High Hopes

The inexorable rise of GSM mobile services and local carriers’ gravitation towards fibre networks for capacity has led many to view satellite operators’ future in the telecoms market as being confined to the periphery.

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By  Richard Agnew Published  June 3, 2003

Introduction|~||~||~|The inexorable rise of GSM mobile services and local carriers’ gravitation towards fibre networks for capacity has led many to view satellite operators’ future in the telecoms market as being confined to the periphery.

But far from backing off, satellite providers are welcoming the challenge.

For example, Intelsat, the global satellite operator, has just opened a customer service centre in Dubai Internet City (DIC) and is planning to establish a teleport facility in the region to serve its business customers with telecoms and broadcast services.

“We [currently] have teleports in Europe, Asia and on both the East and West coasts of the US, [and] now we’re thinking of building [one] in the Middle East as well,” says Samir Dajani, Intelsat, regional vice president, Middle East sales. He adds that the company is currently considering offers of space from various countries in the region.

Announced in April, Intelsat’s customer service centre, Dajani claims, will also allow the operator to become more ‘in-step’ with its Middle Eastern customers. Previously, the operator’s customer support, and sales and marketing in the region has been provided from the US and UK.

“Being in real-time with the customer and understanding [its] needs is very important,” he says. “When I start [work in] my office here [in the US], there is sometimes seven, eight or nine hours time difference [and] the customer is already at home. [The office] has been in operation a few months and [has helped] us get leads. We’re trying to increase the staff there,” he adds.

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Intelsat will use the DIC office (Dajani says) to build its customer base in the VSAT (very small aperture terminal) sector, pointing to upcoming licences that are expected to be awarded this year in countries including Tunisia and Saudi Arabia as a potential source of growth in the region.

Despite carriers’ growing preference for fibre networks for point-to-point links — Jordan Telecom, for instance, this month struck a deal with Etisalat division, Emirates Internet Exchange for capacity — the operator is also bullish about its prospects in the bandwidth market as a provider of support in cases of outages.

“We recognise that the price is lower for fibre but our strategy is to offer back-up,” Dajani says. “If you imagine traffic moving through cables from one country to another, it’s not easy to isolate the problem and rectify it quickly. Now our approach is to offer alternative routing,” he adds.

On the mobile side, operators such as Thuraya and Inmarsat are also ramping up their own bids for growth. Thuraya plans to launch its second geo-stationary satellite on June 10th, which the satellite voice provider claims will increase its capacity, and allow it to handle up to another 14,000 phone calls simultaneously.

Inmarsat, meanwhile, has been looking beyond voice. The provider is predicting that that the total market for mobile satellite services in the Middle East will grow to US$571million by 2006, and that 90% of those revenues will come from data services.

As a result, it has invested much in raising data usage by its customers through its Regional BGAN (broadband global area network) service, which offers data transfer speeds of up to 144Kbit/s.
Although the company says it has only sold around 2,000 units since December, Samer Halawi, Inmarsat’s regional director, claims that take-up in the Middle East has been comparatively strong.

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“The [Regional BGAN] footprint is the Middle East, Europe, North and Central Africa plus the Indian sub continent, as well as the US. Most of the terminal usage has been in the Middle East because Europe is covered very well by terrestrial infrastructure,” he adds.

The service will also provide a precursor for the launch of Inmarsat’s full, 432Kbit/s BGAN system — originally pencilled in for next year but now to take place in 2005.

The provider is, in the meantime, strengthening its distribution network in preparation for the launch. While its arrangement to lease capacity with Thuraya will end when the new service comes online, Inmarsat has also forged new partnerships with service providers to
expand its area of focus.

“We have wanted to look at distributors who are either geographically or sector-wise exposed to new markets,” Halawi says. As a result, three companies operating in Egypt, the Lebanon and Nigeria have come on board.

The search for new markets will focus particularly in areas out of the reach of terrestrial infrastructure. For example, Iraq, where traditional telecoms networks are limited, has caught the avid attention of both satellite operators and service providers since the conflict broke out.

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Inmarsat, for example, reported a US$9million windfall profit from the surge in traffic during the war, after tilting one of its satellite to provide its regional BGAN services to journalists covering the conflict. And although contracts are being prepared for the construction of GSM networks in the country, Halawi says there will continue to be opportuntities for the operator there, albeit in less populous areas.

“Although the opportunity will lessen as the terrestrial infrastructure grows, it’s still a way off before that happens,” Halawi argues. “Whatever is going to be built is going to be built in different stages, starting with the capital and moving to [other] urban areas, and if it does reach the rural and remote areas it will be a long time from now,” he adds.

The maritime sector is also a growing area of focus. Last year, Inmarsat launched its Fleet F77 and Swift S64 services for shipping companies and has followed those up recently with smaller and cheaper versions, the Fleet F55 and Fleet F33.

Inmarsat is aiming the products at operators of smaller vessels, that have had limited access to satellite services because of the size and cost of terminal hardware.

Inmarsat hopes to reap ongoing revenues from a range of fax and data services, including e-mail, and plans to expand the F33 service next year to include mobile packet data to enable crew to send short bursts of data at lower cost.

Meanwhile, although many terrestrial mobile operators are expanding their own data-centric business models with the rollout of GPRS networks, Halawi remains unflustered.

“Of course, the more [mobile] networks that become available, the smaller the area that we have to work with. [But] it doesn’t bother us as we position ourselves to be complementary to terrestrial infrastucture, and there are enough markets out there,” Halawi adds.
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