The European Commission quietly released the winners of the Mobile Satellite Services bids this week, with the winners being the two companies which the Commission thought would be most likely to do a good job, and deploy services in time. Naturally the two licenses went to Europe’s best know satellite agencies Inmarsat and a combination of Eutelsat and SES Astra trading under the brand Solaris.
Not much has been written about this decision and there’s a reason for that. It is a bit early for either camp to go and celebrate, because there’s so much more to be done. Satellite ventures are like that, they cost a lot, cover a wide area, they have to offer multiple services, to take in as many revenue points as possible ‘ so they end up providing framework services and getting a big eco-system to take them to market ‘ at least that’s what usually happens. It’s enough that you have competently designed and put in orbit $100 million of hardware, why should you also take all the risks on service delivery and route to market as well. Your partners should do that.
In the US the satellite radio companies have provided something of a model of how a single satellite service operator might work, but given the current valuation of Sirius on the US stock market, that may not provide sufficient of a role model to make them want to provide every step in the chain of broadcasting to mobile devices from a satellite.
The technology is established, as is its popularity, but perhaps not the business model. All satellite services require a long term view and DTH, direct to home satellite TV, was long thought of as an impossibly large investment before the likes of BSkyB, Premiere, EchoStar and DirecTV pioneered it to the money trough that it is today. Actually most of the original breakthroughs were in the Far East, but they have translated to the West admirably.
So what’s the difference between the two DTHs – Direct to home and Direct to handset? Well the first issue is that Mobile Services are NOT limited to broadcasting to a handset. While we are fairly sure the licenses are not supposed to be used for full HD and SD video broadcasting, mostly because they don’t have enough bandwidth for that (there is a total of 30 MHz shared between the two operators), they might just as easily target a car or a fixed receiver on the ground like a home radio.
And secondly it must be understood that not only do advancements in large unfurlable antennas (the W2A satellite which Solaris launched in April this year has a 39 feet antenna) mean that less power is required to reach the 22,000 miles back to earth, but also that a return signal can be created, from a battery powered handset all the way to the satellite.
So what we have is a switch in the sky that can do two things very well, it can ‘listen’ to incoming signals from devices on the ground and it can broadcast to multiple devices at once or in the odd instance to a single device. This means that a number of services are possible, but the one that keeps coming up in EU announcements are mobile TV and satellite radio ‘ because they are broadcast in nature and potentially they may bring the highest revenues.
But it is important not to place too much emphasis on these for the satellite operators, in case they cannot attract companies into the eco-system and fail to make this part of the revenue equation add up. So there have to be other revenues streams, and potentially some of those envisaged will fail completely. Regardless, the satellite operator can succeed as long as it has multiple partners and multiple streams of revenue.
So following on from the lengthy initial debate in the US about S-Band (which by the way is in the low 2 GHz spectrum, compared to purely line of sight satellite spectrum for TV delivery which is in 12.5 GHz), there are a number of other services possible.
There are other broadcasts such as anything with a one way service delivery, like a Kindle class service, or software updates to portable devices such as handheld games consoles or even efficient software downloads for handsets. The obvious candidate for all of those is through the broadcast services within a cellular network. The cellular chips are cheaper, the networks are already there. But where those business relationship are not in place, Mobile Satellite Services may be cheaper and in a short space of time, receivers and antennas may become as cheap for S-Band as for cellular.
It might be used to alleviate pressure on cellular backhaul for cellular multicast services. So where a cellular operator wants to offer Mobile TV, but doesn’t want to use up all his backhaul getting the TV signal to rural base stations (which have very low backhaul) the satellite can deliver it to many bases stations all at once.
Or it can delivery in-vehicle advertising, or act as a broadcast update for digital signage. The satellite return path can also be used to gather data about fragile devices and their condition. A car, for instance, could report on its own condition, report if it had been in an accident, or the car or other static receptors might report back on the condition of surrounding traffic or weather or pollution levels or pollen counts, or anything.
Another thing that mobile TV services have been used for in other countries, notably Korea, is to deliver real time updates to GPS services. For instance in the event of an accident or a snarl up, it might re-calibrate GPS routing so that cars can bypass these obstacles ‘ all in real time. There is even an idea that the satellite could somehow manage road toll collection using GPS tracking and reporting, though we thing there are easier ways to make this work.
Similarly broadcast warnings such as shipping warnings or severe and sudden weather fronts, could be broadcast as data from the satellite.
Another great service will be locating just about anything that can power a satellite antenna and chip. Remember you won’t need an external antenna to reach the satellite because it’s so sensitive. At worst a tiny one inch ‘snub’ antenna might be needed. So you could track cars, children, trucks, cargo, pets, weather balloons, airplanes and just about anything worthwhile by the simple expedient of them having a GPS device and transmitting the co-ordinates back to the satellite and on to your receiver.
There are more obvious uses such as providing encrypted two way communication for things like rural rescue ‘ think mountaineers on the alps which usually use the awful, but powerful, short wave radios which can be so unreliable and noisy. The same applies to rescues in extremely bad weather or the European equivalent of homeland security applications, for instance communication in the event of a natural disaster when terrestrial networks are down.
In effect the satellite acts like one big base station in the sky. The strategy is not to use it all up in two way messages, but to grab hold of high value two way communication, which cannot go through other formats. So when the European Commission statement talked about web pages being delivered to a moving car, that would be a very inefficient use of what amounts to about 1 large base station’s worth of return path.
