by Peter J. Brown

A global transformation is under way as rural villages and remote enterprises are tapping into the global telecommunications revolution. This huge rural market, previously unserved or underserved, is benefiting directly from the creation of low-cost satellite phone systems and related advances such as the rapid proliferation of prepaid, so-called "smart cards" or calling cards.

Together, a creative mix of VSATs and plastic is opening up lots of new doors for satellite operators and equipment vendors alike. This allows the growing number of recent arrivals in cities-developing countries in particular-to maintain essential ties to relatives back in remote village settings.

"How can these people afford telephony? People who have up and moved to the cities buy these prepaid cards and ship them back home. National long distance rates have dropped substantially, to the 65 cent to $1 range in many countries," says Herb Bradley, president and CEO of San Diego-based Titan Wireless. "We see no hesitancy when it comes to spending money to communicate with loved ones. There is no unwillingness to pay for this type of service." Bradley also believes that the satellite industry should stop referring to this market segment as rural telephony altogether.

"It has a negative connotation. Internally, we prefer to call it universal service. This involves a model where the VSAT technology provides the first phone in a community, but it is not an end point in itself," Bradley says.

Intelsat’s recent telephony trials in Peru and Senegal have generated a substantial amount of baseline data which seems to support the various business models that are driving the expansion of VSAT-based telephony solutions into previously underserved areas.

"We interviewed users to determine why they were calling and how much they were willing to spend. The results were somewhat surprising in terms of the level of telecommunications consumption. These people were willing to devote a large part of their monthly income-$2 to $3 out of a monthly income of $20 or so-to this type of service," says Fabrice Langreney, Intelsat’s manager for voice, data and video product and service development.

This data from Intelsat is reinforced by broader ITU-sponsored research, which suggests that among rural populations, 10 to 15 percent of income often gets spent on telecom services, according to Langreney.

Developing nations in Africa and Latin America are embracing these VSAT telephony solutions and so, too, are developed nations such as Poland and Australia. China is looking for a way to initiate affordable phone services in as many as 500,000 unserved local markets as well. Canada may soon begin to deploy thousands of VSATs, pending the outcome of governmental hearings focused on how to best allocate resources in order to connect what are deemed as high-cost serving areas. Thus, the scope of this VSAT-related activity is actually far broader than most readers realize.

An Important Role For Wireless Local Loop

Another very important trend in wireless rural telephony is the creation of hybrid VSAT systems where the satellite technology is integrated together with sophisticated wireless local loop (WLL) networks. VSAT/WLL systems are quite common. These multi-line phone networks blend satellite technology together with one of two cellular telephony systems, either Digital Enhanced Cordless Telecommunications (DECT), which operates at 1880-1938 MHz; or Advanced Mobile Phone System (AMPS), an older analog FM radio-based solution, which dates back to the early 1970s.

These two wireless phone standards sit on opposite ends of the spectrum when it comes to range. AMPS is what is known as a macrocellular approach, with a range of 30 kilometers or more, whereas DECT is in the microcellular category with a range of perhaps 3 to 5 kilometers. Keep in mind that DECT offers something that AMPS cannot, a relatively high data rate of 64 kbps. In addition, both have vastly different power requirements, which can impact on solar-powered VSAT/WLL systems in particular.

New technologies are allowing new telephony services to evolve, such as Thin-Route-on-Demand, which Intelsat is rolling out in Africa in cooperation with Germantown, MD-based Hughes Network Systems (HNS). This service will enable 14 countries spread over different time zones to pool resources in order to offer affordable, instant dial-up connectivity using Demand Assigned Multiple Access (DAMA) satellite technology, all controlled by a single network management control center (NMCC).

Suffice it to say that the rural telephony market is undergoing a vast transformation, and good old VSATs lie at the heart of this process.

"The functionality and reliability of this technology has dramatically improved," says Mike Martin, director of business development for Telesat Canada’s voice and data services in Ottawa. "And thanks to the vast improvement in voice quality along with the implementation of single hop functionality, we are seeing a definite increase in traffic."

