Rural Telecommunications: The Future Is Calling
by James Careless
Rural telecommunications: It’s not just about voice service anymore. Instead, it’s about voice and data.
You can blame this change on the Internet. The human desire to be logged on “wherever you are, whoever you are,” means that many voice-only VSAT (Very Small Aperture Terminal) sites are being rebuilt to support data, while new ones have to support both.
There is good news to this change. For satellite service operators, the worldwide demand for Internet access provides a glimmer of hope in the traditionally bleak rural telecom market.
Helping matters along is a dramatic decline in VSAT equipment prices, says David Hartshorn, secretary general of the Global VSAT Forum (GVF), the industry group that lobbies for VSAT rights with governments around the planet.
“During the past 15 years, the international satellite communications industry has been rolling out network solutions such that today, there are more than one million VSAT systems installed and operating in more than 120 countries throughout the world,” Hartshorn explains. “Practically speaking, this level of deployment means that economies of scale are now being realized….The most immediate and tangible result of this trend is lower terminal pricing” (See Figure 1).
Bandwidth costs have also dropped, Hartshorn says. “In addition, there is more satellite capacity deployed than ever before. The increased supply is leading to lower cost space segment.”
The bad news? Although equipment costs have dropped dramatically, they’re still too expensive for cash-strapped countries. As well, although the GVF has made progress in convincing the world’s governments to ease VSAT deployment–with the adoption of “blanket licensing” for certain classes of terminals, for instance, as opposed to a license being required for each individual VSAT–more deregulation is needed for rural telecom to reach its full potential.
Rural Telecom: The Traditional Model
Before the Internet came along, rural telecom was simply a synonym for “rural telephony.” In general, this meant using satellites and VSATs to provide “the first line into areas where telephony has never been before,” says Gil Shacham. He’s the product manager for Gilat’s DialAw@y IP rural telecom VSAT solution, which combines toll-quality voice with high-speed Internet.
There are good reasons these areas didn’t have wireline access. Located in the remote areas of Africa, Asia, and Central and South America, it was just too difficult to get the lines in, and there were too few subscribers available to make PTT (Postal, Telegraph and Telephone) service profitable.
Of course, places that are too remote to support whirling service are often too remote for electrical power grids as well. This explains why many rural telecom VSAT sites rely on solar panels to power the telephones and satellite terminals.
As well, remote areas are often mired in poverty. As a result, few people in these locations can afford to have their own private telephones. This is why VSAT earth stations are located in public areas: stores, libraries, clinics, or all alone in an outside phone box with a dish and solar panels attached.
Unfortunately, such sites are often targets for thieves. “We occasionally hear of villages being pillaged by bandits,” Hartshorn says. “A particularly popular target are the solar panels, which can be used to power consumer electronics and lights. As a result, some communities have taken to posting guards on their rural telecom earth stations, to ensure that they don’t disappear.”
If this wasn’t enough of a challenge, there’s the issue of price. Even with years of price reductions, earth stations still run anywhere from $1,000 to $2,000 a piece.
Taken as a whole, “it is tough to justify a business plan based purely on the rural telephony market,” observes Ramesh Ramaswamy, Hughes Network Systems’ (HNS) senior director of business development for the Middle East and Africa region. Adds Hartshorn, “The entire telecommunications industry has been talking a very good game about providing rural telecom for 15 years or more. But, until the past 24-36 months–when rural VSAT deployments began to increase–what actually had been done was precious little.”
PTTS To The Rescue
This said, a number of voice-based rural telecom systems have been installed in the Americas, Africa and Asia, mainly by Gilat (with 78.6 percent of the market, according to Comsys) and Hughes (21.4 percent). Ironically, these sites are being deployed by state-owned PTT companies.
“The PTTs aren’t doing this due to any universal service obligations (USOs),” says Ramaswamy,” at least not in the Africa region. Instead, they’re seeing a gradual growth in ‘teledensity’ in their rural territories, and are installing VSAT-based telephones to service it.”
Meanwhile, many competitive carriers who are challenging the PTTs do have USOs, but are doing their best not to implement them. Again, the reason is cost. These profit-driven companies don’t see a chance of ever making money from voice-based rural telecom alone. That’s why they’re stalling, especially now, when the global economy is in decline.
