Good article representing this sector:
(BTW, I do not know why these new ?s are coming up on this new SI site, but I won't waste time in editing)
telecoms-mag.com
Watch Out DSL: Broadband Satellite Systems Are Coming
The need for speed is the driving force behind this space race, and the sky?s the limit for this new group of broadband suppliers that promises speeds of up to 64 Mbps downlink and 2 Mbps uplink.
Susan O'Keefe
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In the next few years, a dozen or so companies are proposing to launch more than 500 satellites to provide broadband data services throughout the world. The players are the who?s who of the satellite industry and include Hughes, Motorola, Boeing, Lockheed Martin, Loral, Alcatel, Teledesic, and Orbital Sciences. The price tags of the early systems total nearly a whopping $30 billion. Dozens of other companies have recently filed plans for similar systems that could shoot that total to $130 billion--if they all are built. Analysts said the market will likely only support four or five main systems, but for those that can survive the rewards appear to be great. Pioneer Consulting aggressively estimated that the market for broadband satellite service will be $11 billion by 2003, and close to $30 billion by 2005.
The need for speed is the driving force behind this space race. While vendors supporting digital subscriber line (DSL), ISDN, and cable modems are staying grounded in their efforts to provide high-speed access, the sky?s the limit for this new group of broadband suppliers that promises speeds up to 64 Mbps downlink and 2 Mbps uplink. The idea is to provide fat data pipes for Internet access, videoconferencing, e-mail, virtual private networks, and numerous other applications. But while the ground-based services could be seen as a threat to the emerging technology, many of the companies also see them as a market validation. ?Satellite service would be more economical in some situations, and services like DSL and cable modems would be in others,? said Teledesic President Russell Daggett, whose company plans to launch 288 low-Earth orbit (LEO) satellites in a constellation that will provide service by 2003. ?The widespread deployment of other technologies helps validate us, because the more high-speed access out there, the more ubiquitous high-speed networking becomes. Without other technologies, you could never get anything close to ubiquitous buildout.?
While many of the systems originally touted the notion of bringing high-speed access to everyone, it appears corporations will form the early market. But as computer prices fall and the economies of scale appear, service will likely become popular with consumers, especially in remote locations where DSL and cable modems are not economical. ?By the time the entire system is up, I think you?ll see a fairly broad cross-section of use,? said Peter Spencer, director of marketing for SkyBridge, a project backed by Alcatel and Loral. ?At first our customer base will be all scales of businesses, but that will broaden to the telecommuter market and then standard residential service with time,? Spencer said. Daggett noted that businesses will fuel Teledesic?s early growth as well. ?I think the killer app is going to be networking computers, which is still an enterprise environment,? he said. ?But over time, the need for access to remote local area networks will push residential use as well.?
So Long, Celestri
The biggest battle for market share seemed to be shaping up between Celestri, a system backed by Motorola, and Teledesic, which has the backing of wireless mogul Craig McCaw and Microsoft CEO Bill Gates. In May, however, Motorola shocked many industry watchers by scrapping the Celestri project and joining the Teledesic team in exchange for a percentage of ownership. ?Motorola and Teledesic butted heads in discussions concerning spectrum and other issues, and there appeared to be a lot of animosity between them,? said Scott Clavenna, senior analyst with Pioneer Consulting. ?I?m surprised they were able to come up with a working relationship.?
Under the terms of the deal, Motorola acquired a 26-percent stake in the system and becomes the lead contractor to design, build, and launch the network. Boeing, which a month earlier had been named the lead contractor, saw its role refocused to develop software and system integration. Matra Marconi, which was working with Celestri on the ground segment, will also join Teledesic. ?I think this was a great move in terms of getting the system going,? said Marco Caceres, senior analyst with the Teal Group. ?There was no way Boeing was going to be able to build that number of satellites in that short amount of time, particularly because Boeing doesn?t have the experience. In my mind, there is no other company that Teledesic could have brought in that could give them a chance at meeting their deadline.?
According to Teledesic spokesman Roger Nyhus, the two companies are in discussions to determine what elements, if any, of the Celestri system will be incorporated into Teledesic. Because changes have already been made to the system with the reduction in the number of satellites from 800 to 288 without Teledesic refiling its plans with the FCC and ITU, it?s unlikely the group would tempt fate by making another major modification. Although Motorola?s influence will be felt, don?t expect much of a change from the project Teledesic has been touting, analysts said. ?If Teledesic changes the system to make it look more like Celestri, I think they would hear some complaints this time around from their potential competitors,? Caceres said.
