By Nick Mitsis

The concept is simple: broadband connectivity anywhere at any time. For consumers with laptops to enterprises with dispersed locations, wireless connectivity seems to rein king these days. But is there a profitable business model for satellite-enabled Wi-Fi? Some companies are convinced this service can return a sizable profit. Others, however, are proceeding with caution.

The so-called "hot spot" phenomenon is spreading like wildfire around the world. From congested airport terminals to relaxed caf�s, laptop Web surfers, Blackberry addicts and the like are staying connected. But make no mistake, those establishments offering such connectivity are most likely not using satellite. In fact, many satellite industry executives accept the fact that terrestrial, in such instances, may be the preferred transmission pipe.

Understanding The Economics

The main reason urban hot spots go live via terrestrial links centers on economics. For example, commercial DSL service may be considerably more affordable than establishing a private satellite Wi-Fi network. To make satellite connectivity work within that model, according to some industry executives, it may need to be a hybrid network. Wi-Fi over satellite service loses its appeal because it is essentially a point-to-point transmission. Therefore, consumers looking to surf the Internet while sitting at a coffee house would become frustrated because the terrestrial high-speed broadband application they most likely are accustomed to does not materialize when satellite is in use.

"Satellite Wi-Fi does not add any additional latency, and is more attractive when it is compared to conventional dial-up services, not high-speed connectivity," says Scott Calder, president and CEO of Mainstream Data. "Satellite Wi-Fi is also a wonderful medium for IP connectivity when alternative terrestrial connections are not available or are too expensive to obtain in certain areas."

So while the corner coffee shop may not be ideal for satellite-enabled Wi-Fi, there is a business case more suited for this application and many companies are significantly investing in its potential. Mike Tippets, senior vice president of engineering for Helius Inc., says that satellite space segment is best suited for the multipoint distribution of rich media content, and if strategically used, Wi-Fi can offer profit gains for endusers, especially enterprise customers. "In regard to Wi-Fi via satellite, serving customers located in remote locations is a key business builder. Unfortunately, terrestrial networks are plentiful in developed urban areas. If an area does not have access to cable TV, access to satellite will naturally be attractive," adds Tippets.

Other executives say satellite Wi-Fi is also ideal where the amount of traffic is minimal, and the simplicity of applications it is used for outweighs some of the latency issues.

As many as 2.5 million rural households and Small Office/Home Office (SoHo) users in North America would be receptive to using the latest satellite technology to gain high- speed access to the Internet, according to Northern Sky Research survey results.

With respect to both price and speed, however, today’s broadband satellite providers so far have not offered enough packages that are comparable to what competing terrestrial and wireless services already offer. Therefore, some satellite companies that are building business segments in the Wi-Fi arena are focusing on remote locations. Like their attractiveness for other satellite services, locations poorly served by terrestrial connectivity are becoming one of the strongest business cases for Wi-Fi via satellite initiatives.

Cashing In On Remote Connectivity

Take, for example, Coffman Cove, Alaska. This isolated village of less than 300 inhabitants on Prince of Wales Island has Wi-Fi hot spots, offering broadband connectivity via wireless and satellite transmissions, which connects the residents to the rest of the world. Skyframes Inc., a satellite broadband service provider, signed a contract last year to equip the residents of Coffman Cove with satellite and wireless hot spot equipment for the city to operate its own wireless ISP. According to the company, the Skyframes service improves the efficiency of dividing up the bandwidth from the satellite link, enabling the community to receive an asynchronous connection of 128 Kbps uplink and up to 1Mbps downlink with a throughput topping out at roughly 440 Kbps.

Back in the continental United States, Skyframes has also provided satellite Internet connectivity to Navajo Nation schools. Skyframes’ executives view the education market in general and the Native American communities in particular as strong business options for satellite-enabled connectivity. Industry executives have identified thousands of other Native American communities that require satellite broadband across North America and are in the process of constructing connectivity solutions.

Hughes Network Systems, (HNS) like Skyframes, is also exploring business opportunities for customers in rural locations. This past spring, the satellite broadband solutions provider launched its Direcway Wi-Fi Access offering and is targeting the enterprise market as well as leisure boaters and campers at RV parks.

