Satellite communications really took off in 1965. That was the year that the first commercial systems could manage a limited range of broadcasting and communication services. Today, satellites handle over one third of voice communications between different countries and almost all of the world's international television links.
According to Walter Morgan, President of the Communication Centre in the USA, "The last few years of the 1990s saw billions of dollars being invested into new satellite systems."
Iridium, Globalstar and ICO led the way in sourcing funds, particularly for their Mobile Satellite Services (MSS). Unfortunately for them, satellite mobile phones didn't prove to be a winner. However, though Iridium has been a notable disaster, many other areas of the satellite market have experienced consistent growth and returned healthy profits to operators and service providers.
A satellite is essentially an orbiting radio station, receiving information via radio waves transmitted from a surface station (up-linked) and retransmitting it to the earth via its transponders (down linked). Paul Budde, independent communications analyst, highlights, "Most commercial satellites contain a series of transponders, and the ground area covered by the combined transponder beams is known as the system's 'footprint'."
Building a satellite system requires two segments. Firstly, there is the space segment, which encompasses the orbiting satellite and its on-board equipment. Secondly, there is the ground segment; a series of earth stations that track the location of the satellite, receive its signals and send remote control commands. The transponders on the satellite receive the signals, amplify them and then retransmit the signals to any point contained within the satellite's footprint.
Satellite-based systems offer ubiquitous coverage of large geographical areas. According to Maureen Murphy, CEO at New Skies Australasia, "Using satellite to provide information to multiple locations is extremely cost effective and measurably more reliable than traditional terrestrial lines. Simply, the terrestrial solution for providing information to 1000 different locations would be 1000 terrestrial connections."
Satellite removes the reliance on terrestrial connections, so increasing availability and reliability, as well as reducing costs.
The more sites you have and the more widely dispersed the locations are, the more economical your network becomes. "The space segment costs do not depend on the distance within the satellite coverage area. Therefore, the costs for a VSAT network and data transmission are independent of distances and country specific PTT fees," says Murphy.
Business benefits
In the corporate and enterprise space, satellite can be used to build wide area network infrastructures. According to Alan Marsden, National Marketing Manager for New Skies, "Ideally satellite does not compete with or replace existing surface based communication systems. It should complement and overlay them by providing wide area connectivity at a reduced price but with greater flexibility and scalability."
Perry Melton, Vice President of Partner & Commercial Relationships at Inmarsat, comments, "Satellite can offer enterprises a wide range of services and applications. These range from the videophone that you will have seen the broadcasters using in Afghanistan, to ECG heart diagnostic equipment on aircraft, software to enable virtual private networks, or simply a solution, so a business can provide a way for its staff to remotely access its corporate local area network".
Satellite provides wide area coverage across geographical borders. Within the satellite coverage area, satellite communication offers borderless connectivity.
"Within an existing network, new sites can be commissioned rapidly with relatively little effort. The equipment is small and containerised, enabling easy transportation and installation," says Marsden.
VSAT systems are installed directly at the customer's site. "Terrestrial back haul lines, in many instances therefore, are not required. Consequently, operators have fewer concerns about back haul costs, inflexibility when increasing bandwidth, terrestrial availability etc," says Murphy.
Satellite communication provides an availability of nominally 99.5% at a BER of 10-7 or better. This is unreachable by terrestrial lines due to the higher number of point failures.
"By its very nature, satellite provides a high degree of scalability. This means that satellite enables you to avoid the high costs traditionally associated with network expansion or reconfiguration," says Murphy.
She adds, "Satellite's the perfect solution for expanding the coverage of existing land based data or PSTN, for example. Changes in network configuration such as bandwidth, interfaces, data rates, etc, can be easily performed. Very often they can even be made remotely from the central management system."
Inherently, VSAT networks provide greater flexibility in terms of bandwidth management, though it is limited compared to terrestrial solutions. Bandwidth may be allocated virtually at will from a common pool, not only to individual VSAT/remote locations, but also down to individual ports/devices on a VSAT unit. In a terrestrial environment, once the 9.6/19.2/56 Kbps line is saturated, either a higher speed line must be installed or the network must be re-engineered with fewer drops per line.