Martin describes Telesat Canada’s ongoing and successful collaboration with HNS as an indicator of how much progress is taking place in this regard. This fall, according to Martin, HNS and Telesat Canada will complete their efforts to develop SS7 calling functionality on a DAMA satellite network.

"This joint development has been a huge undertaking in terms of software development. It will have a great impact on rural telephony. As a protocol and infrastructure, SS7 supports a host of applications and enhanced services such as call waiting and caller ID. Now that functionality is being layered in. DAMA definitely improves performance in terms of call set-up, as well as reduces bandwidth requirements," Martin says.

Globalstar: A Big Emphasis On Rural Payphones

Talking to Paul Lenfant, Globalstar project manager at Schlumberger Test and Transactions Europe in Montrouge Cedex, France, one gets the distinct impression that the coming year will be very exciting as far as rural telephony via satellite is concerned. As of mid-September, Schlumberger is delivering pre-production units of its satellite payphones to Globalstar L.P. for testing in southern France and London, according to Lenfant.

A Globalstar spokesperson indicates that Globalstar is projecting that 15 percent of its revenues by the end of the year 2000 will be coming from fixed phones, which include Schlumberger’s smart-card-equipped payphones. Some believe that Globalstar’s revenues from fixed phones may run much higher, perhaps as high as 30 percent of the total revenues.

Lenfant sees Globalstar as having noticeable advantages when it comes to offering rural telephony service using both standalone payphones, as well as sheltered clusters of perhaps four or five payphones all overseen by an attendant who can sell smart cards on the spot. By the way, this is a very user-friendly arrangement as far as the local phone system is concerned, according to Lenfant, because there is no money inside the phone to be collected, and the billing system is completely self-contained. All the billing statistics are compiled as part of an integrated payphone management system.

"Globalstar indicated early on that addressing this underserved market was a very important application for them," Lenfant says. "Their speed of deployment will be incredibly fast. Once the Globalstar gateway is in place, these rural payphones can be set up anywhere. However, two other advantages stand out as well. With Globalstar, the operators encounter no limit on traffic density, while at the same time, due to the fact that the constellation is already in place, the capital cost per line is fixed."

Starting with France Telecom in 1983, Schlumberger has already deployed 500,000 payphones worldwide that use smart cards, and this puts Schlumberger in the top slot with a 35 percent market share, according to Lenfant. More than 70 phone system operators, including 30 in Africa, are using Schlumberger’s equipment. The People’s Republic of China and India are two very large markets where Schlumberger is quite active already with its broad mix of products, which includes GSM payphones and WLL systems.

Lenfant believes that many currently unserved locations in the well-developed European telecom marketplace-and perhaps North America as well-will be attracted to this solution from Globalstar. In this instance, the Globalstar Access Unit (GAU) is offered by Schlumberger as part of a turnkey solution, along with the smart cards, phone booths, installation and ongoing maintenance services. The GAU, a VSAT interface, is built by either Ericsson or Qualcomm.

Skylinx In Europe

Readers may be somewhat surprised to learn that many European companies have been evaluating and embracing VSAT telephony. In mid-1999, both Eutelsat and Telekomunikacja Polska S.A. (TPSA) selected Atlanta-based Scientific-Atlanta Inc.’s (S-A) Skylinx and Skylinx.IP network systems to address a variety of needs. TPSA will use Intelsat transponder capacity.

"Eutelsat needed a general purpose platform for telephony, along with medium-rate data services in the 64 to 128 kbps range as part of its DAMA STS-Satellite Telephony System. We offered them a single-channel Skylinx unit that addressed all their needs," says Gerry Einig, principal engineer for S-A’s satellite network systems group. "TPSA in Poland needed to address telephony, IP distribution and data services, and so they are deploying 80 VSAT terminals along with a Skylinx.IP, a high-speed overlay, which combines Skylinx with PowerVu.IP."