That’s probably (our guess) just a few 1,000 concurrent communications at once, across all of Europe’s 500 million people. It might allow car occupants access to say SMS or to a hotel booking system, but to give it unfettered access to the internet would mean it would have to charge an awful lot. Our guess is that except for emergencies, return paths will be confined to service requests ‘ for large amounts of data which can then be delivered from the bulk sending power of the satellite.
The tendency is to think that cellular can do ALL of these things better than satellite, but the truth is that the cellular network has a job to do and it has a huge economic cost to put a cellular network across a single country. For satellite, after the $100 million worth of satellite has been put in place by $100 million of space craft and planning and personnel, there are few operational costs that remain, in the region of let’s say $10 or $20 million a year. Across 27 European countries, it might perhaps need a $ 1 or 2 million from each country per year to make its existence worthwhile, and in the early stages of delivery perhaps the first set of services might need $10 million a year across the first country. You can argue about the exact numbers but the order of magnitude is right ‘ it is way less costly than a cellular network, but of course it has a lot less capacity ‘ but there are certainly use cases where it will outperform and cost less than a cellular network in either one way or two way service delivery.
Another aspect is what the US MSS players call the Ancillary Terrestrial Component (ATC). This is the fact that after a long period of pressure from intending suppliers, the US FCC regulator agreed to allow the same spectrum to be used from terrestrial repeaters, to ensure in-building penetration.
One implementation from Alcatel proposes a clever ruse to make the 15 MHz produce wider variation in TV signals. In territory 1 it would use just 5 MHz of spectrum to send TV from a satellite, but it would augment this with 10 MHz of spectrum that is never sent from the satellite into that territory ‘ consequently territory 1 gets the full 15 MHz of spectrum use. However in territory 2, using a directional beam from the satellite, it would move the various spectrum chunks around. It would send a different 5 MHz from the satellite and a different 10 MHz from the ground, and so on through territory 3. The idea is that all 15 MHz of spectrum is used from the satellite (legitimizing it) but each territory gets its own 15 MHz of content, effectively tripling the bandwidth.
This is the basis for DVB-SH, and depending upon modulation scheme it could arrange for 15 mobile TV channels to be sent to the UK, another 15 to be shared across France, Spain and Portugal and 15 more to be set up in Germany, Austria and Switzerland. In fact playing with the terrestrial component, it could vary a number of those channels for each country additionally.
The problem is that Mobile TV has become a dirty word in Europe, with everyone terrified of launching because they are worried about agreeing on the wrong business model. It’s a case of mobile TV not working in Europe, because they haven’t tried it.
The Alcatel system, the only satellite based generic system from an equipment supplier (the other two are S-DMB in Korea, a one off, and China’s regulator sponsored CMMB), is almost certainly going to be used on both the new European MSS licenses for video and audio delivery and potentially for all forms of broadcast data. Alcatel already has a agreement in place with Solaris and the Alcatel model is one that will support paid mobile TV services, free to air advertising supported services and hybrids between the two. But someone has to invest in networks which are very similar (if slightly cheaper) than DVB-H mobile TV systems, and then get phones produced which have DVB-SH chips in them, which currently only made by DiBcom in France. Alcatel has pointed out that the spectrum makes it suitable to use cellular base station sites, which means that a cellular operator is the natural partner for DVB-SH’s terrestrial component.
Our guess is that these MSS satellites will have to prove their value entirely from a satellite, and then, when either ARPU or advertising is clear cut, someone will invest in a terrestrial network to give it the strong in-building penetration that mobile TV networks are known to need.
Meanwhile ICO Global Communications a company entirely controlled by Craig McCaw, which operates an MSS license in the US, says it plans to challenge the issue of the two licenses, saying that due to its innovation in creating this market and the fact that it already has a satellite in the air, like Solaris, it should have been given one of the licenses.
ICO initiated legal proceedings last September in the European Court of First Instance trying to get the process stopped, but bid anyway. There is a bit of a suspicion that the two European incumbents were pre-selected and that the selection process was a bit of a rubber stamp process. How come the criteria for selection always suit European companies? Things like financial viability tests were thrown in this time, cynics might say, to ensure that Solaris and Inmarsat came out top of the list.
‘ICO has spent years clearing the S-band worldwide, has an operational satellite using this frequency band and is registered in the International Telecommunications Union (ITU) Master International Frequency Register (MIFR). We believe the just-concluded EU process jeopardizes years of international cooperation and coordination that has governed satellite communications worldwide,’ said Michael Corkery, acting chief executive officer of ICO. ‘ICO will continue assessing its options in defending its international legal rights.’
What usually happens in these disputes is that one of the lucky winners works out a deal with the complaining party to use its satellite in some way, and the objection goes away and that may well happen here.
But even if this obstacle was not raised, there would still be other issues. In order to meet the build out guidelines each one of the 27 European countries now have to separately offer licenses to the two chosen Pan-European operators. Some of these may require payments for licenses (the European Commission could not give the spectrum away), or at least a government revenue share of some description and these all have to be agreed ahead of the first services which, are meant to be triggered before the end of the year.
So while Europe may appear to be on the verge of its first satellite radio services and pan-European mobile TV broadcasts, it’s hard to go ahead and build the route to market apparatus and equipment eco-system, when regulator and local government greed may still get in the way.