Perry Melton believes that the future of mobile satellite communications is in offering high-speed data services to businesses and enterprises that require a reliable and always available network not reached by more traditional GSM or fibre/copper networks. He says, "Last year 40 per cent of our network traffic was data - a higher proportion than virtually all telecoms providers. We provide bandwidth at any altitude, latitude or longitude, which currently means a 64 Kbps mobile ISDN or packet data service for those working on land, at sea, or even in the air."
Market forces
According to Maureen Murphy from New Skies, the growth of satellite communications has been quite healthy and the opportunities for the future are extremely positive. The Satellite Industry Association (SIA), in a study detailing satellite industry statistics, reported that the commercial satellite industry generated $85 billion in revenue in 2000, a 23 per cent increase when compared with adjusted 1999 revenues.
The failure of Iridium has impacted a particular section of the market; the use of satellite to handle 'point-to-point' mobile phone communications. Satellite''s strength is in multi-casting, the delivery of communications from a single point to a range of receivers over a large geographical area.
"The capacity of a single undersea cable system (640 Gbps) now exceeds the combined throughput of all the world's 200 commercial communications satellites (260 Gbps). Yet, no worldwide voice or data network is complete without satellites," states Budde.
In its report, International Bandwidth 2001, TeleGeography estimates that almost half of the world's countries remain dependent on satellites for international connectivity. Budde comments, "Fibre offers network builders practically unlimited bandwidth, but limited geographic reach, while satellites can provide limited bandwidth, but essentially limitless reach."
Although fibre optic capacity has grown exponentially, satellite operators have continued to prosper. "While bandwidth prices on well-served terrestrial routes have fallen by approximately 50 per cent in each of the past two years, the cost of satellite capacity has held firm. Indeed, many geosynchronous satellite operators report pre-tax profit margins of 80 per cent, including SES Astra and GE Americom," says Budde.
The largest satellite system operators, including PanAmSat, Loral Skynet and New Skies, have relied on broadcast applications to build solid businesses. Budde comments, "These operators have also provided, to a lesser but increasing extent, point-to-point services such as voice telephony and IP backbone connectivity. IP backbone connectivity, which mainly links ISPs in developing countries to the Internet, is currently the fastest-growing service segment for satellite operators, according to TeleGeography's original survey."
IP traffic on the New Skies system, for example, rose from seven per cent of revenues in 1999 to nearly 25 per cent in 2000.
Most existing satellite networks are based on a circuit switched approach, but the major vendors are upgrading their network technology to become IP-based. Melton says, "Last May we launched our Global Area Network (GAN) service that uses IP-based protocol. This is the way most of Inmarsat's services are going with all the newer services also being IP. That means there is better interoperability with IT systems, and as our high data services roll out, they will be compatible with 2.5 and 3G telecoms networks."
Inmarsat's revenues in 2001 were up by six per cent to US$442 million, and data revenues up by 19 per cent on 2000.
Paul Budde warns that satellite operators should expect a possible downturn in the growth and profitability of their network solutions. He says, "The build-out of terrestrial and undersea cables is proceeding at a breathtaking pace, despite the downturn in the market. As terrestrial networks continue to grow, opportunities for satellite operators to provide point-to-point services will eventually dwindle."
New Skies is confident of satellite and what it can offer Australia and Asia-Pacific. It's bringing online two new satellites later this year, specifically targeting the Asian and Pacific regions, with the aim of increasing their business of providing multicasting services for video, TV and remote broadband access.
New Skies expects increasing demand from the retail and primary industries sectors, where enterprises need to communicate to a host of different branches, retail outlets, and remote offices dispersed across a wide geographical area. Their systems also aim to deliver pay TV content from overseas and beam it into Australian homes and recreational areas such as pubs and clubs.
