By Nick Mitsis

Terrestrial networks such as Ancillary Terrestrial Components (ATC) can enhance availability, efficiency and economic viability of Mobile Satellite Services (MSS) by reusing at least some of the frequency bands that are allocated to cellular systems. Without ATC, it may be challenging for MSS operators to reliably serve densely populated areas because the satellite’s signal may be blocked by urban structures. As a result, mobile satellite business executives are pursuing solutions using ATC retransmissions, which can reduce or eliminate this problem, paving the way for a strong business for next-generation mobile communications.

Throughout the last five years, the U.S. Federal Communications Commission (FCC) has moved to permit use of MSS spectrum for integrated satellite-terrestrial services, says Tim Farrar, president of Telecom, Media and Finance Associates. "Deployment of terrestrial base stations, known as ATC, will enable MSS operators to provide service in urban areas and inside buildings which satellite signals are too weak to penetrate," he says. "New, more advanced satellites will also allow customers to use small, low-cost handsets for mobile services."

The FCC’s decision to permit MSS companies to use their allocated radio spectrum for an ATC-based communications network now has given way to hardware development. All the major players within this arena have business plans and infrastructure in the works. ICO North America in May 2005 raised $650 million and told its investors that ATC rights could be valued as much as $9.8 billion. ICO also signed a contract with Space Systems/Loral (SS/L) for a satellite that is slated for in-orbit delivery by next year. Likewise, Terrestar, which raised $200 million in a private placement in mid-2005, also has a spacecraft under construction at SS/L and is seeking to launch it into orbit by 2008. Mobile Satellite Ventures (MSV) continues to move forward with its ATC-enabled business plan and remains on track to complete a satellite contract with Boeing — valued at more than $500 million for the two North American spacecraft.

But even with solid hardware in space, service and customer uptick will determine success. Likewise, MSS operators will need to partner with larger players, both to fund the estimated $3 billion projected cost of terrestrial base station deployment and to secure adequate mass-market distribution channels, adds Farrar. "We believe that the optimum partner would be a satellite TV operator such as DirecTV or Echostar, because of their need to develop new wireless and broadband service offerings, and the shortage of alternative spectrum options for deploying a nationwide wireless network."

Another option would be to partner with satellite radio providers such as XM Satellite Radio, Worldspace or Sirius Satellite Radio to provide capacity for mobile video services. "There are currently five proposed MSS-ATC systems, from MSV, Terrestar, ICO, Inmarsat and Globalstar. However, there won’t be enough partners for all of these companies to successfully deploy their own national terrestrial network," Farrar adds.

New Business Opportunities

Globalstar LLC’s petition to offer ATC in the United States, approved in January, allows Globalstar to use part of its satellite radio frequencies for the complementary terrestrial wireless service. Globalstar is developing a system that will work with its existing satellite constellation, using small, portable, lightweight, fully featured, dual mode handsets. "If you first consider ATC to be predominantly a voice and data service, what it really allows an MSS operator like us to do is to offer a seamless service," says Jay Monroe, CEO and chairman of Globalstar. "So if you have our device, wherever you are, you will have access to your voice and data. That is unique to the MSS world. A regular cellular user cannot go to the middle of Montana and access the system. We will be able to do that as well as operate in downtown New York City, which will feel exactly like a cellular phone call, and from the customer perspective, this will be completely seamless."

Globalstar demonstrated the feasibility of ATC service in New York and Washington in July 2002, pairing a modification of its dual mode satellite/cellular phone with a small, transportable base station, though Monroe could not specify how much of that demonstration would be applicable to the planned ATC system of today. "We modified a few phones, but there was not a production quantity," he adds. "But production quantities of ATC phones are something we could bring to the market fairly promptly. We are working with Qualcomm on a new generation of satellite phones and they can be made to accommodate the service with some changes."

The primary ATC applications will be the enhancement of wireless service in urban areas and the provisioning of self-contained, transportable local area networks for remote locations or where communications are disrupted during disasters and emergencies. But Globalstar also envisions multiple business possibilities growing out of the system, Monroe says. "There are lots of other uses [for ATC] being contemplated," he adds. "There are direct broadcast uses for those who want to have channels which allow them to distribute content where there is no landline. All of the [direct broadcast satellite] guys want to have a way for you to order additional services from them wirelessly. Right now that is done by a connection to a landline. There are opportunities to utilize ATC in the direct access radio market, such as with XM and Sirius, who also want to have that channel which allows you to order additional services. All of these are opportunities which we are having discussions with companies about. They are nascent, so it will be a little while before they mature."