Enter The Internet
Which brings us to the Internet. Add IP data to voice, and suddenly you’ve got a winning combination for rural telecom; at least, one with a better chance of success.
“The initial growth has been driven by demand from Internet Service Providers (ISP) for broadband links to content sources,” says Hartshorn. “But other emerging IP-based satellite applications such as hybrid access, two-way access and content distribution are on the rise,” he adds, “and there are strong indications that such services will play an important role.”
As well, a look at where IP-based satellite links are shows that demand for IP-based services is strong in emerging regions.
A case in point is the Middle East and Africa: DTT Consulting’s research revealed that in 1998, these regions accounted for less than 10 percent of the world market for satellite-based ISP links–the third and fourth lowest regions in the world. Two years later, no less than 47 and 43 percent of African and Middle Eastern ISPs, respectively, were linked via satellite. Only Latin America–with 66 percent–was higher.
Gilat Satellite Networks understands these facts firsthand. That’s why this VSAT manufacturer modified its “DialAway” rural telecom product to handle IP, and rebranded it DialAw@y IP. Each terminal can support a PC/LAN connection, and up to six voice lines. Like conventional rural telecom terminals, these hybrids are installed in stores, schools, or wherever else make sense. With a PC attached, they become these communities’ literal “Windows on the world.”
Gilat is deploying a 150-site DialAw@y IP network in Russia’s Krasnoyarsk region, about 2,000 miles east of Moscow. Meanwhile, HNS is expected to deploy up to 50,000 VSATs for Australia’s Telstar, to supply voice and Internet service in the Outback.
In addition, Hughes has seen a temporary installation‚ in Angola turn into an established voice/IP VSAT network with one large gateway.
“We put the equipment in there a few months ago, to help journalists cover the eclipse,” explains Ramaswamy. “Initially, all they wanted were voice circuits. However, within two weeks the requirements changed completely. They wanted to be able to send and receive e-mails, and to access the Web as well. As a result, what started as a rural voice network soon became an ISP.”
Today, HNS’ Angola voice/IP VSAT network is still in operation, for the benefit of the residents there. “The transformation in Angola matches what we’re seeing happen in other rural telecom earth stations worldwide,” Ramaswamy says. “People started by just wanting to put in payphones; now they want full-scale Points of Presence (POPs).”
One point worth noting: Traditional rural telecom products may not be fast enough for high-speed Internet downloading, but they’re just fine for basic dial-up. For instance, Viasat’s Skylinx 6000 VSAT terminal has been modified for, and then deployed by, Australia’s Telstra, to provide rural farmers with voice and 28.8 kbps Internet access.
“Since that time, we’ve developed a new IP-based VSAT product called Arclight,” says Hendrik Stribos, Viasat’s regional manager for Africa. “It provides both voice and data transfers at up to 4.5 Mbps,” thus proving that although 28.8 kbps is okay for Internet access, 4.5 Mbps is definitely better.
Everyone Wants The Internet … Well, Almost Everyone
Taken as a whole, it’s clear that the world wants Internet access. Or most of it, anyway.
“We’ve seen this incredible explosion of demand for Internet and IP-based VSAT services,” says Hartshorn. “It could be for e-mail, or Web browsing, but the demand is there. And let’s not forget the utility of IP as an information medium. For instance, run a VSAT IP line into a clinic, and you’ve got a telemedicine site; run it into a school, and you can do distance learning.”
“Internet access is becoming a must,” adds Shacham. “We’re seeing a great demand for it in Latin America, where we have a number of rural networks. We are also seeing it in Asia, which is starting to recover from the meltdown of a few years ago and in Africa as well. In addition, Eastern European countries are also hungering for Internet access, not just Russia, but new states like Kazahkstan. The Kazaks have money and they are eager to upgrade their technology.
“We’re also seeing many countries with antiquated terrestrial infrastructures–old wireline networks and microwave/HF radio links–consider rural satellite telecom as well,” Shacham continues. “These are countries who’ve had telephone voice service for years, but whose physical plants aren’t up to the task of carrying Internet traffic efficiently.
