SatPhones — Why Can't They Make It Work?

RedEaredSlider writes "Satellite phones aren't as clunky as they once were, and technology has made them more powerful. Gone are the days when satellite phones had to be accompanied by a suitcase. Yet to date, the field is littered with bold attempts at a phone that could be used anywhere, without depending on earthbound cell phone networks. Billions have been invested, with relatively little to show for it. Part of the answer is debt. TerreStar is only the latest casualty of a crushing $1.2 billion debt load. The company introduced its Genus phone last month, but is in the middle of Chapter 11 proceedings. It's unclear that the phone will sell enough to help TerreStar stay in business, especially when it carries a $799 price tag."

Comments

Can't make a call from inside

[troylanes]

I've worked in the industry for the past 7 years or so -- most of the support calls that came in were related to the fact that the phone would not work indoors or in a car. People were really confused and often angry when you told them they need to be outside to make a call. This is small fact is one of the reasons, not to mention the cost, that satphone adoption has been stagnant.

Re:Can't make a call from inside

[fpp]

I second this. I also work in the industry and people generally don't know that not only do you have to be outside, but you have to have a clear line of sight to the sky and not be near obstructions like buildings. Also, the higher off the ground you are, or the higher the elevation, the better. Even in the best conditions, the call quality can vary as a satellite goes over the horizon and passes your call to another satellite. Also, satellite calls are very expensive, and the hand held units, although getting smaller (like the Iridium 9555 handset), are still bigger than a large cell phone.

Re:Can't make a call from inside

[MichaelSmith]

If you are in a car you just need to give the phone enough power to burn away the roof of the car so that it has a clear view of the sky.

It's not cost effective.

[OdoylesRule]

Sat phones are trying to solve a problem that doesn't really exist. Most folks are ok with terrestrial cellular service. If they need wireless comms outside that service area, it exists... it's just expensive. For something to be affordable it has to be mass consumed, and the masses just don't need it.

Re:It's not cost effective.

[edremy]

Not just that, but the infrastructure you need to build is just staggeringly expensive. Cell towers are bad enough, but at least they're on earth and can be easily built and repaired. To get full satellite coverage of the earth, you either need a whole pile of satellites in LEO (Iridium uses 66 with several spares) or a couple massive ones with amazing antennas in GEO. Iridium's satellites are considered amazingly cheap, and they still run over $5 million each according to Wikipedia- that's $350 million just for the satellite hardware, and launch costs are going to triple that. Tack on running and replacement costs, the costs to design both them and the phones....

I'm honestly amazed anyone bothers.

Re:It's not cost effective.

[bertok]

It's not a direct comparison, AT&T-s network has a much higher aggregate capacity.

The Iridium satellites can only handle 1100 concurrent phone calls each. While there are 66 active satellites, most of the coverage is over the poles because of their orbits, so the capacity over occupied land is much lower than one would think, probably below 10,000 concurrent calls. Each of those channels in turn is very narrow bandwidth, about 2400 bits per second, and uses heavy audio compression to make speech intelligible. This explains why Iridium plans are so expensive. They're not for "chatting", they're for professionals that need emergency communication in the middle of nowhere.

The iPhone in my pocket has a higher bandwidth for a single connection than an entire Iridium satellite!

Just another way of saying

[jpmorgan]

Saying that the problem is 'debt' is just another way of saying that the value of the service over traditional cell networks isn't enough to outweigh the enormous initial investment required.

Which makes sense. Satellites are enormously expensive and only a handful of people really get any benefit over a normal cell phone. For those who do find a benefit, there are more cost-effective ways of dealing with communication than launching dedicated satellites into orbit.

Re:Let's see...

[RapmasterT]

1. don't work indoors 2. cost a lot more than cell phones that do work indoors, show real-time video, run apps. etc.

Did I miss anything?

3. Doesn't have Twitter client

Re:Do they still use geostationary satellites?

[Wyatt Earp]

Iridium satellites are at 475 miles, not geo sync

Is this a real question?

[RapmasterT]

Maybe I'm missing some subtleties, but "why can't they make it work" doesn't sound like a real question. It sounds like a literary device where the author asks himself a question that he can then answer, without having to sound like he's just sounding off on an obvious subject that everyone already understands.

But if not, I can hazard a guess why sat phones haven't taken off. Cost. Putting satellites in orbit is exponentially more expensive than putting up terrestrial towers. It's always going to cost a LOT more than cell phones. Combine that with the fact that the market of people who NEED sat phones because cells aren't good enough is very small. So you end up with expensive infrastructure, plus very small user base, that equals enormous individual consumer expense.

