FLUG REVUE September 2002: Mobile phone satellites are a flop

THE MOBILE PHONE DEBACLE

By Hans-Dieter Naumann

They were born out of euphoria, and projects, operators and system concepts sprang up like mushrooms from the ground: satellite systems for global communication by mobile phone.

Nearly twenty projects were registered around the world, but today only a handful are undergoing implementation or are actually in service – three for global usage and two regional systems. All of these are running at a loss and are in fact struggling to survive, but it is clear that the outlook is best for the regional systems, initiated by Third World countries.

Global telecommunication and speech traffic via satellite has been possible for 20 years, and has been a normal part of life at sea since January 1982 when the satellite-supported system Inmarsat, initiated by the International Maritime Organisation, officially entered service after a long run-up period. Although it was originally intended exclusively for international deep-sea shipping, the aerospace and mobile land radio industries soon discovered, like the international shipping and transport industries, the advantages offered by the possibility of global telecommunication traffic via satellite.

Inmarsat therefore began to expand its services to all these areas, and this was reflected formally in 1995 in a change of name from the International Maritime Satellite Organization to the International Mobile Satellite Organization. Devices for global telephone communication via Inmarsat have since then become ever smaller and cheaper; however even today they are still distinctly inferior as regards size, weight, technology and above all on cost to the "handheld format” that is so popular for mobile phone operation. The Inmarsat system is geared towards commercial interests and was not intended to support mobile phone use, so that a market gap emerged in the sector of popular global mobile phone telephony.

Iridium satellites

This gap was first spotted, so it is said, by Karen Bertinger, whose husband was a manager at Motorola at the time. She was annoyed by the fact that she was unable to speak directly by phone to her husband Barry from her beach holiday in the Bahamas, so she asked him to think up a solution. Naturally Mr. Bertinger was unable to resist this challenge, so he and his colleagues then came up with the basic ideas for the first globally effective and usable handheld mobile telephone satellite system, Iridium. The concept of traffic handling for this was drawn up by Motorola back in 1988. This was followed in 1990 by the system concept for global telephoning via low earth orbit (LEO) satellite.

The new system, the first in the industry, acquired a certain pacemaker role, both as regards design and especially as regards operational experience. Born out of euphoria, however, the project ended unceremoniously in insolvency, until investors could be found for a revival in a rescue company. Iridium's failed launch and subsequent struggle for survival were a warning sign for the entire industry and no doubt resulted in "planning corrections” on all the systems. Since then these have had one thing in common, the struggle to survive against a background of financial losses!

At the end of 2001 even Globalstar was forced to file for bankruptcy and to apply for judicial protection of creditors, and ICO (formerly Inmarsat-P) was only able to avoid bankruptcy because it joined up with the Teledesic system initiated by computer billionaire Bill Gates and mobile phone billionaire Craig McCaw. This was intended as an orbiting data highway but would have faced a similar fate if left on its own.

Today there are a multitude of satellites in orbit, with ICO still under construction, but there is still no sign of anyone breaking even. Iridium, Globalstar and ICO are the most expensive misdirected investments ever made in a communication satellite sector which has otherwise proved extremely profitable, in fact the most lucrative of all space applications.

This naturally raises the question of why. First of all, the market was totally misjudged: there is simply no requirement to phone the Bahamas or the Fiji Islands from Greenland or Alaska every day. The boom in land-based mobile telephone systems and mobile phones is quite a different matter. Thus, in the year of its commissioning Iridium only managed to enlist 3,000 users instead of the expected 50,000. Nor has competitor Globalstar yet succeeded in attracting sufficient numbers of users to be economically viable.

Another factor is the lack of sophistication of the technology. The performance of such a system depends critically on the selected orbital position of the satellites. It was with good reason that Inmarsat got several teams of experts to examine possible variants for its system over an extended period before any decisions were made. The orbital position determines the number of satellites needed and hence the cost of the space-based part of the system. It also strikes a balance with the efficiency ratios.

Both aspects were taken by the managing boards of Iridium, Globalstar and ICO to exclude geostationary earth orbits (GEO). Combined with overestimation of potential customer interest, this appears to have been a cardinal error. Again, the entire logistics of global onward routing of signals, especially in systems which, like Iridium, work with inter-satellite links, is dependent ultimately on orbiting position and requires sophisticated algorithms.

The optimum solution to these questions and problems has still not been found today because in the hurry to implement the systems it was overlooked. The need to beat the competition by a hair's breadth seemed more important than sophisticated technology, and the companies are now paying dearly for their mistake. Finally it must be borne in mind that the number of region-wide terrestrial mobile telephone systems is increasing. Operating satellite systems in parallel to these is doomed to failure and simply creates unhealthy competition.

Success depends above all on integrity. The satellite systems must bring about the networking of terrestrial systems or they must directly integrate terrestrial systems, working side by side with them. However, these are questions and problems which can only be answered in practice after trial and experiment.

In the meantime, however, even GEO has receded as a possible and practical alternative, and this in connection with completely different user and target functions for mobile satellite communication systems. The main reason for this is GEO systems initiated by Third World countries (Thuraya in the United Arab Emirates and Garuda in Indonesia), which are based on state-of-the-art satellite bus concepts such as the Boeing BSS 702-GEM bus, specifically aimed at mobile use and with GEO orbit, and offer regional mobile telephone systems as an alternative to landline network structures in regions with poor telecommunications infrastructure, in which capacity they clearly have the better cards. They are thus derived from different requirement structures and cover regions in which either there are no networks or else the geographic and demographic structure preclude their developement.

Garuda covers the Philippines, Indonesia, Thailand, China, Taiwan and India, a region in which only 25% of the population has access to fixed networks, so that mobile telephony offers a solution suitable for mass use. Particularly on islands like Indonesia and the Philippines, it is not possible to install landline networks at a reasonable financial cost and in the required time frames. Here satellite mobile telephony constitutes the only way of opening up telecommunications, including networking with international networks. A similar system is under development by Thuraya for the United Arab Emirates, north and central Africa, the Middle East, India, parts of the Near East and south-eastern Europe.

This type of usage may well constitute the most promising variant for such mobile telephony systems today. On the other hand, orbital configurations such as Iridium or Globalstar would not be economic here and would also be too expensive as regards technical operation. For regionally effective satellite systems, GEO is probably the best solution, assuming that the satellites have the required capability.

The main conclusion is that the high hopes that were placed in mobile satellite communications for mobile phone operation have not been fulfilled to date. Whether they will be fulfilled and with what technical resources and concepts, for which user groups and whether the extremely high investments will pay off remains to be seen.

From FLUG REVUE 9/2002, page 44

Last updated 9 August 2002

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