The customers that commit to using Globalstar’s ATC services will influence the rollout of the system and the funding requirements, Monroe adds. "We are not actually going to build an ATC system until we precisely know what and who it will be used with. This is not a system you can build generically then layer on all those uses. You have to build it with careful thought to what the ultimate application is."

Dawning Of ATC Competition

Globalstar joins Virginia-based Mobile Satellite Ventures (MSV) in targeting the United States as a prime market for ATC services, though the two companies may not be direct competitors with their planned services. MSV plans to provide voice and data communications across North and South America using handsets the size of cellular phones.

"We at MSV have been working for the last 10 years on our vision of an advanced communications network that would link the best of satellites and the best of terrestrial," Alexander Good, chairman and CEO of MSV says. "The satellites will provide ubiquitous coverage that will be the key and will be enhanced through a cellular network that will provide the power and capacity needed for urban environments," Good adds. "Our vision is that this has huge applications for first responders and safety professionals because of the ubiquitous coverage but also has everyday applications for people that need better coverage. This will provide seamless service that uses existing cell phones … using the economics of existing sets that don’t cost thousands of dollars. This system takes us to the next step to providing more power and 20 times more calls of our next generation satellites."

MSV currently operates a satellite communications network using two MSAT satellites but is developing a new trio of spacecraft to work with its ATC system. Globalstar does not have to worry about launching satellites, as the company provides its services in 120 countries via a constellation of 48 satellites already in low-earth orbit.

Both Globalstar and MSV also are pursuing the deployment of ATC systems around the globe. MSV received a patent last December from the European Patent Office covering ATC technology in the United Kingdom, France, Sweden, Finland, Spain, Belgium, Portugal, the Netherlands, Italy and Germany. "How long it will take to have that opportunity around the world as it exists in the United States is unknown at the moment," Monroe says. "We know some regulations are in planning bodies, and after [the Federal Communications Commission] has decided on an issue, it makes it easier for other regulatory authorities to made those decisions. So I expect we will see ATC roll out in some other places in the near term."

Erasing The Past

Terrestar Networks Inc. also is working on developing a viable ATC offering to the market. "The most salient lesson [from the MSS failures of the past] is that without the ability to have true ubiquity in terms of being able to attract customers in the urban and built up areas, mobile satellite services are at a disadvantage," Terrestar President and CEO Wharton "Zie" Rivers says. But with the Federal Communications Commission reaffirming its decision on ATC, Rivers believes the consumer markets will be more open to MSS as a competitive alternative to terrestrial wireless.

The offering of ATC to fill in the gaps in urban areas is only a part of Rivers’ plan to put a different face on MSS. Terrestar’s service is looking to be a departure from the past is pricing. "From a pricing standpoint, we certainly expect to be very competitive in terms of pricing along side the more traditional wireless carrier," Rivers says. He did not disclose any specifics of Terrestar’s anticipated pricing for its service. "With ATC and the advanced capabilities that we are building in our spacecraft, [we are] offering a more diverse set of products and services that are keeping up with the advances in technologies, especially broadband," Rivers adds.

Even with ATC and the possibility of terrestrial partnerships, These satellite service providers still face an uphill climb to not only succeed but also turn a profit.

"Terrestar has a credible argument for its business case and it makes sense on the surface," says Roger Rusch, president of Telastra Inc. Rusch notes that the cost and complexity of space-based systems typically is underestimated and the capacity and service quality typically is overestimated. Plus, without clear pricing information, it is hard to assess the viability of such business cases.

"It is not sufficient to say that the pricing will be competitive," Rusch says. "To win market share, the price must be significantly lower than the competition."

Ultimately, time and market demand will tell how valuable the ATC investment will have been for both service providers and hardware manufacturers. Local and state government agencies potentially can gain the most benefit from always-on connectivity. But a comprehensive plan to effectively use satellite-enabled communications, taking into account both the advantages and limitations of such new MSS systems, still needs to materialize. Only when all these elements are in place will the industry and market realize the ATC benefit to always-on communications.

Nick Mitsis is the Editor of Via Satellite magazine and sits on the board of the SSPI Mid-Atlantic Chapter. Jason Bates, Assistant Editor of Via Satellite magazine also contributed to this article.