Tim Furniss/LONDON
THE INCREASINGLY competitive market of worldwide, anywhere-to-anywhere, mobile telephone systems is expected to have generated revenues of $26 billion by 2005, and have over 33 million subscribers by 2012. It is, however, a market likely to be dominated by only a handful of companies, and this is creating an acrimonious battle for market share.
Because of a scarcity of frequencies and the high cost of setting up systems, only four consortia are so far planning to operate communications-satellite networks - a situation which has raised doubts about the fairness of the competition, says the European Commission (EC). The EC is investigating two of the consortia - Iridium and Globalstar - to assess what impact they may have on future competition in local European markets, and to ensure that there is a "level playing field" in Europe.
The other two consortia are I-CO, an affiliate of the Inmarsat organisation, and TRW, which offers a service called Odyssey. Between them, the four groups are expecting to spend a total of $10.8 billion setting up their systems.
That kind of investment intensifies the issue of competition, and has sparked a controversy between I-CO and TRW. The latter has petitioned the Federal Communications Commission to deny the US Comsat - an Inmarsat member and shareholder in I-CO - authority to participate in the I-CO system. TRW claims that Inmarsat will unfairly cross-subsidise I-CO and that I-CO will market its services as if they were Inmarsat's, violating the Maritime Satellite Act. TRW says that the I-CO system will be anti-competitive because it is too closely associated with Inmarsat and its members.
PATENTED TECHNOLOGY
On 18 July, TRW was issued a patent with 35 claims on the use of medium-Earth-orbit (MEO) orbital plane configurations and satellite usage, posing "...serious challenges to competitors who wish to provide similar services", according to TRW. Bruce Gerding, TRW vice-president, says: "We believe that any imitator would have difficulty in launching a commercially viable MEO system without infringing our patent."
I-CO, which intends using the same orbit, thought it "...unusual for TRW to patent space". According to Olaf Lundberg, chief executive officer of I-CO, the only similarity between the two systems "...is the altitude of the orbits and the fact they both offer communications services. Otherwise the systems are different", he claims. "We do not believe that the I-CO design infringes any patent," he adds.
I-CO plans to fly ten satellites in two planes while TRW flies 12 in three planes. Each I-CO satellite will have 160 beams, while TRW's will have 37. The mobile-to-satellite frequency I-CO is using is 2GHz, compared with 1.6GHz and 2.4GHz for the TRW system.
On the ground, meanwhile, some mobile telephone manufacturers fear that industry is not geared up to produce the handsets in time for the advent of satellite systems in 1997-8. The consortia's estimates for how much the handsets will cost, varies wildly, from $500 to $2,000.
The handsets need to be dual-mode for cellular and satellite use, requiring considerable long-term investment by manufacturers in what may initially be a speculative market, with no short-term profits.
Making a relatively inexpensive, small, lightweight, dual-mode handset with an antenna capable of keeping track of a fleet of satellites passing overhead is a major technical challenge, and observers fear that users may be disappointed, when they see the handsets which accompany the systems. It is likely that initial handsets will be large, and only followed later by smaller, second-generation handsets.
The four consortia face other problems. I-CO will use an L-band satellite-to-mobile frequency spectrum which, while approved by international regulators, only becomes available in 2005. Inmarsat is confident that this will be advanced to 2000. Approval for the C-band satellite-to-ground station feeder links has yet to be given.
TRW has so far failed to attract backers, apart from Teleglobe of Canada, and some observers doubt whether it will be able to proceed with the Odyssey. Globalstar, despite having many strategic partners, has had to rely on raising much of its funding from banks and private investment. Iridium will operate by using inter-satellite communications links, representing considerable technical risk and challenge.
The market addressed by the consortia will be complemented by regional satellite systems, which also provide mobile communications, among other services. Asian Cellular Satellite and Afro-Asian Satellite Communications will cover one-third of the globe. Inmarsat says that this will create a bigger market and its business plan caters for this development.
AUGMENTING CELLULAR
One of the consortia's markets is "cellular fill-in", expanding the area provided by terrestrial-cellular systems, such as servicing the national roamer who moves out of the coverage area; the international business traveler or journalist; search-and-rescue services; and private sailors and pilots. Globalstar says that this could represent 50% of the total market opportunity.
The other key markets for all four consortia are underdeveloped regions of the world such as Africa and India, which have no telephone systems and which would benefit from a remote-site fixed-phone booth at strategic locations. This represents the other 50% of the target market, according to Globalstar.
Portable/mobile satellite-based services are expected to have 2.7 million users by 2002, with an additional 2.6 million for rural/fixed satellite based services. The feeling in the industry is that each system, which is flown, will have a niche, but that there may not be a global market for all four.
Source: Flight International
