Aloha Networks SkyDSL - first highspeed two-way satellite based Internet Access System - from Red Herring Mag
SKY'S THE LIMIT
Aloha Networks' satellite-based
SkyDSL service lets ISPs hurdle
terrestrial bandwidth barriers.
By Deborah Claymon
The Red Herring magazine
October 1998
Rusty Schweickart understands the importance of
satellite communications: as the first pilot of a lunar
module, for the Apollo 9 mission in 1969, he was a
satellite himself for ten days. Now, as executive vice
president of Aloha Networks, he's bringing his expertise
to the more earthly problem of Internet access.
Aloha Networks won't solve all the problems that ISPs
face. But according to Mr. Schweickart, by reaching
skyward to satellites the company will enable ISPs to
bypass local telephone carriers and serve geographically
dispersed customers more cheaply. Aloha will introduce
SkyDSL, the first high-speed, two-way satellite-based
Internet access system, in the second quarter of 1999.
And according to Mr. Schweickart, Aloha's instant
infrastructure could precipitate rapid expansion and,
later, consolidation in the ISP industry as larger
companies with the cash to buy Aloha's technology
squeeze out midsize regional players.
Aloha recognizes that ISPs are in a bind. More than
4,000 companies compete in a splintered market that's
concentrated in metropolitan areas. Not only are they
racing to increase bandwidth capacity, but they are also
wrestling local telephone monopolies for access to the
link between customers and the high-speed network
backbone--a process that can take months per
customer. Because of these infrastructural and logistical
challenges, even the largest ISPs have been forced to
limit expansion plans, especially globally. Aloha's
technology could solve these problems and offer ISPs a
quick and cost-effective new way to expand their
networks.
Defying gravity
Before SkyDSL, Internet access via satellite had one big
drawback: the cost of communicating with the satellite.
Satellite channels are used most efficiently to transmit
large amounts of data to thousands of terrestrial
receivers; however, the reverse path, or uplink, requires
either the expensive use of a one-to-one channel or the
sharing of a single channel through multiple-access
techniques. All of the existing satellite and terrestrial
wireless networks rely on a combination of
multiple-access techniques to make sure users have
service when they want it. The efficiency of this
combination is essentially what determines price. Aloha
Networks' principal innovation is a new multiple-access
protocol for the reverse path, called Spread Aloha
Multiple Access (SAMA).
SAMA is a modernization of the conventional Aloha
protocol invented by Norman Abramson, Aloha
Networks' founder and chief technology officer. While
teaching at the University of Hawaii in the early '70s, Mr.
Abramson used Aloha to build the first packet-switched
network. He also introduced the idea to Bob Metcalfe,
the founder of networking giant 3Com. Mr. Metcalfe
made Aloha the basis of Ethernet, the most widely
installed LAN technology, and credits Mr. Abramson
with his success.
Some experts are skeptical that Aloha Networks will be
able to achieve all that it claims. "No amount of
cleverness in the reverse path can compensate for the
fact that satellite bandwidth costs four to ten times what
terrestrial bandwidth costs," says Richard Edmiston, the
founder of BBN Planet, one of the first large ISPs, and
currently vice president of R&D for the ISP Earthlink.
He says that until a new generation of satellites drastically
reduces the cost, "satellite Internet access cannot be
anything other than an expensive service to remote
areas."
"There's no doubt that satellite bandwidth is expensive
when used in the same wasteful way as terrestrial
bandwidth," counters Mr. Abramson. He says that
wire-line Internet traffic uses only one 1/1,000 of the
bandwidth available because it does not take advantage
of the silences characteristic of Internet use. With high
satellite costs, Mr. Abramson could not afford to
squander bandwidth between transmissions, so he spent
ten years developing SAMA, which allows multiple-user
communication with the satellite to occur in the most
efficient way possible.
Aloha will initially offer an Internet access transport
service and multiple-access networking equipment solely
to ISPs. The ISP will install a SkyDSL outdoor unit on
the roof of each customer's building. Then, with a single
SkyDSL base station, the ISP will be able to provide
direct access to the U.S. Internet backbone to roughly
3,000 customers at downstream speeds no slower than
500 kbps and upstream speeds no slower than 64 kbps.
