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COMMON GROUND: The Promise And The Peril Of Data

By | November 10, 2000

      by Clayton Mowry

      If you’ve paid any attention to telecommunications industry trends over the past few years, you already know that data will be a big part of satellites’ future. While growth in switched voice traffic over telecommunications networks continues to see modest annual growth, the delivery of data is skyrocketing–no pun intended. Satellites are no exception. Traditional fixed satellite services (FSS) providers have seen revenue from IP data delivered over their systems grow by a phenomenal 800 percent in the last two years. They are linking Internet Service Providers (ISPs) and corporate Intranets around the world through a simple, one-hop service to the fiber optic Internet backbone.

      The market breaks down into two main groups–businesses and consumers. On the business side, we’re seeing plans from new companies like Cidera, Ibeam, Tachyon, and Idirect. They want to deliver media rich Internet content. The main multicasting models they employ utilize caching, active push and streaming technology to get the ones and zeros to the edge of the Internet fast and efficiently.

      Other players targeting the business data market will employ cutting edge technology. For instance, a sizeable chunk of Hughes Space and Communications,–renamed Boeing Satellite Systems–$6 billion, 40+ satellite backlog is committed to next generation Ka-band and digital signal processing satellites utilizing spotbeam technology and inter- satellite links. Operators including Spaceway and Telesat will leverage the new bandwidth to serve large and small business customers.

      On the consumer side, companies like Wildblue, Starband, DirecPC and Skybridge are using satellites’ ability to solve the low-cost, last-mile conundrum posed by the Internet. They know that even with the dramatic buildout of fiber optic networks, the broadband fairy godmother will never visit millions of homes and SOHOs to connect the glass cable into computers and televisions. For those captive markets, a small satellite dish solution will be the only option.

      Let’s not forget Mobile Satellite Services. New ICO, led by Craig McCaw, recently announced a $750 million contract with Hughes/Boeing for three new satellites and modifications to 11 existing birds so they can provide data services to mobile users.

      Of course, this broadband tale wouldn’t be complete if the evil forces of regulation, taxation and government gridlock didn’t make a showing. Heck, that’s what I get paid for– to fight those bureaucratic dragons.

      First, satellite broadband needs to pay attention to elected officials’ calls to span the rural-urban digital divide through costly tax plans. In the United States, federal, state and local officials have long relied on the Universal Service Fund (USF)–a tax on basic voice service–to bring service to rural and low-income areas where it would not otherwise be profitable to provide telecommunications services. These are rural places in wide-open spaces that will never see DSL, cable modems, or LMDS/MMDS services.

      We need to ensure that the inevitable push by those wired, cabled and towered companies to subsidize their deployment does not disadvantage satellites. We’re going to serve those rural markets anyway. New legislation and regulations aimed at old USF-type plans won’t help satellites without dramatic changes in the way those funds are administered by state public utility commissions.

      In a similar context to the landmark World Trade Organization Agreement on basic telecommunications that took a “technology neutral” approach to prying open markets for a variety of communications services, incentives for broadband deployment should not favor the build out of wired technologies over satellites or other wireless solutions. Tax breaks are one such option that can allow either companies or consumers to deduct the cost of equipment (satellite and ground) or the service from their taxes. A bill in the U.S. Congress already co-sponsored by 46 out 100 Senators may do just that this year.

      Whether to allow “open access” to satellite broadband services is another major regulatory question. Merger partners AOL and Time Warner (TW) have pledged to open up their digital cable networks to other ISPs. However, AOL/TW has asked the U.S. government to refrain from passing new laws or enacting regulations to keep their lines open to outside competitors. Satellite broadband companies who will offer another big pipe for high-speed Internet delivery will need to address this same issue and soon.

      Let us also not forget many of the other issues on the ground. Zoning covenants, local taxes, and rights to access wiring in office and apartment buildings will be part of the upcoming fight. Other issues are now emerging because new satellite broadband systems are two-way. The two-way dishes will radiate power and must be treated differently by businesses and consumers that need to put them out of harm’s (and head’s) way. Similarly, self-imposed government tax moratoriums for the delivery of Internet services may be short lived. As technologies converge, the companies offering competing telecommunications services and paying sales taxes or access charges are sure to cry fowl–and who can blame them.

      Our counterparts in the DBS sector have already fought and won many of these same battles to enable the growth of television receive-only equipment. By the same token, the VSAT players have opened many regulatory doors to allow service to the business world. But to achieve widespread or, dare I say, ubiquitous use of two-way satellite broadband, we’ll need to do some heavy lifting in Washington, Brussels, Geneva and just about every other capital around the world. The fight has just begun.

      Clayton Mowry is the executive director of the Satellite Industry Association. His email is

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