Farrar: Satellite companies need Clearwire to succeed
All systems were go for today’s launch of the largest commercial satellite, by which TerreStar Networks will offer a combo satellite and terrestrial mobile service in North America.
Weather can affect the timing, but everything was on schedule leading up to the launch – shortly after noon EST today. TerreStar was showing video of the launch via its Web site. “You only have one shot at it,” said TerreStar President Jeff Epstein from the French Guiana launch site yesterday. “Everything needs to work perfectly.”
Space Systems/Loral provided the satellite and ground system, while the satellite is being launched by Arianespace. The satellite will provide service for the continental United States, Canada, Puerto Rico, Hawaii and Alaska.
The launch marks the start of a new era for satellite phones. Gone are the days of big, clunky handsets. Instead, the satellites are getting bigger. The main body of TerreStar-1 is about the size of a school bus, but the reflector measures more than 60 feet across when unfurled. Epstein says that will enable TerreStar to offer handsets that are about as small as a conventional BlackBerry.
TerreStar isn’t the only company in the up-and-coming satellite/terrestrial market. SkyTerra, whose past has been entwined with TerreStar’s through ownership, has a similar approach. “We think we’re transforming the satellite market from niche to mass [market] and to a much greater number of potential addressable users,” says Chris Gates, vice president of strategy at SkyTerra. “We’re a huge complement to the existing wireless [services].”
It’s not yet clear how SkyTerra will service the terrestrial part of its network. The regulations around Ancillary Terrestrial Components (ATC) allow satellite operators to deploy a terrestrial network in conjunction with satellite, but they have to offer dual-mode devices. The idea is to sell the satellite service like any other add-on to cellular phone service; it’s protection for the end-user when terrestrial coverage isn’t available. Consumers might not need the satellite capability every day, but they will want it for emergencies or limited usage.
TerreStar expects to launch its service by the end of this year, after various tests and certifications are completed. The company has a reciprocal roaming agreement with AT&T and plans to add other carriers. TerreStar is a “carrier’s carrier,” Epstein says. “I don’t view anyone as our competitors ... This has never been done before.”
TerreStar has not yet named a manufacturer for its first device, which will be a quad-band GSM/WCDMA/HSPA smartphone. Plans call for CDMA-based devices in the future, too.
TerreStar will leave it up to partners to decide on a subsidy for the phone, and pricing is to be determined, but Epstein says he anticipates cellular-like pricing, not the $1 or so per minute that current satellite providers charge. Handset pricing is expected to be in the $700 range without subsidies, lower than legacy satellite provider Iridium’s handset cost of about $1,500.
Both SkyTerra and TerreStar have inked an agreement with Qualcomm, whereby Qualcomm is including satellite frequencies in its first chips for Long Term Evolution – at no additional cost. The MSM8960 chipset that Qualcomm is developing includes legacy CDMA and GSM-based protocols, as well. The two satellite companies also are working with Infineon under similar terms that share costs among the ATC providers.
One of the challenges for satellite players is getting the distribution to sell to the mass market, and then explaining to people what satellite service means, according to Tim Farrar, founder of TMF Associates. Customers need to be told the satellite service is for open-air environments and not inside buildings. “It’s a difficult challenge to get the distribution and explain to people the limitations,” he says.
One school of thought is the satellite players will try to convince wireless operators they should sell the satellite service alongside their other products. But that’s similar to the femtocell quandary; by offering such a service, the operator is admitting its coverage is not 100 percent. Of course, satellite providers can argue that their service means a wireless operator truly is offering the best coverage.
A key part of the satellite players’ strategy involves their spectrum. Indirectly, the satellite companies will need mobile WiMAX provider Clearwire to succeed, Farrar says. If Clearwire is a complete failure, all of that 2.5 GHz spectrum could come to market. If Clearwire is a great success, then theoretically that would push others to follow a similar route and operators will look to the satellite companies for more spectrum.
The satellite companies say the current and future explosion in wireless data will help fuel the need for their services and spectrum. Limited mobile spectrum is available in the near term from traditional sources, but in a few years, U.S. operators will once again be on the hunt. Whether that pans out remains to be seen, but the satellite companies are placing big bets.