In addition to equipment, Aloha will arrange the leasing
of satellite service and manage the SkyDSL portion of
the network for ISPs. Mr. Schweickart estimates that
Aloha will sell the base station for $100,000 and each
outdoor unit for $2,500.
Aloha stands to grab the most attention in regions where
DSL service is unavailable or mired in technical delays.
"Unlike conventional DSL, SkyDSL rolls out in
continent-size clumps," says Mr. Schweickart. "For
example, when you put a point of presence in Hawaii,
you can serve all of India." Although Aloha has yet to
prove the technology on a large scale (beta testing is
scheduled to begin in the first quarter of 1999), SkyDSL
seems a remarkably simple and cost-effective way for
ISPs to expand internationally. Before satellite-based
Internet service, the only way to offer service overseas
was to establish deals with local phone service providers,
which involves complicated negotiations and often
presents insurmountable technical barriers. "Because
many ISPs don't own their own infrastructure, there is
very little barrier to entry but a very high barrier to
growth," says Joe Bartlett of the Yankee Group.
Indeed, SkyDSL could dramatically alter the competitive
landscape for ISPs worldwide. Freed of infrastructure
constraints, large ISPs with the capital to invest in
SkyDSL could embark on rapid expansion both
domestically and abroad, swallowing regional incumbents
as they go. This kind of consolidation has been predicted
for the past few years but has yet to begin. In fact,
Dataquest reports that the worldwide market share (in
terms of units connected) of the top ten ISPs actually
dropped from 46 percent in 1996 to 44 percent in 1997.
Earthbound
ISPs that buy Aloha's hardware and services will not be
the first to offer Internet access via satellite. DirecPC, a
division of Hughes Network Systems, began offering
Internet access in 1995 by combining one-way satellite
broadcasting power with a return path over phone lines
and a terrestrial ISP. Although the service is available
worldwide, it has attracted only 70,000 customers,
according to Fritz Stolzenbach, DirecPC's senior
marketing manager--hardly a dent in the potential
market. Analysts say the slower back-response channel
has been the problem.
High-speed networks in the sky scheduled to be
launched by companies like Teledesic and CyberStar are
another means of sidestepping terrestrial bandwidth
problems. Unlike Aloha, which hopes to sell equipment
and service to ISPs, these ambitious and costly new
ventures will bypass the terrestrial Internet backbone and
compete directly with ISPs for customers. If these new
satellite networks seriously diminish ISP revenues or put
many ISPs out of business, they will erode Aloha's
potential market. Aloha, however, is scheduled to offer
service almost a year before the earliest satellite
constellation does and will be orders of magnitude
cheaper to establish and maintain.
Other wireless Internet-access techniques, like the
recrafting of existing cellular telephone standards to
support high-performance data transmission, are still
several years away, says John Carosella, vice president
of marketing for Nokia's IP routing division. He
compares the promise of the Aloha system to the early
success of wireless local loop for local telephone service.
As Aloha gears up for SkyDSL's beta launch, it looks
more and more like a formidable business and less like
an academic extension of Mr. Abramson's research. The
company has hired Jim Omura, a former chairman of
Cylink, as its president and CEO, and its board
members include Tony Rutkowski, director of the Center
for Next Generation Internet and cofounder of the
Internet Society, and Paul Baran, who invented packet
switching in the '60s and, most recently, cofounded
Com21, a high-speed cable modem manufacturer. Until
all systems are go, Aloha is more promise than
product--but its idea provides a glimpse at the celestial
future of all communications.
ALOHA SYSTEMS AT A GLANCE
CEO: Jim Omura
LOCATION: San Francisco, California
PHONE: 415/561-2400
WEB: www.alohanet.com
OWNERSHIP: Private
FOUNDED: 1995
EMPLOYEES: 22
PRODUCT: Satellite multiple-access
networking equipment and service
COMPETITORS: DirecPC, wire-line
Internet access equipment developers
FINANCING: $4.2 million
INVESTORS: Small Business Innovation
Research program, Draper Fisher
Jurvetson, HMS, individuals
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