Teledesic is the most well-known system because of its high-profile backers, but it?s also considered by many to be the most elegant system because it utilizes the LEO orbit and its satellites use on-board processing and are linked to each other. Other proposed systems use intersatellite links as well, although many use the ?bent pipe? system in which the satellite is only a relay mechanism from ground station to ground station. Motorola is familiar with the logistics of intersatellite links because they are used in its Iridium system to provide mobile voice services via satellite. Celestri also planned to use intersatellite links. Those links are risky because they are unproven in widespread use, and as many industry insiders have noted, it?s hard to send a repairman into space. But Teledesic?s Daggett said his company is watching the progress of Iridium closely. ?We will make our share of mistakes, but we can look at theirs and make sure we don?t make the same ones,? he said. ?We?re really going to take advantage of their learning curve.?
Nothing New Here
Many of the proposed systems plan to operate in the newly released Ka-band. Newer filings are going beyond Ka-band to V-band and up, and a rash of new systems has been filed for using the 40-GHz range. However, SkyBridge, considered by many to be Teledesic?s largest competitor, is utilizing the tried-and-true Ku-band for its 80-satellite LEO constellation and expects to be the first broadband system operating in that band when it launches service with 40 satellites (half of its planned constellation) in 2001. ?We?re going for the simple approach. There are no new developments in the Ku-band, so there are no new risks,? said Nicolas Brun, vice president of communications for SkyBridge. The system is basically a wireless broadband local loop system providing last-mile access to customers via the terrestrial fiber network. According to analysts, SkyBridge will be marketed alongside CyberStar, a GEO broadband project backed by Loral and Alcatel. CyberStar will start service this year using capacity leased from other Loral satellites and will eventually build its own Ka-band constellation.
Because of time delays, geosynchronous orbit is not appealing for interactive applications but several companies, such as CyberStar, hope to make GEO work for applications that are not as time-sensitive, including Internet access. GEO systems are attractive because of their price: They require fewer satellites because each bird is more than 25,000 miles above the Earth and can ?see? more of the Earth?s surface than satellites in lower orbits. AstroLink from Lockheed Martin plans to begin launching its nine-satellite constellation in 2001, while Spaceway from Hughes will launch an eight-satellite constellation.
Although the cost of some of the systems is breathtaking, there is little doubt that there is a burgeoning market for broadband data services. A study by Andersen Consulting estimates the total worldwide broadband transport market will be $65 billion by 2002, with satellite services accounting for $8 billion of the total. What?s more, in response to perceived customer demand, SkyBridge increased the capacity of the system by 50 percent, adding 16 satellites to the original 64. ?We anticipate we?ll be able to accommodate about 20 million users and we expect to cap out the capacity of the system,? Brun said. Teledesic expects similar results, but unlike SkyBridge, Daggett said Teledesic will add capacity if it is needed.
Analysts agree the demand for satellite services appears to be high but caution that with the number of proposed systems out there, some are bound to fail. ?I think there is limited potential to the number of systems the market can sustain,? Caceres said. ?I think there can only be three to five major players and a handful of smaller ones.? Greg Caressi, a research manager in Frost & Sullivan?s telecom group, said the partnership between Motorola and Teledesic may be a harbinger of things to come in the satellite industry. ?I think we?re going to see a lot more consolidation between systems prior to launch,? Caressi said. ?Especially with the smaller systems that are still in the early stages.?
Clavenna said he feels a lot is hinging on the success of these systems. ?The satellite industry is in a tough spot because if satellite data services don?t work or produce revenues for the industry, it is left with this undefined mobile voice market and the traditional video market, both of which are expected to grow at pretty modest rates. The data market seems to have the most potential, but there is a lot of risk there because all of the investment is up front. I think some of these companies have set themselves up for failure.? But, he said, the competition created by the number of proposed systems should have a positive effect for consumers by helping drive down prices of all broadband service offerings. ?There?s definitely enough will behind all of the alternatives to satellites, and I think there will be a big enough market for each of the technologies to exist,? he said. |