In both instances, S-A is making significant headway in terms of demonstrating the flexibility and attractiveness of VSAT-based solutions, according to Einig. For Eutelsat, which is adding three S-A gateway hubs as part of the deployment of its Skylinx-based DAMA STS network, S-A modified its VSAT system to address the European VSAT standard known as TVRO 28. Among other things, this meant that S-A had to alter its network management requirements with software changes that allow for such things as a mechanism to rapidly shut down VSAT traffic. "We had to make these changes to our Skylinx VSATs because VSAT 28 is designed primarily for TDM/TDMA services, and it does not adequately address, accommodate or recognize switched SCPC DAMA services," Einig says.

In Poland, according to Einig, TPSA will become the world’s first commercial user of S-A’s PowerVu.IP with Skylinx return path. While any telephony services will float as mere adjuncts to TPSA’s more advanced IP-based requirements, a new bandwidth reduction mechanism will allow the Skylinx terminal to automatically tear down the outbound SCPC circuit 90 seconds after the commencement of the TCP/IP session, leaving two circuits in place rather than three, according to Einig.

"The satellite carrier is always up. The DAMA system sees the session request, sets up a two-way circuit, and then proceeds to tear down the outbound circuit once the PowerVu.IP has mapped it out," Einig says.

Installation of both systems is scheduled to be completed in late 1999.

Gvt: The Pace Is Picking Up

During the summer, one of the two VSAT market leaders, Gilat Satellite Networks Ltd. of Petach Tikva, Israel, announced a major new VSAT phone deal in Brazil through its Fort Lauderdale, FL-based subsidiary known as Global Village Telecom NV (GVT). In south central Brazil, GVT won a contract valued at more than a half-billion dollars to install 500,000 lines in nine states over the next three years. This service area includes Brasilia, Brazil’s capital. According to Giora Oron, GVT’s vice president of operations, this is GVT’s largest contract to date.

Oron indicates that GVT is awaiting news on another large contract in Latin America as well. In addition to a very large project involving Gilat and Telkom South Africa, GVT has also been very active recently in Chile and Peru. It maintains a teleport in Miami, and, for its satellite telephony operations in Latin America, GVT uses both Satmex 5 and Nahuelsat.

The vast majority of GVT’s installations involve Gilat’s Dialaway and Faraway VSAT systems. And as far as the bright future is concerned at GVT, the pace in this arena is definitely picking up

"We are a telephone service provider. We are not a systems integrator. We try to avoid that role. We are an operator. We analyze the needs of our customers on a case by case basis in order to determine what is the right solution," says Oron. "This is a big market, not just for villages, but for companies and enterprises in rural areas in general, such as mines, ranches, resorts and other remote recreational ventures.

"We are using full mesh and full star configurations to interconnect with the incumbent provider," Oron adds. "Gilat is our major equipment provider, supporting us through installation, as well as during operation. Our relationship with Gilat is very important to us."

Having the ability to deploy VSAT-based telephony systems rapidly is very important, according to Oron. In South Africa, for example, GVT assisted Gilat in the installation of Dialaway VSAT terminals at more than 2,000 sites in less than two months. Oron indicates that Dialaway is ideal for handling traffic up to three lines, whereas Faraway units have no such limitations and can run at speeds up to E1.

Oron points out that GVT’s strategy as a service provider encompasses all wireless technologies, including wireless local loop and cellular, and not just satellite alone. Thus, GVT intends to play an important role in the deployment of telecommunications infrastructure for semi-urban markets involving populations above 10,000, according to Oron.

Oron stresses the need for the intensive marketing of this relatively new concept of satellite-based phone service in areas where no such service existed previously. It is extremely important to tap a local entrepreneur and motivate that individual to become the local phone guru in order to get people to use the equipment. Those who believe that somehow the presence of a phone alone automatically guarantees that the phone in question will be used frequently or properly need to reevaluate this perception, Oron asserts.

Titan Wireless CEO Bradley agrees with Oron. "These businesses have to be promoted. You cannot just go and stick a phone out there. You see many of these phones in odd places, and in many instances, they are not working. You have to find an on-site entrepreneur whose economic interest is tied to the VSAT," Bradley says. "In essence, what you are doing is establishing a local phone company which is capable of operating one to three highly compressed voice channels for as little as $5,000."

