satellite-based private business networks. The capabilities of these networks will be greatly expanded through Spaceway.
Thus far, all of the promised broadband systems mentioned will operate in the relatively unused Ka band, where there is a large quantity offrequency to be shared among several companies desiring to offer bandwidth- and frequency-intensive services. The final broadband system to be discussed here will not use the Ka band, but rather the Ku band—a set of frequencies used primarily for satellite news gathering, network transmissions to broadcast and cable affiliates, corporate videoconferences, and satellite-to-home broadcasting. Beginning in 2003, SkyBridge GP, Inc. plans to operate a US $6.1 billion Ku-band LEO satellite system that will provide end users access to high data rate multimedia services. Like the other Ka-band services planned, SkyBridge wants to take advantage of the fast growing market demand for high-speed Internet access, corporate intra- and extranets, LAN/WAN remote access, E-commerce, videoconferencing, and interactive video and audio entertainment. The SkyBridge service is aimed at both residential and business users. According to SkyBridge, up to 72 million residential users will seek to purchase broadband communications services by 2005, and by the same year, businesses will spend more than US $100 billion per year on broadband services. The 80 LEO satellite constellation from SkyBridge is designed to limit use of terrestrial facilities—except where these are more cost-efficient—and thus solve the ”local loop” or ”last mile” problem by using satellite antennas that connect directly to satellites.
According to SkyBridge, it will offer telecommunications operators a flexible, timely, and cost-effective alternative to slow terrestrial roll-out programs, for example, cable, fiber. The 80 Ku-band satellites will orbit at an altitude of 913 mi (1469 km). This low Earth orbit allows the short signal propagation time—30 milliseconds—needed to provide real-time interactive services. The SkyBridge system will comprise about 200 gateway Earth stations for worldwide coverage. Each gateway will have a 234-mile (350-km) radius of coverage. The gateway stations will interface with all existing terrestrial facilities through an ATM switch that will ensure seamless integration with residential or business satellite terminals that will cost about US $700.
The SkyBridge system is designed to operate in the 10 to 18-GHz Ku-fre-quency band without causing interference to either GEO satellite operators or terrestrial users. Frequency will be shared between SkyBridge and the many different Ku-band GEO satellite operators by limiting the power from the SkyBridge system into the GEO transmit arc. Specifically, each SkyBridge satellite will cease transmissions during all potential interference conditions. A SkyBridge satellite will stop transmissions to a gateway cell, and the SkyBridge Earth stations in the gateway cell (including all end-user terminals) will cease transmission to the satellite when the satellite enters that gateway’s ”nonoper-ating zone.” This zone will span 10° on either side of the GEO arc as seen by any Earth station in the gateway cell. The traffic in that cell will be handed over to another satellite in the constellation. The SkyBridge satellite system will have neither onboard switching nor intersatellite links. The gateways and satellites will be preprogrammed to hand over traffic.
As do the other Ka-band broadband operators, SkyBridge intends to serve both developed and developing countries around the world with its ubiquitous ”instant” infrastructure. As is the case with Hughes’s Spaceway system, many international partners are being recruited to help pay for these expensive systems. Alcatel, a multinational telecommunications firm located in Paris, is the general partner of SkyBridge LP. To assist in the design, development, and manufacture of its system, SkyBridge has arranged a diversified international consortium. Participants include Boeing (U.S.), COM DEV International (Canada), CNES (Centre National d’Etudes Spatiales) (France), EMS Technologies (U.S.), Litton Industries (U.S.), Loral Space and Communications Company (U.S.), Mitsubishi Electric Corporation (Japan), Sharp Corporation (Japan), SNECMA (France), Toshiba Corporation (Japan), a Belgian banking institution, and others.
Satellite Handheld Mobile Telephony
According to the Teal Group, some 450 new satellites for mobile telephony will be launched between 2000 and 2008. This represents 44%—nearly half—of all new satellites to be launched during the coming years (29). [Teal Group, report titled ''Commercial Communications Satellites, Satellite & Launch Services Market Forecast: 1999-2008,'' April 1999] According to many, data delivery by phone will be the next boom technology for consumers. Using their handheld satellite phone receivers, they will be able to receive E-mail, access the Internet, obtain the latest news and weather forecasts, trade stocks, and participate in videoconfer-ences via a built-in TV screen.
As mentioned before, INMARSAT, the International Maritime Satellite Organization, which operates a global constellation of geosynchronous satellites,pioneered a worldwide infrastructure for mobile telephony and data communications as early as 1979. Today, new regional and global mobile constellations of GEO, LEO, and MEO (medium Earth orbit) satellites are coming on-line to compete with INMARSAT. These include global mobile systems such as Global-star and INMARSAT’s own privatized spinoff, New ICO Global Communications. New regional systems include MOTIENT (formerly American Mobile Satellite Communications, or AMSC; Thuraya; Asia Cellular Satellite Communications (ACeS); and Asia Pacific Mobile Telecommunications (APMT)). All of these services are aimed at the individual who needs uninterrupted global phone, fax, data, or pager access. This can include the business traveler in remote areas of the world or in developing countries where the telecommunications infrastructure is inadequate or nonexistent. Other users include workers involved in oil and gas extraction, those providing disaster relief, and those working aboard commercial and government ships.
