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Inmarsat warms up for broadband

Inmarsat warms up for broadband – First Mile

John C. Tanner

Iridium and Globalstar did little to break satellite telephony out of its niche market, but Inmarsat has been quietly demonstrating that niche markets can still be profitable. Its Mini-M satellite telephony service with briefcase-sized terminals has around 100,000 terminals in operation worldwide–a small number, but the service is hardly a money hole. Inmarsat managed to report a 5% overall revenue increase last year in an otherwise flat market.

More to the point, says Inmarsat managing director Michael Butler, the company is already demonstrating that data is an indispensable part of satellite telephony services.

“54% of our revenues came from services last year,” Butler said.

Indeed–Inmarsat saw its overall data revenues grow 25% last year, with data revenues from land-based services growing 72%. And most of that was prior to the commercial launch in November of the first phase of Inmarsat’s grand plan for broadband mobile satellite data services–Regional BGAN (Broadband Global Area Network), which offers data connections of 144 kbps–including support for VPN and H.323–via leased capacity from Thuraya. The service area ranges from Europe, the Middle East and North Africa to the Indian sub-continent and parts of southern China.

The terminals are notebook-sized satellite IP modems that are also compatible with GPRS. They even sport SIM card slots that in theory would allow end users with GPRS accounts to use their SIM cards to log on to Regional BGAN when no GPRS network is available.

Regional BGAN is the first phase of Inmarsat’s planned $1.6 billion BGAN service that will offer data connection speeds of up to 432 kbps via two purpose-built satellites currently being built by Astrium and scheduled for launch late next year, with commercial service launch scheduled for the third quarter of 2005.

It’s also part of Inmarsat’s overall strategy to break out of its maritime/vertical core customer base and build up its core land market penetration, says Butler.

“The strategy does open whole new markets for us, like finance and banking, for example. Our packet data service is used in the Philippines for ATM machines,” Butler says. “We also want to penetrate our existing vertical market base more deeply, such as government clients. Not just military but also civil government contracts.”

All systems go

Butler says that the final BGAN project is proceeding on schedule. “All the contracts are in place, including the earth stations, billing, and CRM,” he says.

Inmarsat has also signed four contracts for user terminals, including a $10 million contract with Add Value Technologies of Singapore to develop a lower-cost A5-size terminal capable of 200 kbps connections. Both the A4 and A5 size terminals can support voice via mobile handsets with DECT or Bluetooth connections.

The service has attracted 1,500 customers since November–hardly overwhelming, but if nothing else, it’s one of the fastest mobile data satellite services on offer. Iridium’s and Globalstar’s systems, which weren’t designed for high-speed data, have data services that max out at around 10 kbps.

Butler does say that none of those 1,500 BGAN users have come at the expense of its existing customer base. “We haven’t perceived any cannibalization so far,” he says.

Butler also isn’t put off by the suggestion that the spread of 2.5G and 3G services, as well as Wi-Fi hot spots, might dampen enthusiasm for an A4-size modem that needs line-of-sight with a satellite to connect.

“Hot spots are a major opportunity and a driver for us, because as people experience the functionality of getting high-speed data away from the desktop, they’ll want it everywhere.”

COPYRIGHT 2003 Advanstar Communications, Inc.

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