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Billion dollar broadband

Billion dollar broadband

In 2004, the launch of three satellites the size of double-decker buses will create a network capable of delivering nearly 0.5Mbit/sec data speeds to most of the planet.

The growing high-speed data needs of multinational corporate and government clients are the reason three satellites, each weighing six metric tonnes, are expected to come into service in the first quarter of 2005.

It’s an essential part of Inmarsat’s future, if it’s to have one.

By launch date, the small London-based company will have invested US$1.6 billion (NZ$2.778 billion) in the next-generation Inmarsat4 satellites, boosting its data offerings from 64kbit/sec streams to 432kbit/sec. The new network will work in tandem with existing Inmarsat satellites.

The cost of each satellite, including manufacture, launch vehicle and insurance, is three-quarters of a billion dollars. So far Inmarsat, has a 100 per cent launch record but is still assuming it will lose one, leaving two operational birds to cover 85 per cent of the world’s surface.

They are designed to fly for 10 years although, if ‘flown well’, that lifespan may be extended to 14 to 17 years. The last of the existing line was launched in 1997. They will stay in operation until they die.

All up, it’s a risky business getting the design right, launching them into space using the equivalent of a Hiroshima atomic blast, and having them work optimally when they are in position.

“These will be the most elegant commercial satellites ever built. What we’re painting up there at 36,000 kilometres above the Earth is an integrated infrastructure with a thick half-megabit capability to areas where it’s needed, and thinner coverage where that’s best suited,” says Inmarsat Ventures world president Michael Storey, in Auckland recently as part of the company’s sponsorship of the World Rally Championships.

The 21-year-old Inmarsat changed its status from an international organisation to a privately owned UK-based business in April 1999. Inmarsat Ventures Group is an umbrella for Inmarsat, which provides satellite communications to land, sea and air customers across 150 countries; Invsat, which provides communications networks to the gas, maritime, government and emergency services using very small aperture terminals (VSATs); Rydex Corporation which develops emails and data for the maritime sector; and Aria, which develops in-flight entertainment services for airlines.

After a high-level career in cable television and a term as executive vice president of WorldCom [now MCI – see page 46], Storey joined Inmarsat as it was privatised in 1999.

Within months, he had persuaded the board to invest in the new generation of satellites. “The team I had inherited was so on-the-ball, they had pre-qualified suppliers – the day after the board meeting they sent out specifications and within five months we had negotiated the contract.”

Storey underscores the importance of the Inmarsat network to industry and governments, especially in areas requiring more bandwidth but where the economics don’t justify investment by incumbent suppliers. “We’re ensuring we have a global capability of filling in the spots where terrestrial networks are just not capable.”

Further evidence of the need for greater capacity came in 2001, when the bombing started in Afghanistan and demand from journalists and aid agencies maxed-out Inmarsat’s recently launched 64kbit service. A testimony to the company’s management capability, however, was its ability to manoeuvre a second satellite to increase capacity over the region.

Rapid turnaround

“Governments, aid agencies and media interest meant we increased our capacity in a matter of weeks. We were able to deploy a spare satellite into the region to increase our capacity by 70 per cent. That would have taken a year for us to achieve a decade ago.”

In November 2002, Inmarsat launched its broadband global area network (Regional BGAN) service, delivering secure 144kbit/sec IP connectivity to a third of the world from a small ground terminal. The service was largely focused on corporate users in the finance and manufacturing sectors.

Concurrent with that move, Inmarsat announced group revenues were up 5 per cent to US$463 million (NZ$804 million) for 2002, and that there had been a 25 per cent increase in data revenues with data now comprising 54 per cent of on-demand service revenues.

That extra coverage over the Middle East and additional satellite capacity was invaluable for the coverage of the war on Iraq. In fact, the real-time capabilities of the Inmarsat network in the sky represented a fundamental shift in how media deliver the news.

While the quality of some of those images may not have been up to full broadcast standard, the incursion of reality TV had prepared viewers to trade off less than optimal footage for the knowledge they were getting real-time, as-it-happens coverage. “The people we talk to at CNN, BBC and Fox news, for example, have recognised immediacy of coverage is more important than the quality of the video,” says Storey.

Beaming from a briefcase

There are also cost and logistics to consider. “Look at the economics of getting a crew in there with five guys and a truck to get broadcast quality product, when one guy can go in there by himself with what is basically a briefcase. He can broadcast as close to the situation as he can get for dramatically less cost,” he says.

