Taking the High Road with Satellite Phones

Satellite phones have suffered something of an ego bruise in recent years with the overwhelming popularity of cell phones and the crash of Iredium. But are they still a viable--albeit expensive--option for mobile workers whose job requirements and customers stretch beyond the boundaries of standard, land-based cellular systems?

I'll Take the High Road

Equipped with an open mind and a $1,200 Qualcomm GSP 1600 tri-mode phone, I tested Globalstar's (www.globalstarusa.com) voice service on a recent trip to Britain. I was impressed with the quality of the transmission, which most of the time was crisper than my 900MHz cordless landline phone at home. I had no trouble hearing my mother-in-law in California congratulate me on my marriage after my fiancée and I tied the knot in the Scottish hamlet of Dunkeld. It wasn't the middle of nowhere, but it was close enough. The phone performed like a champ from London up to the Scottish Highlands and had little trouble penetrating Britain's omnipresent blanket of clouds.

The downsides to the Globalstar solution are glaring: the phone's bulkiness and its inability to find a satellite without having a clear view of the sky. I had trouble obtaining a connection inside a parked car with a moonroof and again while leaning out of the window of a two-story building. I had to be on open ground to receive a good signal.

Globalstar's system is not targeting honeymooners, however. The company is taking a decidedly enterprise track when it comes to marketing: Globalstar wants to ditch the "misconception that this is for globetrotting CEOs," Jeffery explains. Pricing for wireless voice and data access runs from about 89 cents to $1.50 per minute depending on volume. (Not bad, actually, considering that my long-distance company recently charged me $1.58 per minute for an on-peak call from New York to London.)

The Globalstar satellite network, which cost roughly $3.3 billion to design, build and launch, is being pitched to individuals and companies that require mission-critical communications solutions miles from the nearest cellular tower. Jeffery points out that a cattle rancher in Brazil recouped the cost of her Globalstar-ready phone in one day when she called to find out that the price of beef had risen 50 cents per kilo while she was in the middle of negotiating a sale.

If voice services are the tree, then Globalstar is hoping that wireless data will be the fruit. Wireless Internet access is currently available in North America and will be rolled out to Europe (beginning with the gateway in Italy) and Brazil in the next few months, according to Jeffery. Using Qualcomm's CDMA protocol, Globalstar promises standard data transfer rates up to 9.6 kbps with the potential for higher speeds using combined channels.

"For some customers, 9.6 won't do the job, so we can gang together multiple channels. For example, four channels would yield 38.4 kbps," Jeffery says. "It costs more, but for sufficient volume we give discounts."

For wireless Web PC connectivity, Globalstar-enabled phones are essentially used as external wireless modems with an optional data cable. Globalstar is also pushing its remote monitoring services, called SCADA (Supervisory Control and Data Acquisition), which enable companies to manage equipment and infrastructure such as pipelines and cargo vehicles. Such data is sent in bursts to lower the cost, resulting in fees of approximately 15 to 30 cents per burst.

So how many bursts will it take to get Globalstar out of financial trouble? For 2000, Globalstar reported a net loss of $3.8 billion (including a non-cash charge of $2.9 billion related to the carrying value of the Globalstar system) against net revenues of $3.7 million. More alarming, however, is the fact that in April the company admitted it might seek bankruptcy protection if it cannot finalize a restructuring plan and assuage its creditors and stockholders, whom Globalstar suspended payments to in January. According to company filings, Globalstar is facing two class-action lawsuits from bondholders and shareholders as of press time in April.

On the bright side, the number of Globalstar subscribers grew from an estimated 30,583 at the end of 2000 to 40,009 in mid-March, and the company reported 394,000 minutes of use in the last week of March, 66 percent higher than its busiest week in 2000.

Jeffery, for one, prefers to look on the bright side. "We have a long way to go; we're not going to sugarcoat it," he intones. "But it's hard for me to see a scenario where this could impact users or service. Where this might leave shareholders or debtholders is another thing."