So who doesn’t consider the Internet to be a priority? The indigenous peoples of Brazil’s Amazon River basin, replies Michael Pollack, HNS director of marketing for Latin America. “I’ve traveled the Amazon by boat, and met people there who’ve never even seen a computer, let alone the Internet,” he says. “For these people, a telephone makes sense: They can call the outside world for medicine, and get other pragmatic commodities like food and medicine that aren’t available in the jungle. But Internet access? It’s just not a priority.”
The Three Rural Markets
The Internet hasn’t only changed the rural telecom market, it’s redefined it. Specifically, where many people saw one homogenous market, there are now three.
The first is the “underserved market.” This represents people like the Eastern Europeans who know about the benefits of modern telecommunications, but can’t access it through their PTTs. “Build it and they will come” is the best way to sum up this rural telecom sector. One caveat: The product has to be priced so that these customers can afford it.
The second rural telecom market is the “developing” sector. These consumers are akin to rural inhabitants in Latin America, Asia and Africa. Their economies are growing and becoming more sophisticated, and hence they have an ever-increasing desire for advanced telecommunications. What makes them distinct from the “underserved” sector is that these customers often have had little, if any, basic telecom service available. However, they’re ready to leap into the 21st century when the right technology becomes locally available and affordable.
The third rural telecom market is the so-called “traditional” base: those in truly remote and low-tech areas, whose lives aren’t integrated with the global economy. The Amazonian natives fit into this category, as do the more primitive areas of Africa, the Middle East, and Asia.
Calling New Customers
These days, it’s not only VSATs that are bringing rural telecommunications to the world. It’s also Iridium and Globalstar. Despite their massive financial failures, the two mobile satellite companies are hot on the trail of new customers.
At face value, the rural telecom market is a natural target for Iridium and Globalstar. However, since most rural consumers can’t afford thousands of dollars for handsets and additional dollars for airtime minutes, both companies are understandably looking at fixed site opportunities as well.
“We’re helping carriers meet their USOs,” says D. D’Ambrosio, Iridium’s executive vice president of business development.
A case in point: “In Venezuela we have installed a number of public phone booths,” says Mac Jeffreys, Globalstar’s senior director of communications. “They look like and function like payphones, but they’re actually based on Globalstar satellite technology. Usually these booths have been set up for entire communities. Quite often, they’re the first telephones these people have ever seen.”
“We’ve installed fixed sites in Alaska, Senegal, Brazil, the Dominican Republic, and Australia,” adds D’Ambrosio. “In Australia, Iridium is a perfect solution for Telstra in meeting its USO in the Outback.”
Moreover, both Iridium and Globalstar are providing IP data service as well as voice. Granted, it’s pretty slow speed–Iridium offers 2.4 kbps uncompressed, while Globalstar supports 9.6 kbps uncompressed–but some Internet access is far better than nothing at all. (Compression schemes exist that can boost this throughput by a factor of four, but it doesn’t necessarily work for all kinds of data. That’s why we have quoted the uncompressed rates.)
Hope And Hurdles Ahead
So what lies ahead for rural telecom?
Well, the good news is that the global hunger for Internet access remains unabated. Whether in India or Indiana, people want to log on for e-mail, Web browsing, distance education, telemedicine, and anything else that can flow down the pipe.
As we’ve seen, this hunger is driving sales for rural telecom, and broadening its potential customer and revenue bases to boot.
More good news: When people get a taste of the Internet, they usually want more. For satellite service providers like Gilat and HNS, this means that customers who sign up for slow-speed data are prime targets for broadband sales later on. In turn, this can open up equipment sales in these markets for everything from earth stations to PCs. Hence, smart satellite executives might want to consider strategic alliances with Microsoft, Dell, IBM, and other IT-based players who will want a piece of this action.
As for the bad news? Well, even though the world is moving toward deregulation, there’s still much to be done in the VSAT area, says Hartshorn. It’s not just getting tight- fisted regimes to loosen their grip on telecom that’s the challenge, he explains. “This may sound ridiculous, but there are still many governments with very little awareness of what satellites could do for them.”
On balance though, the future looks bright for rural telecom, or at least brighter than it has for several years. Thank heaven for the Internet. It’s the boost this sector needs to keep it on an upward trajectory.
James Careless is a contributing writer to Via Satellite.