Storey is surprised at how quickly Inmarsat has made inroads into fast data. “We thought we’d be a fast follower in extending the ability to get rich content anywhere in the world and assumed that 3G terrestrial mobile would get there first. However, not a lot has happened with 3G, so suddenly we’re embarrassed by the fact that we’re way out in front.”

Inmarsat has been providing 2.5G coverage in over 100 countries since November 2002, and he believes the problem with 3G is finding the right combination of content and applications for which people are prepared to pay a premium. “There’s no killer application. Personally, I believe in 3G as a location-based infrastructure. But it’s going to take a lot longer than people expected. So much was paid for those licences and they still have to build out the infrastructure. However, they must go forward – they can’t rely on voice only.”

Many carriers trying to break into 3G are missing the point, he says. “They’re trying to leap straight into a consumer application. If you look at the history of mobile voice, it started with businesses then spread to the consumer market. As far as I can tell, they’re trying to change the model rather than recognising this is a low early adopter market needing a core customer take up initially.”

While the next generation of satellites still won’t be able to compete with 2Mbit/sec broadband networks, the throughput will be more than adequate for most people’s needs. “We are at the forefront of the space in which we operate and are continually thinking through how we can get the size of the terminals and the cost down and the speed of communication up – that’s what technology is all about.”

Inmarsat can provide a point of presence anywhere a telecommunications company can’t afford the cost of infrastructure. However, the cost doesn’t stack up unless the demand for internet access far outweighs the cost of transmission.

Land earth operators

Inmarsat is now gearing up – not only to increase it capacity, but also to boost its profile. That means working more closely with its 200 global distributors and resellers to better understand the needs of their clients and to plan future services.

It uses land earth station operators to talk to the satellites and terrestrial networks. Resellers of the service locally – including Rocom, Crystal Electronics and Wright’s – get their airtime through a range of gateway operators; such as Xantec, a joint venture with KPN in Holland; Telenor or France Telecom and Telstra, which operates an earth station in Perth.

Inmarsat began as an inter-governmental organisation with modest aspirations – the current management team and staff of about 426 are literally aiming for the sky.

Inmarsat’s market is largely the maritime and aeronautic market and remote land locations where there’s no other means to communicate. While the demands of media, aid agencies, governments and enterprises such as smart card company Schlumberger, British Petroleum, Shell, every major international airline and shipping company make up the bulk of its business, Inmarsat is keen to have a yet broader market understand its relevance.

While it can operate land stations in 80 per cent of the world, it is currently prohibited from going head-to-head with commercial carriers in the US.

“We don’t have a licence to provide services on the land mass of the US at the present. FCC approval is dependent on legislation which requires us to do an initial public offering (IPO), which we are currently negotiating.”

In New Zealand, Inmarsat is used by the fishing industry and some multinationals, including Air New Zealand and oil and gas rigs, but its customer base is mainly government departments, including Defence, the RNZAF and Customs. New Zealand Customs used the satellite coverage on the East Timor border handling the processing of refugees. Its expected use by Customs will grow to mirror the Australian experience, where high definition cameras aboard aircraft are used for surveillance to detect and track illegal immigrants.

Inmarsat is viewed as a good global citizen, providing a free maritime distress and safety service to those in trouble on the sea. “Anyone who’s in trouble anywhere on the oceans can press a button and be triangulated to the nearest air–sea rescue stations.”

The system handles about 600 calls – most of them legitimate – a month, and an update was installed over six months ago to send a signal back to the vessel in question saying ‘we read you’. “I’m a sailor and I know how reassuring it can be to know there’s a response being organised. It increases your desire to survive and gives you hope.”

So where to next? Post-2005, when the new birds begin delivering their fat streams of data to the world, Inmarsat is already considering its next generation of offerings.

Storey believes this may in fact represent a complete shift – possibly delivering bandwidth from devices attached to geo-stationary space platforms or ‘spaceports’.

They could be the staging points for plans to create interplanetary internet connections – as mooted by Vint Cerf, the father of the internet, who has been tasked with the job by NASA.

While this all sounds like science fiction, Storey is quick to remind us it was sci-fi stalwart Arthur C. Clark who, in a 1946 article, first came up with the premise of geo-stationary satellites reflecting signals back to Earth.

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