The first LEO satellite mobile telephony system to become operational, Iridium, began commercial service in November 1998. Although Iridium—that has 19 strategic partners from around the world—was forced to terminate service in March 2000 for financial reasons, the system did prove the technology. The Motorola-designed system required US $5 billion and 11 years to create and was authorized to provide voice, fax, and data transmission services in more than 120 countries. Iridium’s 66 satellites, each weighing just 700 kg, formed a cross-linked grid only 485 mi (780 km) above the Earth. The Iridium satellites could receive the signals of a handheld phone. They acted like cellular towers in the sky, where wireless signals could move overhead instead of through ground-based cells. The Iridium network integrated land-based phone lines, local cellular facilities, and satellites to provide the quickest and most cost-efficient call routing. The Iridium handheld telephone worked in two modes. As a mobile cellular phone, it sought out available service from existing land-based networks. In this mode, it operated in the same way as today’s terrestrial cellular systems. When cellular service was not available, the Iridium phone would switch to satellite mode. At least one Iridium satellite was always available overhead to receive a transmission. The call was then relayed from satellite to satellite, until it reached its destination, either through a local Iridium gateway and the PSTN or directly from the satellite to a receiving phone.
According to industry analysts, Iridium’s market failed to materialize for five reasons. First, the handsets were large and heavy; second, they cost US $3000 apiece; third, they were not functional indoors; fourth, Iridium chose to build its entire system up-front; it cost US $5 billion and resulted in unsustain-ably high consumer rates; and fifth, it took too long (11 years) to get to market, so that initial market assumptions and technologies became outdated. For example, by the time Iridium was launched, cellular and personal communications service (PCS) technology had improved dramatically and was so pervasive that for most people, a traditional cellular phone was the optimum choice. Its lower cost and weight deterred conversion to the Iridium service.
Globalstar, another global mobile satellite telephony service, is now commercially available in more than 30 countries (as of May 2000) in North America, South America, Central America, Latin America, Asia, and Europe. Globalstar has said that it expects to offer commercial service in at least 50 countries,including Russia and South Africa, by the end of June 2000. The company, a consortium led by Loral Space & Communications and Qualcomm of the United States, plans to provide service in more than 100 countries on six continents. Like its erstwhile competitor Iridium, Globalstar uses satellites to extend traditional mobile and fixed phone services and offers the flexibility to make both satellite and cellular calls through one phone anywhere in the world. Also like Iridium, Globalstar supports data transmissions and Internet connectivity as part of an overall range of services. E-mail messages are received through the system at rates of 9600 kbps.
Unlike the satellites in the Iridium network, Globalstar’s 48 LEO satellites are not cross-linked and perform no onboard processing. Also, users are not connected directly to or from a satellite. Instead, Globalstar is what is called a ”bent-pipe” system. Calls are routed via a terrestrial path from a fixed phone or handheld or vehicular mobile phone to a gateway Earth Station, which uplinks the call to a satellite. The call is then routed by satellite down to another gateway Earth station and then transmitted through local terrestrial wire-line and wireless systems to the final destination. The Globalstar system can pick up signals from more than 80% of Earth’s surface. In fact, several satellites pick up a call (via the terrestrial gateway), and this so-called ”path diversity” ensures that the call does not get dropped, even if one satellite moves out of sight of the phone. Each Globalstar satellite consists of an antenna, a trapezoidal body, two solar arrays, and a magnetometer. The Globalstar satellites were manufactured by Space Systems Loral.
The satellites operate at an altitude of 1414 km (876 mi), so that there is no perceptible voice delay or echo effect. The satellites are placed in eight orbital planes of six satellites each, inclined at 52° to provide service on Earth from 70° North latitude to 70° South latitude. The Globalstar system uses Qualcomm’s CDMA (code division multiple access) transmission technology, that offers better voice quality and security than terrestrial cellular networks. Small, lightweight multimode handsets are used for either satellite or terrestrial cellular service (e.g., when inside buildings) in such standards as GSM, AMPS, and CDMA. Placing a call takes roughly 10 milliseconds. In addition to offering mobile telephony, Globalstar also intends to serve users in underdeveloped parts of the world with affordable fixed-site telephones. For example, these could be located in coin-operated village telephone booths or small business offices that currently cannot enter the global marketplace, for example, a supplier of batik in Indonesia that needs to communicate regularly with a wholesaler in New York. In the first quarter of 2000, Globalstar began service in China. The company plans to bring communications services to vast reaches of the country outside the range of existing cellular and wire-line phone systems. Globalstar estimates that 50% of the world has little or no phone service and believes that satellite telephony eliminates the high cost and long times needed to build land-line or wireless network infrastructures. Beside Loral and Qualcomm, the Globalstar consortium’s strategic partners include Alenia Aerospazio (Italy), China Telecom (Hong Kong), DACOM (Korea), DaimlerChrysler Aerospace (Germany), Chrysler Aerospace (U.S.), Hyundai (Korea), France Telecom, Alcatel (France), Elsacom (Finland), and Vodaphone AirTouch (U.K.). As of February 2000, all 52 Globalstar satellites (48 operational and four in-orbit spares) were in orbit. However, as of
August 2000, subscriber numbers lagged far behind projections, and Globalstar’s fate was in question. Despite the relative technological simplicity of the Global-star network (compared with Iridium), the total system cost between US $2 billion and US $3 billion.
