Back in the days of World War II, it was pretty much unheard of for a U.S. soldier to phone home. The Korean War wasn’t much different, and Vietnam was only marginally better – at outrageous per-minute rates. Even in Gulf War One it wasn’t much better, nor was it at the start of Gulf War Two.

Enter an almost unknown Herndon, Va.-based start-up named Segovia – which in the space of 36 months has gone from launch to being the largest provider of non-tactical Internet protocol (IP) communications for U.S. forces in Iraq. In part by luck and in part because of the rapid growth of voice over IP (VoIP) technology, soldiers in Iraq these days can phone home for 4 cents per minute from any of 3,560 terminals and 1,424 VoIP phones Segovia has installed in 178 Internet cafes scattered around Iraq under a contract with the U.S. Army.

“We have, in less than 36 months, quietly built this global IP satellite network,” Segovia President and CEO Mike Wheeler told Broadband Business Forecast, a sister publication of Satellite News.

Change In Plans

When Segovia was launched in late 2002, the company was not thinking about delivering VoIP, nor did it think of itself as a military contractor, Wheeler said. “On day one, we were focused on supplying Internet and IP services to emerging markets, including Africa, the Middle East and Eastern Europe, he said.

That didn’t last long. “As we started to understand those markets, we had the opportunity to become involved in a couple of R&D projects with the U.S. Army,” Wheeler said. Almost overnight, the company found itself with the U.S. Army Corps of Engineers as its first customer. That was quickly followed by an order from the Army’s Space and Missile Defense Command.

“As we got to learn more about those customers, we came to the conclusion that there was a heck of an opportunity to provide broadband communications via an integrated satellite and terrestrial network to the U.S. government – specifically to the U.S. Army,” Wheeler said.

Morale Booster

By the summer of 2003, Segovia was working with the combined joint task force in Iraq. The goal, Wheeler said, was to set up about 150 locations served by satellite “where they wanted to provide Internet access to the troops in support of morale and welfare.”

There had already been some Internet cafes set up in Iraq, served by fiber, in major population centers, but there was no way to protect the infrastructure. The result: “The electronics were stolen,” Wheeler says.

Segovia’s solution to this problem was to set up a network that did not depend on a land-based network. The company leases commercial satellite space and uses teleports on both coasts of the United States as well as in Europe to create an integrated satellite/terrestrial IP network. The ground stations are based on commercial off-the-shelf very small aperture satellite terminals. The system is connected to a center where the Segovia IP network can tie into public and private networks.

“Almost as an afterthought, [the U.S. military] said, ‘We really want to figure out a way to get voice services to those guys,'” Wheeler said. Fortunately, Segovia’s system was designed to allow voice services “to have the highest priority,” he said. Segovia also set up an e-commerce site that allows soldiers to buy a phone card in order to use the VoIP features of Segovia’s network.

Operational System

Segovia equipping each of the cafes with 20 workstations, mainly laptops, and eight VoIP phones. Each site can receive 2 megabits per second of data, and Segovia uses a compression algorithm that provides more than 19 kilobits per second of bandwidth outbound. Since late 2003, Segovia has deployed 178 of those cafes and signed up more than 190,000 accounts.

When Segovia first launched the service, it had been charging 4.7 cents a minute but dropped the standard price to 4 cents a minute when its contract was renewed. “Before we were there, these guys were paying anywhere from $1.50 to a couple of bucks a minutes,” Wheeler said.

On Mother’s Day weekend in the United States, May 7 and 8, soldiers made more than 100,000 VoIP phone calls totaling more than 1 million minutes. The call volume represented about a 45 percent increase compared to the amount of calls made during a typical weekend. For Father’s Day weekend, June 18 and 19, Segovia dropped its per-minute rate to 3 cents and handled more than 1 million minutes in calls.

Wheeler would not say why Segovia cut its rate, but did admit that “dozens” of potential competitors are eying Segovia’s business and some competing Internet cafes have been set up in Iraq.

Beyond Voice Services

Beyond Iraq, Segovia is looking at IP Centrex. The company is putting together a global IP network that will be able to support “every combat logistics service and support team in the U.S. Army,” anywhere in the world, Wheeler said. The network a mission-oriented application that the government will own and Segovia will operate.

“Because it is an integrated global network,” each VoIP system can retain its IP address, no matter where on the network it is plugged in geographically, Wheeler said. Thus, when a unit moves from one location to another, it takes with it all of its phone numbers, internal extensions and other Centrex-type

Segovia services, including voice mail.

The network accommodates encryption devices and takes with it “all the security that is tied to that known good IP address,” Wheeler said. The first “couple of hundred” such systems already are in use in Iraq, brought there by troops who rotated into the country.

Also leveraging on the capabilities of VoIP, Segovia is rolling out both USB (universal serial bus) phones and softphones – a service similar to just about any VoIP company – aimed at the military market. Those lines work like a VoIP phone and also can be reassigned, Wheeler said. “They can pick up and take a set of devices with them where they deploy, with the same numbers,” he said. “We’re seeing more and more demand for that service.”

–Stuart Zipper

(Mike Wheeler, Segovia, 703/621-6420)