From: gary@ke4zv.uucp (Gary Coffman)
Newsgroups: sci.space
Subject: Re: Imminent demise of comsats predicted (for the dozenth time : -)
Date: 26 Jul 92 07:31:49 GMT
Reply-To: gary@ke4zv.UUCP (Gary Coffman)
Organization: Gannett Technologies Group

In article <1992Jul23.091925.2503@techbook.com> szabo@techbook.com (Nick Szabo) writes:
>In article <20831@suned1.Nswses.Navy.MIL> slb@suned1.UUCP (Shari L Brooks) writes:
>
>>As an aside.  The value (or rather, usefulness) of COMSATs is decreasing, not
>>increasing; also, they are getting more expensive relative to the superior 
>>communications offered by fiber optics.  
>
>The second point is valid for point-to-point communications, but the
>first is false.  Wall Street is bullish on space communications.
>Comsat stock is near its all-time high, and large amounts of new

I'm in nearly daily contact with Comsat Systems Division of Comsat General,
and they expect to see several parts of their network shutting down in favor
of fiber in the next few years. They are already laying off personnel and
scaling back their launch plans.

>capital are going into mobile-communications ventures like American
>Mobile Satellite Corp., Alpha Lyracom, European/Loral Globalstar,
>Motorolla/Lockheed Iridium, Orbital Sciences Corp. Orbcomm, and even
>more $billions are going into foreign ventures.  The mobile and broadcast 
>functions of comsats are not being replaced by fiber, and are expanding 
>far faster than the point-to-point market is moving to fiber.  The

This isn't the whole story. There's a number of *proposed* direct broadcast 
and mobile applications for satellites in the US, but no major system is 
operational. Nor is it likely that many of them ever will be. Wall Street 
was in love with other high technology stocks a few years ago, like biotech, 
but after their promise didn't deliver large profits, and investors took a 
bath, Wall Street became very shy of further investments in them. With 
ordinary stocks only posting mediocre gains in the current market, Wall 
Street is once again taking a speculative flyer on high tech, but it's 
likely to take another bath as well. With the explosion of cellular users, 
the completion of the terrestrial cellular network in the US, and the advent
of the microcell to offload the increasing demand on ordinary cellular,
there is no niche left for systems like Iridium in the US market. The
market among Columbian drug lords is too small to support a 77 satellite
constellation. With the necessarily large cell size of an orbiting satellite,
the constellation would be unable to handle much volume, meaning the cost
to users would have to be extraordinarily high to support such a large
number of satellites. The market is not there. Nor are the agreements there
with the world's telecom administrations to allow such a system to operate.
Though the recent WARC did allocate a narrow bit of spectrum at UHF for
smallsat usage and a bit of SHF for digital audio broadcasting. Unfortunately
many administrations reserved the right to disagree on these allocations
and negotiations will be required with over 100 countries to resolve a
worldwide chunk of spectrum for these services. The US and the EC disagree
on the basic modulation method and channel allocation scheme for DAB.
That issue won't be resolved any easier than their disagreement over
HDTV standards and channel allocations which is still in dispute after
nearly ten years of wrangling, not to mention the totally different
implementations of cellular and microcellular systems. Satellite systems
such as Iridium need global agreement on standards and allocations.

Similarly for broadcast satellites, the networks plan to move to terrestrial
fiber for distribution, cable has a 90% market penetration, and the other
shoe has now dropped with the FCC approving video on demand service from
the regional Bell operating companies. The window of opportunity for direct
to home satellite broadcasting is rapidly closing. The rural market unserved
by cable is small, less than 10%, and the Bell companies will be able to
offer even them video on demand soon. People accustomed to 50 channels
are no longer impressed by three channel pay per view systems that require
unsightly antennas.

>"unused capacity" Gary keeps harping on has always been a normal part
>of the comsat business; backups are necessary because of the unreliable
>nature of launch services.  Both the builders and operators are making 
>money despite that constraint, but costs would come down even farther,
>and the market expand more quickly, by making launchers more reliable.

The unused capacity is *same* satellite unused capacity. Since all 24
channels of the satellite share the same TWT and go up on the same
launcher, this is not "backup" capacity. Transponder time is currently
going begging at the rate of $400 an hour, or $50 for five minutes.
We are able to pick up an ad hoc transponder even during peak usage
for news backfeeds, and at bargain rates below those quoted. The real
costs are now on the ground for uplink trucks ($750,000) or teleports
($1,200,000) or even professional RO systems ($8,000). The amortization
on our uplink vehicles is higher than our transponder rental bill.
Comsat General is still making money only because of their service
contracts for NBC teleports. And that will be gone before 1996 as
the network goes to fiber.

>For a successful, $multi-billion space program that pays for itself,
>comsats sure get dismissed a lot. In my more derogatory moments, I start 
>thinking that some fans of other parts of the space program can't 
>stand success.  :-)

Comsats had their window of opportunity, but now it's closing for most
services. They'll still be needed for a while for news uplinks from 
the uplink trucks, but even the sports backfeeds are returning to 
terrestrial links as the phone company pulls fiber into all of the 
stadiums. Comsats will hold onto market share, and even gain some 
penetration, in the third world for some time to come because their 
terrestrial infrastructure is so poor. But usage in developed countries 
is slated for a sharp decline in the decade ahead.

Gary
Newsgroups: sci.space