Industry Canada primes satellite-cellular phone rivalry

A recent regulatory decision by Industry Canada will allow providers of mobile satellite services to go head-to-head with their cellular counterparts, according to one Ottawa satellite operator.

Mobile Satellite Ventures (Canada) Inc. said a new spectrum and licensing decision released last month by the federal government will allow MSS providers to reuse their signals more efficiently, providing a future service that is more reliable and cost-competitive.

In its decision, Industry Canada concluded that permitting terrestrial mobile services as a component of MSS offerings will “”serve the public interest and foster Canada’s telecommunications policy objectives.””

“”In particular, these new mobile-satellite networks could promote advanced communication services at affordable prices to rural and remote areas,”” the decision read.

Industry Canada’s new policy “”clears the way”” for ancillary terrestrial components (ATC) and their integration into the traditional MSS infrastructure, said Robert Power, MSV’s vice-president of regulatory matters.

ATC consists of land-based stations that MSV plans to incorporate into a future service offering. The stations will be capable of boosting signal coverage to the same receivers that phone customers would use to access a satellite, said Power, whose company operates two satellites that serve roughly 100,000 customers in such industries as marine and natural resources.

The result will be an intelligent cellular/satellite hybrid phone that chooses between a satellite signal or a land-based signal, depending on which one is most accessible relative to a caller’s location, he said.

The next-generation handset, which will closely resemble the size of traditional cell phones, will be able to switch seamlessly between a base station’s signal and a satellite’s signal as the user moves from an urban centre to a more remote locale where connectivity isn’t always guaranteed by traditional cell phones, added Power.

“”We made an application for this in Canada in 2001,”” he said. “”At that time it was pretty much unheard of to be re-using your satellite spectrum on the ground to boost your signal. But it’s something we need in order to make our service more reliable.””

Power predicts this system will be enough for MSS providers to go head-to-head with cellular carriers. Dan Lowndes, vice president of operations at Vancouver’s Glentel Inc., agrees. His company, which specializes in business and consumer wireless communications, is a customer of MSV’s.

“”MSV will have a service that will compete with the Bells, Rogers, Sprints and AT&Ts of the world,”” he said. “”(This Industry Canada announcement) will allow us to take an existing satellite service that we already offer on the business side, and … move more into a combination of businesses and (individual) consumers.””

Aside from ubiquity, some appealing attributes of a future cellular/satellite phone will be its competitive price and a size and shape that are similar to traditional cell phones, said Lowndes, adding such traits are critical because consumers of cell phones can be extremely picky about such “”look and feel”” aspects.

But when it comes to cost, Laurence Surtees is more skeptical. While the senior telecom analyst with IDC Canada acknowledged there is a demand for satellite phones, they will never break out of the niche market they serve, he said.

“”Sure, there’s a niche for some really under-serviced, remote areas,”” he said, adding satellite phones prove useful for trucking fleets and oil and gas workers.

“”But the price is still really steep for it to constitute a threat. Wireless cellular has a penetration in Canada of almost 13 million users. Satellite phones are nowhere near priced to make people sit up and take notice. In terms of making a big dent, not yet. It’s not a question of time, it’s a question of price.””

Lowndes admitted “”there’s no way”” MSS providers can compete strictly from a cost perspective, but there are a host of other factors at play.

“”Under the new world, when (MSV) has that new service, there will be totally new handsets, suppliers, and totally different rules.””

Currently, one of MSV’s biggest challenges is the lack of suppliers who are “”jumping to the table to manufacture phones that cost $3,000,”” he said.

“”So you need to bring a handset cost down to $500 to $600. But you need multiple suppliers willing to jump into the game. They will be more willing to jump in as they look at this as a way to leverage the new, modified mobile satellite services spectrum.””

Industry Canada is now saying, “”You can take that same national footprint you have for North America and you can reuse that for a terrestrial type application,”” said Lowndes. “”As a supplier, I’m thinking ‘Hey, this is an opportunity to really leverage that and it’s worth it for me to invest this money to create a dual-mode device’.””

Power said he expects a policy decision from the U.S. Federal Communications Commission on the land-based reuse of satellite signals by mid- to late summer.

Comment: info@itbusiness.ca

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