Beginning in the first quarter of 2001, another satellite global mobile telephony service will be provide by London-based New ICO Global Communications—so named after ICO Global Communications emerged from bankruptcy protection in May 2000. Like Globalstar, the New ICO system also maximizes use of terrestrial wire-line and wireless (cellular and PCS) networks, and the satellites are not cross-linked. However, New ICO users do have the option to uplink their calls to the satellite directly from the handset. When terrestrial transmission is selected, a dozen satellite gateway Earth stations around the world will provide access to and from the satellite. Using digital onboard processing, the New ICO system can handle 4500 simultaneous phone calls per satellite. The New ICO space segment will comprise 10 satellites operating in medium Earth orbit at an altitude of 6430 mi (10,355 km) and inclined 45° to the equator. The 10 operational satellites will provide complete, continuous overlapping coverage of Earth’s surface. Like Globalstar, the New ICO system will employ the same path diversity, where a caller has access to more than one satellite at a time. New ICO believes that its MEO system has at least two advantages over LEO systems like Iridium and Globalstar. First, because there are far fewer satellites to build and launch, the capital cost of the New ICO system is lower, and these savings can be passed on to the consumer. Second, a higher satellite orbit means fewer call handoffs from one satellite to another and thus superior quality of service. The call handoffs are minimized because of a MEO satellite’s larger footprint across the ground, where the user is, and because these spacecraft travel more slowly than LEO spacecraft, allowing the user handset more time to ”see” the satellite.
New ICO’s dual-mode mobile phones will be similar in appearance, size, and weight to standard GSM phones used throughout Europe. New ICO will also supply fixed telephones for such places as remote offices and oil rigs and coin-operated telephones for community phone booths. New ICO service is directed toward satisfying the needs of five market segments: (1) maritime; (2) remote fixed, for example, business and residential users located in areas where there are no existing fixed telecommunications services; (3) handheld mobile users who have an ongoing need for telephony where existing infrastructure is insufficient, as well as users who wish to extend the area in which they can roam; (4) transportation, for example, land transport operators whose needs include vehicle tracking and fleet management applications; and (5) government, for example, military and disaster relief agencies.
The launch of New ICO’s first satellite onboard a Sea Launch rocket in March 2000 was unsuccessful. However, New ICO mitigated the impact of this failure with its plans to build and launch a total of 12 satellites even though the intended service requirements call only for 10 operational satellites in orbit. Because US $4 billion were already spent, New ICO will need another US $2.1 billion in financing to take it to commercial launch. New ICO Satellite Communications, based in London, was established in January 1995. The New ICO investor consortium comprises two of the world’s leading telecommunications entrepreneurs, Craig McCaw and Subhash Chandra, plus more than 60 of the world’s leading telecommunications operators and manufactures. These include INMARSAT (U.K.), COMSAT (U.S.), ARABSAT (Saudi Arabia), British Telecom (U.K.), NEC Corporation (Japan), PT Indonesian Satellite Corporation, Singapore Telecommunications Ltd, Telecom Egypt, Telecommunicaciones de Mexico, Telefonica de Espana (Spain), Telekom Malaysia Berhad, Telstra Holdings (Australia), TRW (U.S.), Deutsche Telekom (Germany), Ericsson Ltd. (Sweden), Mitsubishi Wireless Communications (Japan), Telkom South Africa, Hughes Space & Communications Company (U.S.) that is building the satellite system, and Hughes Network Systems (U.S.).
Along with the global mobile satellite telephony systems described before, there will also be several regional systems in different parts of the world. Two, MOTIENT and Asia Cellular Satellite System (ACeS) are already operational. Two others expect to be operational in the 2000-2001 time frame. These are Thuraya Satellite Telecommunications and Asia-Pacific Mobile Telecommunications (APMT).
MOTIENT was founded in 1988 as AMSC and has been operational since 1996, when its first satellite, AMSC-1, was launched into orbit. The company targets U.S. corporations that have fleet management needs and services a footprint covering North and Central America, the Caribbean, and surrounding U.S. waters. Mobile workers can be linked to their companies for voice, data, dispatch, and messaging transmissions. Recently, mobile access to the Internet has been added. MOTIENT provides its services to several markets, including fixed-site satellite telephone users in remote areas; land mobile cellular/satellite telephone users; the maritime industry, including managers of multiple vessels and offshore oil rigs; transportable regional dispatchers, for communications with their fleets of trucks, ships and other vessels, and railcars; and aeronautical users, for making and receiving satellite-linked telephone calls in flight on commercial and military planes. Calls are uplinked directly from the MOTIENT handset to AMSC-1 and downlinked to the MOTIENT gateway outside Washington, D.C., and from there through the PSTN. AMSC-1 can serve up to 10,000 mobile users simultaneously. Located at 101° West longitude, AMSC-1 operates in the L band and uses switchable spot beams to serve an ever changing, on-the-go market.
