Sat phone shake-up

The end of this decade and the beginning of the next was supposed to bring us an expanding selection of satellite phone options and begin a new age of worldwide mobile communication. This summer, however, that future suffered a setback when two of the companies expected to be major players in the satellite telephone market, Iridium and ICO Global Communications, were forced to file for Chapter 11 protection.

Iridium, a Motorola-led 19-company consortium that has spent more than $5 billion designing, building, and launching a technologically sophisticated, 66-satellite, world-girdling network, began service in the fall of 1998. While the system was hailed as a technological marvel, the sat phones and the connect time needed to actually use them were expensive$3,349 for a phone coupled with a confusing, many-tiered rate schedule that included rates as high as $5 a minute. Iridium also reportedly suffered from a shortage of phones and the phone’s inability to connect with a satellite from inside a building or a car.

If that wasn’t enough, Iridium seemed to have an underlying problem with its business model. The system was conceived in the mid to late 1980s when terrestrial cell phone coverage was still restricted to urban areas in the developed world. There appeared to be a market of business users who needed to communicate when their travels took them to areas without cell coverage. There was also a subsidiary market of offshore mariners whose voyages regularly took them to “non-service” areas.

Widespread growth of cell phone coverage in the 1990s, however, apparently threw a monkey wrench in Iridium’s plans. After all, most business travelers contract their business in populated areasas one pundit quipped, “How often do you have to make a call from the back of a camel?” After attracting only a fraction of the 500,000 customers it had projected, Iridium took action this spring and slashed in half the price of a sat phone to $1,495 and greatly simplified its rate structure. On August 13, 1999, the company filed for Chapter 11 protection from creditors while it reorganized. According to Iridium director of communications Michelle Lyle, Iridium will stay in business. “We are working diligently to restructure here,” said Lyle. A new batch of accessories, like fixed external antennas for using an Iridium phone while inside boat, could make Iridium phones more attractive. “When we started,” said Lyle, “we only had the phones and the pager units, but none of the accessory products.” Two weeks after Iridium filed, ICO Global Communications, another sat phone hopeful, joined Iridium in court, also filing for Chapter 11 bankruptcy. According to ICO, just about the time of Iridium’s Chapter 11, ICO found itself unable to raise $600 million in needed funding. “Our board took this action after several attempts to get funding failed,” said Joseph Tedino, director of communications for ICO North America. “We are determined to emerge from this. We have a strong core group of investors.”

Wall Street analysts have reportedly laid ICO’s problems at the feet of Iridium’s woes. Investors reportedly got “cold feet” about putting more money into sat phone systems. While Iridium has launched a constellation of satellites and built its ground-control segment, ICO Global has built four satellites but has yet to launch any spacecraft. Unlike Iridium, which was targeting the worldwide business customer, according to Tedino, ICO Global has a mix of potential users that include oil and gas exploration teams, marine users, local, state and federal government, plus rural customers who are outside the reach of terrestrial cell coverage.

The third major player in the handheld sat phone race is Globalstar. Unlike ICO, Globalstar has managed to get 36 satellites in orbit, with the last launch taking place on August 18, the four satellites rode into space on a Boeing Delta 2 rocket from Cape Canaveral. That launch meant that Globalstar was only 12 spacecraft away from a complete 48-satellite constellation. Funding has not been as big an issue for Globalstar as it has been for the other systems. “We’re fully funded to build the system,” said Mark Newman, general manager of Washington operations for Globalstar, “and to the early stages of introduction. We’re going to do a controlled introduction; it won’t be flipped on worldwide all at once.”

While all of these systems are seeking to provide satellite phone service, the system designers have taken different tacks to achieving that end. In addition to the publicity it garnered from being the first of the sat phone constellations to go aloft, Iridium also generated interest from the sheer technical audacity of its system design. To get a feeling for the height of the technological hurdle that the Iridium engineers had to clear, it helps to look at how most communications satellites work. In the satellite communications industry there is a time-honored phrase to describe these spacecraft: “bent pipes.” This is another way of saying that they do little more than receive signals coming up from the ground and then re-transmit them back to Earth. They are basically repeaters in the sky. (Actually, the first communications satellite, Echo I, launched on May 13, 1960, was nothing more than a 100-foot-diameter aluminized Mylar balloon that acted as a passive reflector of radio signals, a “bent sphere,” if you will.) This is how the first communications satellites worked, and it is how, with various technological improvements like higher frequencies, greater bandwidth, more power, etc., most communications satellites work today.