Anyone shocked by this revelation? anyone other than RedEaredSlider at least?

Just a bit more than an iPhone

[tsa]

$799,- is just a bit more than a SIM-lock free iPhone costs. So the price is most probably not the problem.

It's a tough business plan, but they do work

[dara]

I work in the aerospace industry and though I haven't been involved closely with any of the major programs (Iridium, Globalstar, TerreStar, SkyTerra, ...), I'm familiar with Thuraya which is apparently making a profit (http://en.wikipedia.org/wiki/Thuraya). As others have said, satellites cost a lot of money, and many large systems were thought up anticipating a given customer base and willingness to pay for monthly charge and minutes that just wasn't there by the time the systems were operational (I believe this was due to mis-predicting cellular network penetration).

At this point, I don't know if any non-GEO systems will be profitable in the future. GEO satellites are really expensive, but at least you only need 1 (with a spare) to server a pretty big market (like the Middle East, parts of Europe and Africa). The bummer about GEO though is in addition to latency, you may not have coverage in many situations (high latitude, obstruction from hills, trees, etc.). What I'd like to see is a LEO network with satellites as cheap as possible that provide store and forward text/data messages only. Orbital Sciences tried to get this market with ORBCOMM (http://en.wikipedia.org/wiki/Orbcomm), but I don't think their market ended up as big as they hoped for either. What you really need is just about every cell phone on the planet carrying the hardware needed to interface with the satellite (which means it has to be a small and cheap addition to standard phones). Then every user can opt to use the satellite system to receive or send email or text messages when outside of the terrestrial network (when you are willing to pay extra). I would think this is a fair amount of money to capture, but I haven't done any estimates. It would fit my customer pattern perfectly since I normally wouldn't want to pay a monthly fee, but I'd probably send a few 1 dollar emails if the situation required it. Whether the world aggregate demand is in the 100s of millions of dollars for revenue per year is the question.

Satellite is still like any other Satellite Servic

[jberg712]

For someone who lives out in the boonie's, this may be the only solution for those who need some form of communication. Very few places who can't receive cellular service, cable, dsl, etc, have to rely on the satellite service. As many of us who have ever had to work with Hughsnet or any other satellite internet service... well it blows! The reason they are not as successful as cable and dsl is because of the cost of the service, the quality is poor (by poor I mean it fluctuates from time to time), not to mention they all use this fair use bandwidth limiter that once you exceed a certain bandwidth, they take away the high speed and leave you with the bandwidth of a 14.4k datafax modem. Think XM/Sirius satellite radio. Think of Direct TV and Dish Network. Satellite phones work similar to how we get our XM radio or DirectTV. My XM satellite radio goes out everytime I enter the parking garage or go through a tunnel. And DirectTV gets flakey during a storm. The reason hughsnet stays in business is partly because of people who live out in the middle of nowhere. There are no other options for them. If hughsnet was able to increase the quality of their service, reduce rates, and remove the whole fair use bandwidth policy, they might be able to compete with cable/dsl. Same with the satellite phone. Now it may be much cheaper to put up a cell phone tower as opposed to launching a satellite in orbit, but i have yet to see anything that makes the satellite phones any better than cellular phones as far as reliability. Now that I can walk into an elevator and still talk on the phone, I wouldn't want to have to go back to saying "hold on, i'm walking in an elevator. I'll call you back" because of reduced quality.

Great product... if you need it.

[WoTG]

I have some friends who have rent sat-phones to go hiking in remote areas. It's amazing for peace of mind. They actually used it last year after being cut-off from the road by a storm. They were able to use the phone to notify relatives that they'd be late a couple days.

But the # of people who need this is relatively small compared to the immense cost of satellites. Of course, the biggest users of sat phones aren't the occasional hikers. I think it's the government and resource extraction sectors, e.g. mining firms.

I wonder, could someone launch a SMS only satellite service based on only a few geo-sync satellites rather than the 66 (!) that Iridium launched? With texting only, the extra lag and a few dropped packets don't matter (as long as it re-sends them later).

Government paranoia was a real problem for them

[billstewart]

At least one of the proposed LEO satellite networks ran into real problems because lots of governments insisted that they route satphone traffic from that network's customers in their countries through earth stations in their countries. It was partly security paranoia (like the recent Blackberry regulations around the world), but largely protectionism for the monopoly telcos, which didn't want to lose revenues from people who could use satphones to save money. (Typically this was third-world countries with poor infrastructure and government-run telcos, which were one of the big markets for satphones.) Remember when calling India cost a dollar a minute?