Performing quick and trouble-free upgrades to VSAT phone systems in order to handle Internet traffic is also crucial. Oron indicates that this task can be accomplished in 30 minutes or so with Gilat’s VSAT systems.

STM Wireless Launches Space Loop

In Latin America, STM Wireless of Irvine, CA, has been very active as well, using Intelsat 601. In addition to its presence in Mexico, according to CEO Emil Youssefzadeh, STM Wireless, through its Direc-to-Phone International Inc. (DTPI) subsidiary, has 2,000 lines in operation in Venezuela, 550 sites up and running in Bolivia, and as many as 700 lines coming online in Guatemala. In Guatemala, a wireless UHF-based transmission network has been united with the STM Wireless VSAT telephony system known as the Subscriber Earth Station (SES) for providing multi-subscriber access.

Earlier this year, STM Wireless raised $16 million. It also reduced its stake in DTPI to 44 percent, streamlined operations by closing down its Atlanta facility, and obtained a new two-year line of credit. Youssefzadeh indicates that, among other things, the STM Wireless balance sheet will look a lot better as a result of all these recent changes.

The STM Wireless SES will soon be joined by a new DAMA-based WLL product known as Space Loop, which has been under development since 1997. Space Loop is evolving as part of a joint service development and technology contract with Intelsat, with a focus on platforms suited to handle between 20 to 200 lines. In addition, STM Wireless continues to make headway with its DAMA 1000 full mesh, single-hop satellite transmission network.

"Space Loop is a totally integrated outdoor 48-volt system with all the electronics in a single housing. All you have to do is install the VSAT terminal and erect the transmitter mast," Youssefzadeh says. "Operating in the DECT range, our Space Loop will cover a range of 5 kilometers. This system offers full PBX functionality in the base station with traffic monitoring, network management and systems software. And for the failsafe operation of subscriber equipment, we offer two hours of battery backup."

Youssefzadeh sees VSAT/WLL as the next major technological leap forward in the rural telephony sector. On a per-line basis, solar-powered rural telephony systems are running at nearly twice the cost of non-solar-powered units, and yet Youssefzadeh sees a lot of recent progress as far as cutting installation and operating costs for both single and multi-line systems.

Intelsat: Getting Ready To Deploy Space Loop

Back in March, Intelsat released a report about its rural telephony field trials involving VSAT and WLL AMPS technology in Peru, which were conducted with Telefonica del Peru. Intelsat used Intelsat 603 to link an HNS 2.4-meter C-band, 16 kbps DAMA traffic terminal to a DAMA gateway station, also from HNS. In this trial, Intelsat used coin-operated pay phones rather than prepaid calling cards.

"The combination of VSAT and cordless technology represents an economical solution, whereas if you have a total subscriber base of between 20 and 200 subscribers, VSAT alone is not economical," Langreney says. "And where DECT is the ideal solution for 20 to 200 subscribers, AMPS can be very attractive for a subscriber base ranging from at least 200 or 300 up to 500 or more subscribers."

What Intelsat encountered in Peru, using an AMPS-based solution, was an enormous power supply issue. For the market to become truly viable for remote, solar-powered VSAT/WLL systems, the 3 kW required by the AMPS-based system deployed in Peru represents an enormous obstacle to be overcome, according to Langreney. For this reason and others, Intelsat is quite keen on DECT, which runs on 500 to 700 watts.

Whereas the emphasis from the start in Peru has been on simply proving the viability of a VSAT/WLL AMPS solution, Intelsat sees the need for much more. Langreney estimates that a cost-savings of 30 to 35 percent will be achieved by the single chassis approach, which is embodied in the STM Wireless platform known as Space Loop. Combining the base station controller for the WLL component together with the VSAT interface on a single board, and also deploying a DECT-based system on this single chassis yields numbers that are starting to get very user-friendly, according to Langreney.

"Much lower power consumption translates into substantially reduced coverage. Regardless, bringing the cost per line down is the goal. But the problem is not the cost per line, whether it is $500 or $1,000 per line. As far as rural telephony is concerned, it is the installed and operated cost per line. At $7,000 to $8,000, it simply does not work. It immediately kills your business plan," Langreney says.

