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The Illusory ATC Opportunity Leaves MSS Lagging

By | June 16, 2003

      By Roger Rusch

      Early this year, the Federal Communications Commission (FCC) approved the use by mobile satellite service (MSS) operators of terrestrial repeaters, known as ancillary terrestrial components (ATC). The regulations implementing this decision are strictly defined to ensure that the spectrum is not converted to terrestrial-only service. MSS users are required to submit applications to demonstrate compliance with the provisions of the order.

      ATC could be a breakthrough for satellite-based personal communications in the United States. There are several potential benefits of ATC:

      • Terrestrial repeaters can be installed to improve the quality of service in urban areas where buildings can block satellite signals.
      • Since the new rules permit the terrestrial and satellite services to operate in the same frequency band, a single-band telephone can be used everywhere.
      • Cost of service might be lower since terrestrial repeaters increase frequency reuse.
      • Additional spectrum is available on a shared basis that could facilitate the transition to third-generation wireless services.
      • Terrestrial cellular companies might be willing to form strategic partnerships with MSS companies to gain access to spectrum without the cost of auctions.

      MSS operators New ICO and Celsat have been strong proponents of ATC. ICO told the FCC that its project could not be viable without it. Recently, Mobile Satellite Ventures (MSV) announced that it would use ATC for its second generation L-band system. Use of ATC is not practical for the current MSV system because the user terminals are transportable, but not handheld. Also, Inmarsat received FCC protection from ATC interference. There will be only 1,725 continental U.S. transmitters in the 1.5/1.6 GHz band, and deployments of those were delayed for 18 months.

      Celsat has designed a satellite with a large antenna that permits use of a terrestrial GSM handset with a “stub antenna.” This system should have no problem satisfying the FCC dual mode “safe harbor” requirement. No doubt there will be more ATC announcements in the future.

      ATC would be ideal if the satellite systems could use existing terrestrial facilities. However, our limited contacts within the cellular industry indicate that existing towers cannot be used. None of the satellite bands is close enough to terrestrial bands. This means that MSS operators would have to build out their own terrestrial infrastructure. There are about 60,000 cellular towers in America today, and national service for MSS operators would require about 20,000 terrestrial repeaters.

      Attracting partners from the cellular industry will be difficult. The Cellular Telecommunications & Internet Association (CTIA) has already expressed strong objections to ATC. Cellular is widespread and has ample competition. Terrestrial mobile telephone rates have fallen from 45 cents to 11 cents per minute. Limited satellite capacity drives airtime prices to about $1 per minute. Growth rates are falling and the addressable market for mobile satellite services is more limited than ever.

      The road to MSS success is not just steep; it’s like scaling a mountain. To date, all MSS operators have encountered major financial problems. Only Inmarsat operates a financially sound business and it does not offer service to handheld phones. Wall Street investors are generally not interested in MSS except as highly leveraged speculation. “Big LEO” constellations were a brutal experience and geostationary MSS is not yet a proven business success. Investors are especially wary of major investments in new MSS systems.

      Unfortunately, only Celsat may be able to benefit significantly from the FCC decision. ATC has arrived 10 years too late for most players. The mobile communications world has changed a great deal in the past decade. Hybrid satellite/cellular services have not kept up. MSS remains a marginal business even for the strongest participants and ATC is unlikely to alter the situation dramatically.

      Roger Rusch is the president of TelAstra. You can contact him at 310-373-1925 or via e-mail at

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