Travel Technology - new TerreStar satellite phone service launch -- yet another $300M down the drain?

I noticed that satellite phone technology is not much discussed here, but this news item caught my attention and I'd be interested to see if anyone else here has opinions on it --

TerreStar, a new satellite company, has just launched a huge (largest EVER!) geosynchronous satellite with the aim of the main product being a reasonably sized handset that has both AT&T service and satellite coverage. (the more powerful satellite xmit/receive capability allows handset reduction)

see here:
http://www.pcworld.com/article/167745/hybrid_satellitecell_pocket_phone_may_arrive_this_ year.html
http://online.wsj.com/article/BT-CO-20090701-712744.html
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/30/AR2009063003949.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter


My question is, given the inevitable bankruptcy filing (past history: Iridium, Globalstar), what were they thinking? How would you justify this venture?

I personally don't think a viable market of people choose/will buy their phones based on availability of satellite backup, especially if the price might change in the middle of a call when you switch over to satellite if ground cell coverage is lost. (and related to this, what will their sat call pricing be?)

And for agencies that do regularly use satellite phones for primary communication occasionally/regularly, I can see them being happy with a dedicated non-integrated satellite phone like Globalstar or Iridium that is now relatively well-established.

Plus this satellite will only cover North America, isn't that right?

I doubt that it will be the boon to rural internet access they claim also, but I have less experience with this.

interested in your take on it...

The big difference is scale - Iridium and Globalstar both went near global - that requires a lot of birds (Iridium needed 66, Globalstar 52)

If TerreStar can keep the costs for access down, they may be able to offer the first true nationwide coverage. Even the largest network in the US can't cover 100% of the country.

Bottom line - if they can get the hardware price down and keep the per minute cost under 50 cents, they will have a chance of survival.

Another selling point for them is availability. Remember Katrina? Without backup towers and mobile equipment, mobile operators can be down for weeks. I think they'll be able to sell a ton of these phones to emergency services.

Remember that Iridium launched with $2900 phones and a I think I was paying $6/minute when I got my first Iridium terminal. They were doomed from the start, and even though they mastered the art of cheap satellites, it's getting the damn things in orbit that will really cost you.

That said - I really did love the Iridium pager, that thing worked almost anywhere.

Another selling point for them is availability. Remember Katrina? Without backup towers and mobile equipment, mobile operators can be down for weeks. I think they'll be able to sell a ton of these phones to emergency services.
Emergency workers have radios and in flat coastal areas like New Orleans they go a long way and are much cheaper. As for the individual victims a Spot Messenger would get the general message across at a much lower cost while probably being a lot more durable.

maybe if they could manage to squeeze the antenna into an IPhone and make it work alongside the AT&T service, they would really be onto something....

With regards to this new service good luck to them, I hope that they are able to succeed. I thought Iridium was popular with the US Gov especially DoD, I thought I read something about that recently.

Even when you have the towers still in place, during a major disaster mobile/cell phone networks can become overloaded very quickly. One way to prevent that is to shut the network off to ordinary users (ACCOLC) and only those with the correct authorized sim card can make and receive calls. Soon MTPAS will overtake this and authorized users will get priority on their calls and more bandwidth, which should allow better use of the system.

This is a GSM thing I think, and landline users can also be cut out or the use of call gapping can also be implemented or in the UK the Government Telephone Preference Scheme.

Yes, Terrestar 1 had a successful launch on Wednesday. It is NOT designed to cover everywhere, this will only cover North America. They will be launching another satellite for more coverage, but I forget the ETA on that, but the bird is being built now.

I believe there are US Government contracts in place.

As a stockholder of TSTR, I agree the 99-cent price is not consumer-friendly. Frankly, I think this company is going to be ripe for takeover from either AT&T or Verizon for 4G.

How much will minutes be when you are on the ATT network (and does that include all ATT partner networks)? If the device is a cell phone first at competitive rates, it might succeed. If I worked on the oil rigs off Mississippi, the rates sound cheaper than what Petrocell charges. Can I rent a phone and just pop an ATT SIM in it and get satellite service? It would certainly be cheaper than roaming in Cuba.

When I lived in Dubai, we had satelite coverage from Thuraya. Our Etisilat SIM would just pop into a Thuraya phone and you had coverage anywhere from Tanazania to Singapore for 45 cents a minute apx. You could rent the phones for about $25 a week or $10 a day from a number of outlets if you didn't want to buy one.