The main priority of ACeS, based in Jakarta, Indonesia, is to provide cost-effective fill-in satellite service for cellular operators and users and thereby afford seamless coverage throughout Southeast Asia, India, China, Australia, Indonesia, and the Philippines, among other countries. Like MOTIENT, ACeS will provide mobile and fixed voice services, data, fax, paging, and Internet access. The US $900 million system uses two GEO satellites, one in orbit and operational and the second an in-orbit spare that will first serve as a backup and then later as an active satellite for system expansion into western and central Asia, eastern Europe, and parts of North Africa. The Garuda 1 satellite was successfully launched in February 2000 aboard a Proton/Block DM rocket from the Baikonur Cosmodrome in the Republic of Kazakhstan. After testing, it will become commercially available in the second half of 2000.
ACeS is the first regional, satellite-based, handheld mobile telecommunications system designed exclusively for the Asia-Pacific region. It is also the first integrated GSM (general services for mobile)/satellite network in the world.
Garuda 1 is said to be ”the most powerful commercial GEO satellite ever built” and can cover more than 11 million square miles. Lockheed Martin Global Telecommunications is the manufacturer. Each Garuda satellite has 11,000 circuits. Because of the high power of Garuda I, the satellite can handle direct satellite uplinking and downlinking from any user’s mobile phone handset. The 205-g Ericsson R190 dual-mode (GSM/Garuda) satellite phone is said to be the smallest satellite phone available worldwide.
The GSM cellular standard is operational in more than 100 countries worldwide. Subscribers to GSM networks worldwide can use ACeS while traveling in Asia by using an authorization card and a leased or owned ACeS satellite terminal. Once out of cellular range, the phone will automatically switch to satellite mode to send or receive calls and will switch back to GSM when in GSM coverage areas. Consumer retail pricing for use of the ACeS system will be less than US $1 per minute, which is the lowest price for any of the satellite handheld mobile telephony systems announced. Service will be offered initially in eight licensed Asian countries whose total population is 1.7 billion—less than 11% have access to wireless service. These countries are Indonesia, the Philippines, Thailand, India, Pakistan, Bangladesh, Sri Lanka, and Taiwan. After initial service rollout, ACeS will make its network available to an additional 26 countries with which it has already signed international roaming agreements. Significantly, because of its vast population and inadequate telecommunications infrastructure, China is one of the countries that has signed a roaming agreement with ACeS. The four strategic partners of ACeS are Pasifik Satelit Nusantara (Indonesia); Philippines Long Distance Company; Jasmine International (Thailand); and Lockheed Martin Global Telecommunications (U.S.), which owns a 30% interest in ACeS.
Founded in 1997, Thuraya Satellite Telecommunications Company of the United Arab Emirates will serve an area that spans the Indian subcontinent, central Asia, the Middle East, north and central Africa, Turkey, and Europe. This area, much of which is sparsely populated, has rugged terrain, little telecommunications infrastructure, and comprises approximately 100 countries and two billion people. This will be the first and largest mobile satellite service in these regions. Thuraya plans to begin commercial service in late 2000 or early 2001 after a scheduled launch in September 2000. The Thuraya system is valued at US $1 billion, including one in-orbit satellite at 44° East longitude and one ground spare. Thuraya will operate a high-power geosynchronous satellite to provide services that include the transmission of voice, data, fax, and messages, as well as location determination using the Global Positioning System ofthe U.S. Air Force. Thuraya will transmit and receive calls via a single 12.25-meter-aperture reflector on the satellite. Calls can be uplinked directly to the satellite from the user handset or relayed via a terrestrial path to a gateway satellite Earth station. The satellite employs onboard digital signal processing to create more than 200 spot beams that can be redirected in orbit, enabling Thuraya to adapt to consumer demand in real time. The system can handle 13,750 simultaneous voice circuits. Thuraya’s investors include some of the leading telecommunications operators from the areas to be served, including Emirates Telecommunications Corporation (UAE); Arab Satellite Communications Organization (ARABSAT) (Saudi Arabia); Quatar Telecom; General Post and
Telecommunications Company (Libya); and other telecommunications organizations from Oman, Yemen, Egypt, Morocco, Sudan, Tunisia, and Germany. Another key investor is Hughes Space & Communications International, which built the Thuraya orbital and ground systems.
Finally, Asia Pacific Mobile Telecommunications Company (APMT), an early market leader, that has a satellite already in an advanced construction phase in 1998, experienced a major setback in early 1999 when the U.S. government withheld an export license from Hughes Space & Communications for the sale of the APMT satellite. (All but one of APMT’s owners were Chinese companies, and on the news, Singapore Telecom dropped out.) APMT immediately cancelled the US $450 million contract with Hughes and has had to start from scratch to seek other suppliers outside the United States. This will considerably delay service introduction. The APMT satellite was originally scheduled for launching in late 1999, and commercial operations were scheduled to begin in 2000. APMT’s aim was to complement and extend terrestrial fixed and mobile coverage at low cost. Its coverage and pricing were going to be virtually the same as ACeS, which leaves APMT at a distinct competitive disadvantage at this time.
