Stakes Are Sky-High as FCC Considers Satellite Service Plans : Telecom: Some of the nation’s largest firms are poised to invest billions in new ways to deliver video, voice and data.
Federal regulators are preparing to make key decisions this month about plans by cable and telecommunications giants to build various forms of a celestial information highway.
Next week the Federal Communications Commission will begin reviewing comments on proposed policies for new microwave and satellite services--a deliberation that eventually will determine whether AT&T;, Lockheed Martin Corp., Microsoft’s Bill Gates, cellular mogul Craig O. McCaw or others get the green light to blanket the skies with satellites to bring the information highway to even the most remote global outposts.
The agency is expected to decide in the next few days whether to grant Tele-Communications Inc., led by John C. Malone, a license for operating direct broadcast satellites that would transmit movies and other video programs.
Though the two proceedings concern different technologies--video vs. voice and data transmission--both involve huge investments in a growing satellite industry that many experts see playing an increasing role in delivering telecommunications services.
Yet both efforts will have to overcome entrenched terrestrial competition from cable, telephone and other wired networks that are pursuing compression and broadband technologies that could provide a competitive advantage over satellite communications.
Satellites can be highly flexible communications tools that offer a relatively low-cost way to link people in sparsely populated rural areas with those in densely populated cities.
“Both the cost and practicalities of constructing a high-speed terrestrial data network throughout the United States are prohibitive,” noted Hughes Communications in a filing last month with the FCC. “As a result, substantial numbers of U.S. citizens . . . will be underserved by the terrestrial network for quite some time.”
But no one has ever launched dozens of satellites at a time, as some of the ventures are proposing to do. And the split-second delay in sending voice signals thousands of miles from the earth to the satellite and down to earth again has made satellites a less-than-desirable medium for telephone conversations and interactive video.
What’s more, some of the applicants have asked the FCC to delay any satellite decision until after this month’s World Radio Conference in Geneva, where conferees are expected to decide the international allocations of satellite spectrum.
Still, those hurdles have not deterred the satellite entrepreneurs, many of whom also operate cable and telephone companies.
Malone, for example, is seeking the last remaining direct broadcast satellite license, which has been a subject of contention between Malone’s huge cable TV company, Tele-Communications Inc., and several rivals, including long-distance phone giant MCI Communications Corp.
Malone is proposing a nationwide direct broadcast satellite network of 150 channels that would resemble that of Hughes’ El Segundo-based DirecTv, while MCI wants the license to offer a variety of entertainment and data services.
Gates and McCaw, meanwhile, are attempting to overcome the skepticism of numerous experts and get the FCC to award their Seattle-based company, Teledesic, licenses to fill the skies with up to 840 low-orbiting communications satellites linking remote outposts.
AT&T; and Hughes Communications also have plans to take worldwide computer communications into the heavens by using stationary satellites 22,000 miles above the Earth to transmit voice and computer data at rates ranging from those similar to today’s fastest computer modems to rates fast enough to provide near-TV quality video transmission. AT&T; plans call for 12 satellites, while Hughes says it needs 20 to provide global service. The signals would be received by 24-inch dishes similar to those used by DirecTv.
At least six other companies, including Lockheed Martin, Motorola and General Electric, met Friday’s deadline to apply for authorization to provide satellite communications.
The FCC, which has asked for public comment on what technical and financial factors the agency should consider in awarding the license, has not yet determined whether there will be more than one license issued. But a top FCC officials said the agency was leaning toward issuing more than one and will probably make a decision sometime early next year.
“This is basically a grab for taking the Internet global,” John Pike, director of space policy for the Federation of American Scientists, said of the fierce competition to launch communications satellites. And though the financial risks are daunting, Pike said a satellite venture has the potential to pay off because the worldwide demand for a global high-speed communications network is growing rapidly.
Howard Anderson, managing director of research for the Boston-based consulting firm the Yankee Group, noted that 40 million people in 154 countries now have access to Internet electronic mail and that corporations are flocking to the Internet at the rate of more than 20,000 a month.
Those numbers are just a fraction of the 660 million telephones already in use around the world. But providing Internet connections is increasingly becoming a commodity business that threatens to nick away at long-distance telephone traffic as people send e-mail and even talk over the Internet at low fixed rates using their modems and new computer software.
In addition, proposals to auction the coveted satellite frequencies or divide them among other competing technologies could further cloud the financial prospects for widespread satellite communications.
TCI, for example, thought it had a lock on the satellite license after agreeing to pay $40 million for the previous license owner--a company called Advanced Communications Corp. But the FCC derailed those plans last spring when the agency moved to revoke the license, arguing that Advanced Communications had sat on the license for years with no apparent intention of using it.
Although TCI, the nation’s largest cable TV company, says it has already spent $400 million to build two satellites, the FCC, urged on by MCI, is considering auctioning the license to the highest bidder.