In Senegal, two VSAT/WLL DECT sites have been developed with the goal of serving 20 villages. According to Langeney, three villages are currently operational. This demonstration in Africa does not entail the Space Loop. Here, a lot of emphasis is being placed on training the teams engaged in VSAT/WLL installations and operations, and not just on the technology itself. As noted in the discussion of GVT, speed is paramount. According to Langreney, when it is done right, the installed cost per line can be downright attractive, at $3,000 to $4,000 per line.

"There is a big emphasis on training the signatories. Rapid installation is the key. You have to be able to do the installation in two to three days, not two to three weeks," Langreney says. "Logistics are vital. Everything has to be in place before you ship the equipment. When proper planning is absent or lacking, inefficiency takes over, and then all the inefficiencies suddenly surface. They tend to have an enormously negative impact on a project."

HNS: A Broad Wireless Agenda

In Africa, HNS and Intelsat are teaming up to provide 14 countries with Intelsat’s DAMA Thin-Route-on-Demand (TROD) service. This is adding to the growing sense of momentum as such services shift from a logical way to efficiently handle international long distance traffic to a domestic service offering. Using TES Quantum hardware, this DAMA SCPC service will be widely available from the North African countries of Algeria, Morocco and Tunisia to countries as far south as Angola and Swaziland, to name a few. It is another indicator of the broader growth curve worldwide, which shows no signs of diminishing.

"We are experiencing significant growth. In general, the level of traffic is far better than what we expected. We are looking for additional capacity. For example, where we have been routinely using global beams on Intelsat 603 at 335.5 degrees E, we are considering a migration to hemi beams with much higher EIRP to accommodate more regional traffic and smaller, cheaper antennas," Langreney says. "We also have enough demand to justify a 64 kbps on-demand data application. A lot of clients are asking for it."

Nigel Simmons, senior director and product line manager for TES Quantum at the satellite networks division of HNS, reminds readers that the TES Quantum platform is now 10 years old and that it is in its fourth generation.

"The emphasis today is not on a single line, but rather on a range of products. Our multi-line products are coming on-stream. Among the new features is digit manipulation for seamless integration into the existing public switched telephone network (PSTN)," Simmons says. "In order to push rural telephony to the next level, we have to have products that are easy to transport, easy to install, and combine rock-solid reliability with very low power requirements. With our Quantum Direct, we have introduced another radio, which consumes less power." "

Simmons also indicates that having the right billing interfaces and the ability to communicate in different protocols, such as SS7, are very important as well. According to Simmons, DAMA satellite products are best suited to multiple local gateways. The DAMA SCPC technology with its highly efficient bandwidth usage is what Simmons describes as "a fine model." Simmons indicates that achieving increased voice compression-well below 8 kbps-is another HNS objective.

While Simmons alluded to "the breadth of product at HNS," most observers might be somewhat unaware that HNS has a terrestrial wireless product line to augment its satellite hardware. In India, for example, HNS has teamed up with Alltel Corp. and India’s Ispat Group to create a venture known as Hughes Ispat Ltd., which operates a very large WLL network using HNS’ Aireach technology. Among other things, an NEC NEAX61 Sigma switch, which has been designated as the world’s first ATM-based Class 5 switch for multimedia services, is now part of this TDMA WLL network in India, and it enables Hughes Ispat to prepare for the launch of Aireach Broadband.

This bit of information demonstrates how HNS has moved quickly to integrate its VSAT technology into a much broader, advanced wireless agenda where VSAT plays a vital role. In this regard, the strategy here for HNS is quite typical of the other big players in this arena. And Simmons is quick to underscore how effective HNS can be when it comes to developing products that feed off each other.

"We continue to find ways to decrease costs, and to expand markets. You see a wireless interaction right across the line," Simmons says. "With telephony, you tend to encounter a PSTN topology which has grown up around the sociology of the people it serves.