The conceptual difference with Iridium was to make the 66-satellite constellation a space-based network with each satellite capable of speaking to its neighbors. So the Iridium setup works something like this: a sat phone call originates on the ground and is transmitted up to a satellite. This receiving satellite looks at the destination of the call and then decides which way to route the signal. Once the routing is determined, the satellite passes the signal on to a neighboring satellite and then perhaps the signal jumps to several more spacecraft before being downlinked to an Earth station. (This is similar to the way e-mail messages are passed from node to node on the Internet before arriving at their destination.)

A satellite network like this would be impressive enough using stationary geosynchronous satellites. What makes Iridium even more technically demanding is that it uses 66 low-Earth-orbit (LEO) spacecraft that are moving pretty quickly in relation to both the ground and to each other. Thus, unlike a fixed set of nodes on the groundlike a grid of cell phone towersthis is a network made up of nodes zipping along at 18,000 mph. Before any Iridium satellites were ever launched, some analysts suggested that it would never work properly, as handing off and routing calls between satellites would prove too difficult. In the end, though, Iridium’s engineers proved the naysayers wrong. The system had some early problems and missed its initial operational date of September 1998, but when November 1998 rolled around, Iridium was on the air, and it worked.

In some ways, Globalstar is similar to Iridium both use large constellations of LEO satellites and both are focused on providing voice service via sat phones. Globalstar’s system architecture, however, uses a mix of tried-and-true techniques and new technologies. Rather than an orbiting network of satellites that can pass signals to each other, Globalstar chose bent-pipe satellitesGlobalstar satellites immediately retransmit back to Earth any signal they receive. This means the satellites and the software to operate them can be simpler and thus less expensive. One outcome of this approach is the need to build a large number of Earth stations to ensure that an earth station is in view of all satellites. At press time there were 38 gateway Earth stations built or under construction. “Not all blue ocean areas will have complete coverage,” said Globalstar’s Newman, “because the gateways are not built.” But, according to Newman, many ocean areas, including most of the North Atlantic, for example, will have coverage.

Globalstar also uses some very up-to-date technology. One interesting idea employed by Globalstar is something called path diversity: the signal from a sat phone user on the ground is received by multiple satellites, and these are combined to compensate for multipath and the blocking of signals by natural and man-made obstructions. The Globalstar system also makes use of spread spectrum, code division multiple access (CDMA) techniques that, according to Globalstar, allow many users to share the same frequency, thus increasing system capacity and making for fewer dropped calls when calls are handed off between satellites.

ICO Global thinks the best system architecture is not LEO, but medium-Earth-orbit (MEO) satellites for its sat phone system. Unlike the 600-mile-high orbits of Iridium and Globalstar spacecraft, ICO’s satellites will be positioned in 5,600-mile orbitsthus, ICO satellites won’t be whizzing overhead as quickly as Iridium or Globalstar birds. ICO satellites will stay in view longer, and handing off calls between satellites will be less tricky. It also means that, since each satellite can see a larger piece of the Earth’s surface than a LEO satellite, fewer satellites are required to provide worldwide coverage. Compared to Iridium’s 66 and Globalstar’s 48, ICO only plans to build a 10-satellite constellation (two spares will be kept in orbit). ICO plans to add additional rings of satellites to deal with increased demand.

The advantages of LEO configuration for sat phones revolve around the need for less transmission power by the hand set, since the satellites are closer, and the issue of signal delay caused by the longer round trip out to a 5,600-mile orbit and back. According to ICO Global, the delay will be minor and virtually unnoticeable. As for requiring more power to get a signal out to MEO, users will have to decide for themselves whether the ICO sat phones have acceptable battery life.

ICO has seen its launch schedule slip due to problems with three of the four launch vehicles the company has chosen to boost its spacecraft into orbit (Atlas 2AS, Delta 3, and Proton). Of the 10 operational satellites, four have been built or are in production. Needless to say, ICO’s chapter 11 filing hasn’t helped in getting satellites into space.

Both Iridium and ICO Global are stating that they will emerge from their financial difficulties and stay in business for sat phone users. It should be an interesting year.