Regulation
Regulation and the globalization of satellite communications are both very important factors in determining the future development of satellite communications. Therefore, we present here a short description of the current situation with respect to these activities.
International Telecommunication Union. All communications entities that use or require radio-frequency spectrum are subject to the rules and regulations of the International Telecommunication Union, a specialized agency of the United Nations headquartered in Geneva, Switzerland. In the case of satellite communications, these regulated entities include operators of fixed (geostationary), broadcast (direct-to-home), and mobile satellite services, as well as operators of satellite ground links. Most, if not all, are also subject to national legislation and to the rules of numerous national telecommunication regulatory agencies (such as the Federal Communications Commission in the United States).
The mission of the ITU is to facilitate the global development of telecommunications for the universal benefit of mankind, through the rule of law, mutual consent, and cooperative action (30). The ITU comprises 189 country members and some 600 members from the private sector (as of July 2000). Among its primary goals is to create and oversee an orderly, transparent system to ensure satellite interconnection and interoperability of different national, regional, and global satellite systems on a technical and administrative basis.
In support of this goal, the ITU attempts to establish fair and equitable regulatory processes, sets standards, allocates orbital slots, provides for the efficient use of radio spectrum, supports telecommunications development worldwide, and ensures freedom from harmful interference through efficient spectrum management. It is safe to say that we could not have the robust satellite systems and applications we have today—and look for tomorrow—without the ITU’s equitable regulation of the world’s limited radio-frequency spectrum and its enforcement of those regulations.
One of the most important tasks of the ITU today is to ensure that increasingly scarce radio spectrum is not allocated for uses that are not currently feasible or practical. The ITU is aware that it must strike a careful balance between its ”first-come, first-served” policy of spectrum reservation (even where no satellite system has been developed) and accommodating deserving, but later, applicants whose well-engineered systems are ready to go (31).
The ITU is also charged with recommending tariff and accounting rate principles to ensure nondiscriminatory treatment. Members and spectrum users pay an annual membership fee to the ITU, along with various filing fees when applying to operate a new system, but they do not pay for the spectrum they use. All ITU decisions are reached by membership vote. Only government members vote on decisions regarding spectrum (32).
The origins of the ITU date back to 1865, when telegraph communications were heating up. There was no international regulatory body to take the lead in providing for the interconnection of national networks or to standardize equipment, issue operating instructions, and lay down common international tariffs. On May 17, 1865, the International Telegraph Union, later to become the International Telecommunication Union, was established (33).
ITU activity in satellite communications took off after the launch of Sputnik. In 1959, a study group was formed to study space radio communication. In 1963, an Extraordinary Administrative Conference for space communications was held to allocate frequencies to the various space-based services (33). Since that time, the ITU has held timely regional and world administrative conferences to plan for and provide new telecommunication services. Each major innovation in the field of telecommunications is matched by specific action on the part of the ITU to integrate new technologies into the world network and to provide the necessary resources (e.g., radio spectrum, orbital slots) to respond effectively to the expectations of member states. For example, with the advent of non geostationary low and medium Earth orbit satellite systems, the ITU assigns orbits rather than orbital slots. The orbit is defined by five factors: spacing of the satellites, altitude, inclination, number of planes, and number of satellites per plane.
The ITU’s workload has become increasingly heavy and complex since the end of the Cold War. As the bipolar Cold War environment gave way to the global marketplace, satellites began to assume an increasingly important role in the communications infrastructures of the new CIS republics (34). This is also true of numerous developing nations, which at this time also began to seek a means of entry into the global marketplace. Satellites emerged as the quickest and most cost-efficient route to global telecommunications, creating ”instant” ubiquitous telecommunications infrastructures. Through satellites, any country could enter the global marketplace immediately—without waiting years for installing copper wire or fiber connections.
The significant capital required for these satellite-based infrastructures made use of private funds inevitable. In most cases, the governments of the CIS and developing nations could not afford this infrastructure on their own, so private companies moved in. Moreover, the economic value of satellite slots and radio spectrum and the provision of satellite services drew in other competing private companies. In fact, today, competition in providing satellite communication services is pervasive throughout the world, domestically, regionally, and globally.
For the ITU, this altered satellite communications landscape meant dozens of new members, new requirements for satellite orbital slots and finite spectrum, member demands for timely action despite growing complexity, and increased politicization in the face of mounting worldwide competition. Meanwhile, new regional and global satellite services increased competition for space throughout the orbital arc. Previously, most applicants sought only to provide a national service—often with a single satellite; now applicants that seek to provide regional and global satellite services want to be everywhere. Hence, they require orbital assignments above countries throughout the world (34).