"AOL’s $1.5 billion investment in Hughes validates satellite technology as the basis for last mile access, and it demonstrates that satellite technology is highly cost competitive. And I see us playing a much larger game, developing volume-based satellite products which, in turn, will impact on rural telephony," Simmons adds.

Titan Wireless: Evolving With The Market

Titan Wireless may not be one of the larger VSAT players in this market, but it is on the move just the same-making investments in West Africa and Central America, while deploying its Xpress Connection VSAT telephony system in countries like Benin and El Salvador. More than 4,400 units have been shipped to Indonesia, according to Bradley, who indicates that a pilot project is underway in Guatemala as well, and that another pilot project involving three other African countries is schedule to get underway in late 1999.

"Before, we were trying to sell huge turnkey systems; now we are trying to generate third-party investment interest, while offering operators the opportunity to pay zero down on the hub," Bradley says. "In Africa, the World Bank is stating that it costs an average of $6,000 to deploy a telephone subscriber line. All of us in this segment are well under $6,000 per terminal."

Bradley sees the VSAT market changing in many ways as new partnerships and new strategies emerge. The growing emphasis on modular solutions, and on the use of such components as remote concentrators and intelligent switches, is changing the way that Titan Wireless and the VSAT in-dustry as a whole sees itself, according to Bradley.

"Our energies are focused on developing an interim technology that fits between where we are today and where the broadband LEOs will be in the next five years," Bradley adds. "We occupy a different place in the market. With GEOs, fixed VSATs and fixed WLL, we have a sustainable place."

Bradley indicates that Titan Wireless is part of international consortium that is developing a low-cost terminal integrated into a multiple channel WLL product. He is saying very little, although he indicates that a prototype will be demonstrated later this year.

"Yes, using VSAT alone is where it all began, and yet now with fixed WLL at $300 to $400 per subscriber, it represents an excellent value," Bradley adds.

Is The Dry Spell Coming To End?

The rural telephony via satellite market appeared to enter somewhat of a dry spell that began just after the completion of a Telkom South Africa project involving Gilat and GVT. Now, with the announcement involving GVT in Brazil, the mood is becoming more upbeat. Latin America and Asia appear to be undergoing a revival.

"We see the long-term potential for the rural telephony market as quite good, with projected annual growth going forward of perhaps 20 to 40 percent. We see a strong and growing demand for our multiplexer products," says Charles Reese, vice president of sales and marketing for DNE Technologies Inc. in Wallingford, CT.

DNE has just started shipping its Satplex/2 multiplexer, which supports both voice traffic at 4.8 kbps and data modems running up to 14.4 kbps, according to Reese. DNE has been involved with the international long distance market for some time, beginning with its Axxess/1 multiplexer. With Satplex/2, DNE is emphasizing ease-of-use in a very small rack-mounted configuration, as well as reinforcing the current market emphasis on voice quality. "Most people are placing a very high premium on voice quality," Reese indicates.

Another well-known company that is eagerly pursuing the rural telephony market is Prodelin Corp. in Conover, NC, which introduced its line of Ruraltel satellite dishes in early 1999.

"People are quickly recognizing that rural telephony is a separate and distinct niche in the VSAT market, and no longer simply a trunking solution. We have addressed this sector with Ruraltel by looking at the unique application and stripping out every element of cost," says Jim Hartman, Prodelin’s vice president of sales and marketing.

Hartman indicates that while the Ruraltel antennas may not be as robust from the wind-loading standpoint, for example, as Prodelin’s more expensive, full-featured products, Ruraltel is designed for the task at hand. With a reduction in the overall metal structure as part of a redesign to handle lower weight transceivers, the unit’s cost savings range is around 25 percent, according to Hartman.

Rural telephony via satellite continues to gain momentum and the point-to-multipoint advantages of VSAT technology are quite apparent. With WLL technology widely embraced now as a key ingredient, the satellite industry is demonstrating once again that it can quickly bring the right solution at the right price to the market. And having the ability to cover the entire market with the flick of a switch is what keeps the phones ringing.

Peter J. Brown tracks the global satellite industry, focusing on primarily on Internet and multimedia applications. He lives on Mount Desert Island, ME.

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