by Marc Crossman and Anh Steininger

According to market research firm Analysys, by 2012 the worldwide broadband, or bandwidth-on- demand, market is expected to total $990 billion (versus about $195 billion in 1998), and multimedia satellites are expected to win 8 percent, or $80 billion, of that business. As a result, numerous planned satellite projects exist that are dedicated to capturing this market. Four projects have the highest probability of going into commercial service in the next three to five years. These systems, once in service, will be able to provide broadband capabilities and two-way access at high speed.

The probability of success for these programs is good for several reasons. Most important, they are developed and/or backed by some of the most powerful and longstanding aerospace/defense and telecommunications companies worldwide, with the wherewithal to complete such an undertaking. They have the financing commitments necessary to begin development of the space components; some have even begun construction.

The race is on. But who will be the first and/or the winning Ka-band, multimedia satellite service provider? All signs indicate this will be a very competitive market. Key players are Hughes’ Spaceway, Loral’s Cyberstar, Lockheed Martin’s Astrolink and Teledesic.

Spaceway, backed by Hughes Electronics, is a planned global network of Ka-band satellites that will begin offering high-speed broadband services of speeds up 16 Mbps in about three years. The initial system will consist of two geostationary satellites and an in-orbit spare, providing broadband data services in North America. The system will begin commercial service in 2002 in North America, with plans for other regional systems in Europe; the Middle East and Africa; Latin America and Asia, as markets develop. Also, as the markets develop and as technology permits, Hughes plans to expand Spaceway into a combined geostationary and a non-geostationary system.

In May 1999, Hughes announced that it would invest $1.4 billion in the development of Spaceway for North America. Spaceway will be an extension of Hughes’ current data delivery businesses such as DirecTV, DirecPC and Hughes Network Systems’ VSAT business, offering an enhanced platform for two-way data delivery via satellite at high speeds.

Cyberstar is Loral’s entry into the digital broadband communications sector. Cyberstar will be a geostationary, satellite-based, open protocol, digital telecom system capable of offering worldwide, high-speed interactive data and telecommunications services at speeds of up to 27 Mbps to multiple locations simultaneously. Cyberstar currently offers service from three satellites of the Telstar fleet, however, the plan is to launch three Ka-band satellites. Cyberstar will offer services similar to Spaceway’s, including multicasting and content streaming. In late 1999, Loral’s broadband strategy will be more visible.

Astrolink will also offer broadband data services; it is a strategic venture of Lockheed Martin, TRW and Telespazio, which is part of the Telecom Italia family. Together, the three partners have thus far invested $900 million in developing Astrolink. Lockheed has invested $400 million, with the remaining $500 million divided evenly between TRW and Telespazio.

Astrolink will be a four-geostationary-satellite system operating in the Ka-band frequency, providing interactive multimedia services such as high-speed data connectivity for Internet access, private corporate data networks and backup or surge network capacity. As well, Astrolink will support such applications as e-commerce, videoconferencing, distance learning and telemedicine. Information will be transmitted at rates up to 20 Mbps and will be received at rates up to 110 Mbps. The first satellite launch for Astrolink is scheduled for 2002, with service to begin in 2003.

Teledesic is a joint venture of several players, including Bill Gates, Craig McCaw, Boeing, Motorola and Prince Alwaleed Bin Talal. The original plan for Teledesic was a constellation of more than 800 LEO satellites; however, this has been dropped to a more reasonable number of 288 satellites plus ground spares. The Teledesic system is designed to support millions of simultaneous users. The system will have two-way connections that provide up to 64 Mbps on the downlink and up to 2 Mbps on the uplink.

The strong participation of the aerospace defense companies in the development of broadband via satellite perpetuates our theory that was put forth early in 1998: the "hybrid" satellite company. That is, traditional aerospace defense companies are using hardware expertise to enter the services market and pursue the high-growth, high-margin satellite services business. Growth from the core business of companies such as Boeing, Lockheed Martin and TRW has stabilized, with marginal improvement potential. Thus, those companies that are candidates for big future upsides are those that successfully execute the services strategy.

Marc Crossman and Anh Steininger are satellite analysts at J.P. Morgan in New York City. These views are those of the authors and do not necessarily reflect the views of the Via Satellite editors or J.P. Morgan.