In addition, new satellite technologies have emerged. These include interactive direct-to-home broadcasting, handheld mobile telephony, and high-data-rate broadband systems for interactive multimedia. These new technologies place added pressure on the ITU, which must ensure their technical soundness and allocate new orbital and spectrum resources so as to prevent harmful interference with any existing or planned system and speed their entry into the highly competitive world marketplace.
To promote the proliferation of global mobile telephony, for example, the ITU, in March 1999, set a single worldwide standard to enable all mobile phones to work anywhere in the world. Previously, global roaming was not feasible because there were competing and incompatible standards among nations. For instance, U.S. wireless networks used code division multiple access (CDMA), but Europe and large parts of Asia used GSM global system for mobile communication. In adopting a single standard, the ITU took the best from both technologies.
Along with the new satellite technologies, there are also competing terrestrial systems, such as fiber-optic broadband and cellular that must be accommodated with a spectrum.
The World Trade Organization. Hand in hand with privatization and competition in satellite communications has come deregulation, whereby many governments now allow foreign competitors to provide satellite services in once-closed markets. On January 1, 1998, the World Trade Organization’s landmark agreement on basic telecommunications took effect, supporting the creation of a multilateral framework for trade in telecommunication services and open competitive markets. Coincidentally, the same date marked the opening up of telecommunications markets within most member states of the European Union. Both actions have a common objective, namely, to ensure nondiscriminatory market access for service providers and to lower costs for end users.
The telecommunication sector, including communication satellites, is one of the major components of the world’s economy. The value of telecommunication sales (equipment and services) exceeded US $1 trillion in 1998. Moreover, telecommunication networks are a major facilitator of trade in other goods and services, as well as in the timely movement of capital throughout world markets. Because of the importance of telecommunications, the WTO has undertaken to ensure that (1) there is free market access, (2) regulation is transparent and nondiscriminatory, and (3) pricing is fair and nondiscriminatory (31).
Before 1998, only a handful of countries permitted competitive provision of international telecommunications services. Of the WTO’s 188 member states, 69 have voluntarily agreed to comply with WTO agreements to liberalize telecommunications trade. These 69 signatories account for more than 90% of international telecommunications traffic. The WTO believes that a significant byproduct of this reform will be quicker introduction of new technologies and services in signatory nations.
The WTO agreement on telecommunications underscores the fact that telecommunications trade has moved from bilateral to multilateral status. In large part, communication satellites are responsible for this significant change, because satellites do not recognize geographic borders. Moreover, the cost of satellite transmission is insensitive to distance. Telecommunications traffic that once moved from one country to another now flows through vast networks that can comprise dozens of countries. Where interconnection rates used to be settled by two nations, now many nations are involved, introducing greater complexity. Reform and fairness in assessing accounting rates is a primary objective of the WTO. Specifically, the WTO seeks a framework that is nondis-criminatory, cost-based, transparent, and consistent with the principle of voluntary multilateralism (31).
Conclusions
Looking back, at the end of 1999, the worldwide satellite industry had generated more than US $69 billion in annual revenues. Communication satellite services, the largest and fastest growing segment of the industry, generated US $30.7 billion in 1999. The U.S. satellite industry accounted for US $31.9 billion of the total, or roughly 46% of worldwide revenues (35). This rather unbalanced spreadsheet will change quickly as more and more non-U.S. countries provide regional services, for example, satellite handheld mobile telephony and direct-to-home TV, and strengthen their manufactures’ ability to compete better with U.S.-based rivals. As we have seen, satellite handheld mobile telephony and broadband services are already proceeding without U.S. involvement. The loss of APMT’s US export license virtually invites international rivalry in manufacturing.
In August 2000, the mobile satellite services (MSS) market was the riskiest of all satellite businesses discussed here. Despite cumulative investments in excess of US $20 billion and 25 years of effort, MSS remains a niche market with only an estimated 600,000 users worldwide. The current market is professional and draws subscribers primarily from areas where terrestrial cellular systems are not available. INMARSAT and Qualcomm’s Omni Tracs service are the dominant players. Due to the failure of Iridium in early 2000, many market analysts doubt the viability of MSS as a successful business. Still, based on current market projections and growth rates, one can forecast the existence of three million to four million MSS users by 2004. Most of the growth will come from niche and specialized markets and from converting the telephony system to a medium-rate data system. Such conversion has already taken place as Globalstar and New ICO begin to offer data service. In the future, all MSS operators hope to boost traffic and revenue with data applications. A significant mobile satellite data market is most likely to require specialized providers to address a wide range of asset tracking and telemetry applications.
Looking ahead at global broadband satellite services, Pioneer Consulting has forecast that total revenues will increase from around US $200 million in 1999 to US $37 billion in 2008. Moreover, according to the Teal Group, by 2008, annual revenues deriving from all commercial satellite technologies and services worldwide will total US $120 billion. These skyrocketing revenues can be attributed to at lest eight trends that have propelled the commercial satellite industry this far: (1) global deregulation and privatization, (2) digital transformation, (3) market convergence, (4) globalization of services, (5) strategic international alliances, (6) the dynamic emergence of—and rapidly accelerating global demand for—satellite broadband services, (7) worldwide demand for more mobile services, and (8) overall demand for more satellite-based telecommunications services of all kinds.