Market research conducted by the various satellite service providers estimates that more than 1 million people in the United States permanently live in their RVs full time. Reports from RVers indicate that bandwidth is generally scarce at parks, and those folks travelling are actually heavy e-mail and cell phone users. Providing enough bandwidth at RV park locations is an actual problem needing a solution and HNS hope to cash in on that need.

"A customer in a resort, RV park or campground can surf the Internet just as easily as they can back home," says Jim Gandolfi, senior vice president and general manager at HNS San Diego. "Resorts and RV parks can cover their entire properties with Wi-Fi, and offer their guests connectivity for as little as $20 a week."

Here is how the system would work: A vacationer at a campground or RV park would send an Internet request to the Wi-Fi access point on the grounds. That request is then transmitted to HNS’s Direcway two-way satellite, sending the signal to the company’s network operations center. The center then connects to the Internet, receives the data and sends it back to the originating hot spot access point that then delivers it to the Web surfer. Customers with laptops and PDAs equipped with standard 802.11 Wi-Fi capability can also browse the Web wirelessly throughout the hot spot, adds Gandolfi.

While it is not uncommon for satellite connectivity to penetrate schools located in rural areas, the growing availability of satellite-enabled Wi-Fi connectivity has taken this application out of the classroom and put it on wheels. Not too long ago, Beaufort County Community College in rural Washington, NC, equipped a van with a satellite dish and 20 laptops enabled with Wi-Fi connectivity to bring the Internet to the students, wherever they may be located. The college uses the van for classes that require each student to have a computer, such as software or writing courses.

The Enterprise Connection

But schools in rural communities, campgrounds, marinas and other remote locations are not the only venues satellite service providers are exploring in regard to their respective Wi-Fi offerings. HNS also recognizes that enterprise clients can benefit from a two-way satellite-enabled broadband connection for its corporate network needs. "When an enterprise rolls out a new customer-facing service such as Wi-Fi, it has to be available in all locations to provide the consistency of service to get repeat business," says Gandolfi.

"If the enterprise is a medium-sized or larger operation, it is highly unlikely that it can get affordable terrestrial services to all of its locations."

Mahesh Bahave, vice president of new business development for HNS is optimistic about the applications satellite-enabled Wi-Fi can offer retailers, restaurants and other corporate businesses. "The IT department of a company, for example, may want to isolate enterprise traffic and overlay solutions with mission-critical information," he says.

Satellite networks can address two common concerns about sharing bandwidth between intranet and Internet users–security and prioritization. Typically, VSATs are capable of supporting multiple LANs. Traffic can be prioritized so that critical applications–such as credit card authorizations–will have first access to network resources over Internet browsing, for example.

"The break even point for [enterprise] customer-facing Wi-Fi using satellite can be as low as three users per day, making it an option for both business as well as for corporate communication requirements," says Gandolfi. "Wi-Fi Access can turn any retail location into an Internet connection destination, encouraging repeat visits, attracting new patrons and extending peak hours. It’s a winning proposition for a business owner to provide customers with convenient broadband Internet access, and opens up the potential for incremental revenue streams via cross-selling and co-advertising with various other content, product and service providers."

Future Wi-Fi Opportunities

Increasing demand for broadband Internet access anytime, anywhere is what is fueling the growth of Wi-Fi services. From more than 5,000 reported in 2003, over 42,000 Wi-Fi hot spots are estimated by the end of this year in the United States. These figures translate into serving as many as 27 million potential customers and generating more than $9 billion in annual revenues. But the question remains on how much of this market truly is addressable by satellite-enabled services.

From a technical point of view, Wi-Fi and satellite can potentially make for a good marriage. But the same point is irrelevant to business users who just want a big pipe coming in. Satellites also may eventually be married with another wireless technology called Wimax, designed for deployment in dense urban centers and rural areas. Speculation remains, however, that a satellite/Wimax combination will ever become a significant broadband option.

Both Wimax and satellite have a place in an overall broadband network, some executives say. For satellite, however, it still remains to be seen exactly how competitive this technology will be in the Wi-Fi arena.

Competition remains strong and the profit-generating of satellite business initiatives will ultimately be measured by what sizable market potential it will garner to successfully compete with its terrestrial counterparts of DSL and cable.

Nick Mitsis is editor of Via Satellite magazine. He also sits on the board of SSPI’s Mid-Atlantic chapter.