by Theresa Foley

Before year’s end, several satellite service providers will be carrying one Gbps worth of Internet traffic each as the demand for satellite delivery of Internet services continues. These operators were only transporting a fraction of that usage at the start of the year.

A Gbps is equal to about 649 T1 circuits, which is a standard unit of measurement for terrestrial capacity. In satellite terms, about 23 T1 circuits fit on a 36 MHz transponder, so a Gbps of Internet traffic would take up just under 30 transponders.

ATC Teleports is watching Internet services transform its customer base from 90 percent video and 10 percent voice and data to a 60/40 mix, which soon will turn to 50/50. With the acquisition of earth station operator ICG by year’s end, the Alexandria, VA-based ATC says it will be the largest teleport operator in the United States, with 130 antennas for international and domestic operations.

ATC’s Internet-related customers are some of the biggest names in telecoms. Global One, the joint venture of Deutsche Telekom, France Telecom and Sprint, uses one transponder on Columbia Communications’ 515 satellite at 37.7 degrees W to provide ISPs and PTTs with Internet services in Latin America, connecting through ATC facilities. AGIS (Apex Global Internet Services), a "tier one" ISP, uses ATC to access satellites that, along with fiber, make up its international network for Internet access and other services. UUNet, Vario and Detesat are other high-profile Internet companies sending their Internet traffic through ATC.

ATC’s strategy is to provide Internet customers with end-to-end connections so the company is not just a teleport. In July, ATC contracted with New Skies for several chunks of C- and Ku-band capacity totaling about one transponder to run Internet backbone access for customers in the Middle East and Europe. "Internet customers really want a turnkey solution. [Non-U.S.] customers don’t usually have a rep here; they want you to do it all for them," says Kay Sears, ATC vice president for Internet, voice and data services.

Sears is concerned that the growing Internet demand will completely overtake transponder supply in 2000, at least temporarily. She says the going price this fall for bandwidth in both ocean regions was about $6,000-$7,000 per MHz per month for C-band and $7,000-$8,000 for Ku-band.

Teleglobe Communications Corp., the Internet support provider arm of the large Canada-based international carrier, saw its Internet services over satellite reach the 1 Gbps level in September, from a 200 Mbps level in June 1999. In September it decided to dedicate three antennas to Internet services of the 40 it operates at three locations for its global telecom networking services.

Teleglobe, which claims to be the largest provider of satellite-based Internet connectivity, says new customers are coming almost exclusively-95 percent-for Internet traffic. Two of the three antennas are aimed at Intelsat satellites, connecting into Latin American and the Middle East; the third will connect to Eutelsat satellites.

Teleglobe says its Internet-related revenues have grown more than 120 percent in the last year and its Internet customer base has doubled. The Internet is a driver behind Teleglobe’s decision in May to invest $5 billion in a global network, called Globesystem, over which Internet, voice, data and video services will be integrated. The network consists mainly of fiber paths, but satellites will be used in many places to extend the service.

Bob Bernstein, assistant vice president for Internet products and management of access services at Teleglobe, says countries that have no cable landing point will access Globesystem through satellite. How will satellite and fiber be mixed in the broadband networks of tomorrow? "That’s the one crystal ball I wish I had," says Bernstein. "There are still a large number of countries where satellite is the only viable means. As deregulation occurs, ISPs will be looking to achieve their own transport capability; they may use rooftop dishes to establish that, instead of going to the PTT’s fiber."

Although fiber is cheaper where available, the choice between fiber and satellite will be made on a case-by-case basis for each customer. "We’ve done creative things with hybrid solutions. A lot of players will want satellite in their portfolios as extra bandwidth because demand is growing so much," Bernstein says.

This year’s growth has come even before high bandwidth Internet services, such as streaming video, have come into wide use, which is expected shortly.

"There’s an $8-$10 billion market opportunity to blend Internet and video over the next 10 years, serving satellite, cable and TV stations," says Clint Chao, Skystream vice president of marketing. Skystream, a three-year-old company located in Silicon Valley, began shipping product a year ago. It has raised $25 million in private capital to date, built an installed base of 40 customers and has 60 employees. The company’s first product is a media router with software that allows IP data to be injected into a video stream, called Null Packet Optimization. The router will help alleviate Web browsing trouble during Webcasting events like the music festival at Woodstock last summer. Due to the popularity of the event, many users could not get access or had poor quality video and audio.

Skystream is launching another product called Jetstream, which will broadcast channels as Internet content, allowing, for example, CNN to be carried on a Web page. Jetstream is available due to Skystream’s acquisition of Varuna Software.

Theresa Foley is Via Satellite’s Senior Contributing Editor.