Global Deregulation and Privatization. Deregulation and privatization of satellite services has occurred throughout the world. This has led to the provision of commercial satellite services by entities from foreign countries that had previously been banned from providing these services in certain highly regulated countries, for example, India, China, Mexico, and Greece. The ensuing competition in turn has led to better quality products and services; lower, more competitive pricing; introduction of new product and service offerings; and spectacular growth in demand. Likewise, the decision of the U.S. Air Force to make its Global Positioning System available commercially to anyone in the world has triggered myriad new service offerings at competitive prices. Finally, when examining privatization, the case of INTELSAT and its commercial spin-off, New Skies, demonstrates the consumer benefits. Before PanAmSat had grown its satellite fleet enough to compete with INTELSAT, only INTELSAT provided satellite coverage around the world. As a monopoly, INTELSAT’s prices were high, and new services were slow to come to market. Now, with New Skies operating a commercial satellite fleet that covers most of the world, competition (with both INTELSAT and PanAmSat and other satellite operators) has brought its familiar benefits. In addition, New Skies has demonstrated its commitment to innovation. Several different satellite services are provided on a single C/Ku-band satellite: DTH satellite TV broadcasting, point to multipoint distribution to cable headends, corporate data networks, Internet access, and multimedia transmissions.
Digital Transformation. Fully packed chips and very high rates of digital compression help give consumers the advantage of advanced satellite-based services at ever lower prices. Being able to install more and more information on chips, coupled with soaring digital compression rates, is making possible the multiuse satellite; without these technologies, satellites would be too heavy and expensive to launch. For example, Eutelsat’s SESAT satellite, which was launched into GEO orbit in April 2000, has 18 Ku transponders that are used for a full range of services, including data and video broadcasting, direct-to-home TV, inter- and intracorporate networks, satellite newsgathering, Internet backbone connections, high-speed Internet access, distance learning, high-speed transfer of software, and messaging and positioning services for mobile users. The satellite was dedicated to communications satellite pioneer Arthur C. Clarke and is so named.
Market Convergence. In the area of service provision, market convergence is giving consumers a whole new range of satellite products and services. For example, the strategic partnerships between TiVo and AOL TV with Hughes’ DIRECTV merge the content suppliers with the satellite operator. This gives consumers a variety of advanced services, such as watching TV while accessing the Internet, writing E-mail, or requesting an advertiser’s annual report. There is also a new, wide-ranging alliance under which News Corp. provides access to Yahoo! Web sites through its global satellite systems and allows Yahoo! to use News Corp.’s news and entertainment products, such as Fox News Channel and the London Times as a major source of content for its computer sites. Another example is the convergence of the automobile industry, for example, General Motors’ OnStar system with PanAmSat’s satellite fleet. What was initially an emergency system for obtaining assistance while driving has evolved into much more. Today, drivers of upscale General Motors cars (and the cars of some other manufacturers) can use the onboard satellite system to obtain directions to a selected destination, choose a restaurant or hotel and make reservations, or find the nearest gas station or dry cleaner. As described before, the convergence of manufacturing with satellite technology providers has revolutionized multinational manufacturing and distribution operations. Today, numerous industries and small businesses worldwide are finding new ways to take advantage of satellite technologies.
Globalization of Services. As deregulation and privatization occur, satellite-delivered services have become globalized to the extent that satellite TV viewers in southeast Asia have become ardent viewers of such fare as MTV, Nickelodeon, and “ER.” Of course, CNN is virtually ubiquitous, available on almost any TV set in the world. But America is no longer exporting only its TV programs. A new service on DIRECTV allows American viewers to experience various cultures from around the world. WorldLink TV, which is telecast via DIRECTV, delivers public affairs programming from Belfast to Beijing. Viewers can tune in to independent newscasts, social documentaries, world music, and documentaries on human rights issues, the environment, and the global economy. Meanwhile, Discovery Communications of the United States is funding and providing satellite education in developing countries. Discovery is providing advanced technological resources and training to rural and disadvantaged schools and community centers around the world. In its first phase of operations, Discovery is establishing learning centers equipped with satellite and video technologies in sub-Saharan Africa and Latin America.
Strategic International Alliances. Strategic international alliances have become an economic necessity in the light of today’s expensive satellite programs, including satellite construction, launch, insurance, and ground systems. This is increasingly the case as new satellite services are global, so that strategic alliances are formed for economic reasons and also for marketing purposes. For example, the ill-fated Iridium global satellite telephony service spent US $5 billion to build its system and relied on 19 strategic investors from around the world. One of its successors, Globalstar, has 10 founding partners and many additional financial supporters. The regional Thuraya satellite mobile telephony system has 15 strategic partners and investors.
