Falling from orbit

Falling from orbitSatellites were going to be the big thing in the mobile comms market, but it’s all comecrashing down to earth. Tom Foremski reports The Players
Iridium is the first company to offer a global satellite phone and paging service and rolled out its service in November 1998. Founded by Motorola and eighteen other large companies, including Lockheed Martin, the company has a network of 66 satellites.
GlobalStar is the next satellite communications company scheduled to launch its commercial service later this year. Last September GlobalStar experienced a setback when a Zenit II rocket carrying 12 of its satellites blew up on take-off, but the company says it is back on schedule. In mid-April, GlobalStar said it successfully launched an additional four satellites, bringing to 20 the total number of satellites already in place with an ultimate goal of 52 satellites by the end of this year, including four spares.
Teledesic is another high profile satellite communications venture with some famous backers including Microsoft head Bill Gates with a projected cost of $9bn. The venture is an ambitious plan to use a satellite constellation of 288 satellites offering very high speed data comms and an “Internet in the sky.”
ICO Global Communications the satellite phone operator division of Inmarsat has placed first orders for GSMand CDMAcompatible handsets is due for delivery by August 2000 when ICO will launch its first full commercial satellite-based mobile phone service. The dual-mode phones will operate with ICO’s satellites and regional GSM networks.
Skybridge is a largely European led satellite communications venture led by Alcatel and is positioned to be a direct competitor to Teledesic. Its goal is to launch 80 satellites and offer worldwide data services.  
 
It seemed like a brilliant idea. Demand for mobile phones is insatiable and covering the globe with a network of ground basestations is expensive and probably impossible. So the idea of using a system that bounces radio signals of satellites was born.
But ten years on and with the first satellites already in orbit spiralling costs could raise doubts over the future of some satellite phone operators.
Iridium, originally Motorola’s satellite venture which kicked the whole thing off, is already experiencing financial problems and has created a question mark over other satellite communications projects. Although analysts point out that many of Iridium’s problems are related to management mistakes and might not necessarily indicate that there is a limited market for global communications services.
Iridium has seen financial losses worsen by 42 per cent and has had to restructure its loans because of poor sales and has reported numerous other problems.
“Although we have succeeded in building a network that is providing high quality service to our customers, we were very disappointed with our first quarter customer and revenue numbers,” said John Richardson, Iridium’s interim CEO. “Clearly, we have a great deal of work to do to improve our marketing, distribution and sales activities all over the world.”
Richardson said that first quarter results were affected by problems in manufacturing the satellite phones and accessories and it was unable to hire sufficient numbers of sales people. Iridium had also reported some earlier problems with its communications gateways.
Iridium is just one amongst a group of satellite comms ventures which includes GlobalStar, Teledesic, ICO Global Communications and Skybridge, and there are other projects in the works. They all need major investment, as they must launch of large constellations of satellites in middle and low earth orbits with regular replacement of those satellites due to atmospheric drag.
These high profile satellite communications ventures are only the tip of the iceberg with some analysts predicting that there will be 500 broadband satellites in operation within ten years. The key issues
facing these satellite communications ventures is competition for the rights to specific radio frequency bands and also competition for satellite launch capabilities. Skybridge and Teledesic, for example,
conducted a high profile struggle over sharing the KA and KU frequency bands. At one point, both companies were threatening to block the other’s frequency allocations.
There is also keen competition for launch sites and launch vehicles. There are about six locations worldwide for satellite launching. And with expensive payloads, there is also a need to increase launch
reliability with about five percent of all launches failing. To increase the number of launch sites, there are moves to establish launch sites from ocean locations. Sea Launch, a venture consisting of Boeing and partners in Norway, Ukraine and Russia, have plans to use converted oil rigs as launch platforms that can be towed to favourable sites.
There are numerous additional technical challenges in meshing satellite and ground based communications networks and also competition from ever faster terrestrial communications systems. Unless the satellite communications companies can demonstrate a significant cost advantage compared with terrestrial based services, the future of satellite based communications systems may be relegated to reasonably large niche areas where installing terrestrial lines is too expensive, but where the market is not large enough for so many players.


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