While Globalstar crashed, Thuraya is still doing well.

They were very popular on desert outings, etc. Ironically, very few people used them as a roaming alternative.

Here's a related article:
http://cedmagazine.com/Article-Capital-Currents-050109.aspx

I'm thinking this one has a chance, provided they can keep the price of the phone at a reasonable level and keep the per minute charge reasonable. Reasonable is of course in the eye of the beholder, but $3,000 for an Iridium kept a lot of people on the sidelines.

With the demise of analog there are more areas than you think that are out of cellular coverage right here in the USA. There are places on interstates that don't have GSM or CDMA. As Dubai Stu pointed out, even a buck a minute is cheaper than roaming in Cuba. Heck, you can pay a buck a minute to roam in Canada.

Style is going to play a huge factor. If you could build this into an iPhone, or a Blackberry but give you the option to turn off the data when you are on satellite roam, or if the data costs aren't terrible you have a real winner.

I'm thinking if they could make in addition to phones a device that would envelope your iPhone, Blackberry like a docking station that has the antenna and communication for the sat you might have a ton of users. This would also take att out of the equasion because you could only turn the device on when you were out of cellular coverage.

Or make a device that would bluetooth to any phone that you could put by a window and make a satellite call. I would think something like this would attract a lot of interest especially if they had a pay as you go option, or a low monthly useage plan. Let the device have it's own phone number, you could forward your calls to it when you are out of coverage area, or use a phone number that will ring to both numbers.

This has some serious potential, especially if they can keep the size of the device small, as I think this is a bigger issue than the per minute cost.

Emergency workers have radios and in flat coastal areas like New Orleans they go a long way and are much cheaper.

Except that during Katrina, the police and fire radio repeater stations went offline, and first responders had NO radio communication: no landline, no cellular, no pagers, and no police/fire radios. Maybe not on every cops' belt, but there is most definitely a market for a mode of communication that works without regard to any local fixed infrastructure.

Part of Iridium's problem was that especially early on, their distribution network seemed almost entirely focused on the fleet or large corporate market. If you were a small business or individual, it was like pulling teeth to get any information out of them whatever, let alone sign up for service. It was like trying to buy a single computer from IBM in the 1980's - they just didn't seem set up to deal with customers on that basis. It's as if they were actively fighting to make it as difficult as possible to get service.

Except that during Katrina, the police and fire radio repeater stations went offline, and first responders had NO radio communication: no landline, no cellular, no pagers, and no police/fire radios. Maybe not on every cops' belt, but there is most definitely a market for a mode of communication that works without regard to any local fixed infrastructure.

Tetra (http://en.wikipedia.org/wiki/Terrestrial_Trunked_Radio)?

i think they're toast. geosynchronus is great and avoids the cost of maintaining a huge constellation of birds ala iridium, but latency is very high given how far up the satellite needs to be.

so they're basically stuck with (poor quality) voice and data to areas that have no other alternatives, period. think oil rigs, emergency backup, etc. there's not enough money in that space. it takes a few years to market and get scale and by the time they get critical mass the satellite doesn't have that much life left in it.

terrestar wanted to supplement the satellite with a terrestrial network (like cell phones) operating on the same spectrum. they'd then sell phones that have can work with both the satellite and terrestrial network.

if they take that route, the more they do to minimize the satellite component of the service, the more money they will make as the spectrum was v cheap for them. this is just an arbitrage of spectrum values then.

you minimize the satellite component because nobody wants a normal but bulky cell phone that burns batteries talking to outer space.

anyway, i'm skeptical this works

Hughes already makes hybrid satellite phones that default to GSM when available, so that isn't a totally new idea. Although they look like something out of Miami Vice, all you need is a pastel suit, suitcase of coke and a Tec-9 to complete the scene.

Neither is the same-spectrum terrestrial/satellite network, Sirius and XM both do that with a network of repeaters in areas with line-of-sight issues.

This is something we are theoretically interested in as a company - we are already using fixed dish satellite data on a limited basis. But nobody can make it cost-effective for the volume in which we would use satellite handsets. I can only think of a handful of users who really need them. A more end-user, retail centric operation can only be positive.

Whatever they are, I will bet Charlie Ergen owns them inside of 5 years.

601 - i'm with you. the technology works but there isn't sufficient demand. by the time they figure it out if they do you'll have an aging bird that needs to be replaced.

i'm surprised that echostar doesn't own one of these operators already. but they've been able to fund themselves so i guess the game is to wait for them to go under