Turning to broadband, to come on line, the emerging satellite broadband systems will need anywhere from less than US $1 billion for iSky, which is using satellite capacity on Telesat (Canada), to US $10 billion for Teledesic. Numerous strategic partnerships for both financing and marketing these broadband systems are essential. The stakes are high. For example, a team of WTO economists estimates that by year-end 2000, there will be more than 300 million Internet users worldwide and that E-commerce will equal US $300 billion. Because most of the satellite broadband systems will not be on line until the 2001-2002 time frame, these numbers reflect the use of cable and other terrestrial technologies. Satellite broadband technology is certain to eliminate the bottleneck and expand the number of commercial consumer and business users. Laying the groundwork for successful satellite broadband companies will require strategic partnerships that enhance the program’s technological, marketing, and economic success.
Soaring Demand for Satellite Broadband Services. Meanwhile, Pioneer Consulting forecasted that total global broadband satellite revenues will increase to US $37 billion in 2008. Residential service will represent the majority of revenue gains, accounting for almost US $22 billion of revenues in 2008. Demand for satellite broadband services will skyrocket as more and more business and residential consumers access the Internet. Netscape founder Marc Andreesen has forecast that, by 2010, the Internet will be 1000 times bigger than it is today and that satellites will be a key conduit because of their ubiquitous reach. China’s Internet growth—even though stymied to some extent by government prohibitions—says a lot for growth around the world. In 1999, the number of China’s Internet users climbed from 2.1 million to more than 6.7 million. By 2003, it is predicted that China will have more than 33 million Internet users and that the number will grow at an annual rate of 60% through 2004. As a whole, Asia had 40 million Internet users as of June 2000; quickly escalating growth is expected to bring the total to 375 million by 2005.
Demand for ”On the Go” Satellite Mobile Services. It is estimated that, by 2003, more than one billion mobile phones will be in use around the world. Wall Street, wireless service providers, and industry analysts believe that wireless data will be the next area of explosive expansion in the Internet economy. Users of wireless phone systems, and particularly satellite-based handheld mobile phones, will use their phones for everything from learning about the local weather to videoconferencing across a continent. The handheld satellite phone will have a screen for displaying both information and broadcast images. Throughout the world, business commuters and travelers lose important business resources that they take for granted when they are at their desktop personal computers. These include Internet access, E-mail and faxing capability, and word processing. Many of these resources will soon become available via mobile platforms, on demand for users on the go. For example, INMARSAT’s satellite-based B-GAN network, scheduled to become operational during 2004, will deliver Internet and intranet content, video-on-demand, videoconferencing, fax, E-mail, voice and LAN access speeds at up to 432 kbit/s virtually anywhere in the world via notebook or palm top computers. According to INMARSAT President and CEO Michael Storey, the new system will enable INMARSAT to ”meet the high demand for mobile broadband services and provide a seamless extension to fixed networks.” INF Barings has forecast that the mobile satellite market will be worth more than US $4 billion in 2004 and will double to more than US $8 billion in 2009. INMARSAT expects to generate wholesale revenues from its new B-GAN network in excess of US $10 billion, ”as global multinational enterprises ….have access to global mobile broadband communications wherever they are in the world,” Storey added. Similarly, Boeing is prepared to afford airline passengers global mobile high-speed on-line connections, television, and other entertainment. Passengers will be able to use laptops to surf the Net at speeds up to 140 times faster than the fastest standard modem service. They will also be able to send and receive E-mail, transmit/receive word processing documents, and much more. Commercial cars with multimedia cockpits are already making their appearance. A personal computer hooked up to a swiveling satellite antenna to navigate the Internet gives access to the same broad array of information resources a driver has at the office. Passengers can even watch films.
The Importance of 24/7 Backup. Whether on the go, at home, or at the office, people have become accustomed to using or enjoying satellite-delivered services, and all indications show that their reliance on such services will increase rapidly in the future. Meanwhile, new subscribers are signing up by the thousands all over the world, from cosmopolitan cities to rural villages in undeveloped countries. The worldwide commercial satellite industry is worth hundreds of billions of dollars in terms of the revenue generated by satellite services. This revenue is significant both to the satellite industry as a whole and to national economies. And in between are businesses whose own revenues depend on the availability of satellite-based telecommunications.
In fact, the real value of commercial satellite-based telecommunications, information, and entertainment services is so diversified that it may not be possible to quantify it exactly. However, a new U.S. satellite company has introduced a product that underscores the vital importance of commercial satellite services for operators, users, and national economies alike. The company, called Assu-reSat, Inc., will provide two high-powered, specially designed geostationary satellites that will provide in-orbit backup protection service beginning in 2002. Once in orbit, the AssureSat satellites will be able to provide backup protection to most fixed GEO satellite operators by moving quickly to appropriate orbital slots to take over the communications tasks of malfunctioning spacecraft or spacecraft whose launches have failed. In-orbit operational backup can provide a cost-effective way for a satellite operator to retain customers and protect both its revenue stream and its customer relationships. The unique design of the spacecraft will allow them to operate on all three International Telecommunication Union (ITU) region frequency plans, and the antennas will be steerable in flight to offer variable footprint coverage in both the C-and Ku-frequency bands. Each of the AssureSat satellites will carry 36 C-band transponders and 36 Ku-band transponders. AssureSat will not offer backup protection for mobile satellites, thus leaving a significant new business opportunity for another entrepreneurial satellite company.
