The challenges of establishing a satellite service

We had hoped to already be testing our satellite early-warning delivery system by now, however, we hit a significant barrier that we had not counted on: our satellite service partner were forced to shut their original service over the Pacific down. While we have a solution in the works, it is probably a good time to talk about the economics of satellite communications, and how this project aims to help.

Communications satellites are usually categorised based on how high over the earth they orbit. Orbits very near the earth are called low-earth orbit (LEO), those a bit further out medium-earth orbit (MEO), and those quite a bit further out, so that their orbit matches the rotation of the earth are called geo-stationary orbits (GSO). The great thing about a GSO, is that it looks like the satellite stays still from the earth. This means you can point a dish at the satellite, and not have to keep moving it to track the satellite.

The international space station is in an LEO, about 400 km above the earth; in part because the higher you want to go, the more energy it takes. But these cheaper, low orbits will decay more quickly, and thus need to carry more fuel to maintain orbit.

In contrast, a GSO is a much, much higher orbit requiring much more energy to reach, and thus costs more to launch a satellite into. On the up-side, you don’t need as much fuel to stop it from spiralling in towards the earth. GSO communications satellites tend to be quite big, so that they can last a long time. Since they need to be big, and are expensive to launch, they tend to be decked out with as much communications capacity as possible.

All this means that once you have launched your communications satellite, you need it to earn a lot of money. Satellite TV is good for this, because you can get regular income from lots of TV stations, often £500,000 per month or more. Satellite telephony is harder to do. This is because you either need LEO satellites, so that a small telephone can reach them (a story for another day), or you need to buy the exclusive rights to a particular frequency over a wide area, so that you can avoid interference from other satellites. Satellite TV does this using a receiver dish, but a phone with a dish wouldn’t be that popular! The other problem with satellite telephony, is that you need lots of subscribers, because each spends only a small amount. This means that satellite telephony providers have to charge a high base monthly rate, and a high per-minute/per-message rate, so that they can generate the necessary income. Prices are even higher if the service is special in some way, for example, if they have exclusive use of a frequency band over a large part of the earth, thus reducing interference, making a smaller dish or even a normal antenna possible.

Fortunately, we only need to receive, not transmit, and our partners have created a new receiver using some innovative tricks. Basically, they can get the same benefit of being able to receive a signal from a satellite, without needing to use a dish -- but without having to use one of these premium exclusive-frequency services. The power of these monopoly services (and their value to customers who need it) is clearly demonstrated in the cost difference of the two alternatives being a factor of 10x or more. However, while our partners had solved the technical problem, they were still not in a position to re-launch service over the Pacific for our development and testing.

To solve this problem, we have had to restructure our budget, and work through the various steps involved to reactivate this service. This process has proved to be more complex and more drawn-out than I had hoped. Indeed, the silence on our part was due to our thinking at various points that we had it almost solved, only to discover that there was some other twist or turn that we had to resolve.

The end result is worth it, though, because it allows us to operate a satellite at low cost, and with that cost being fixed, regardless of the number of receivers. In short, it makes it possible to provide a solution that is scalable, and avoids the financial hamstrings of traditional approaches. This is important, because it allows a fixed annual operating budget to provide the service, as well as incrementally grow the deployment size by adding more receivers – but without those extra receivers increasing the recurrent satellite charges. Without this property, the budget for extra receivers would soon be consumed by the recurrent charges, and further growth would be impossible. This is one of the traps of deploying satellite telephones for this kind or purpose, and we have seen first-hand how that arrests growth of deployments in the Pacific. It is the creation of a solution to this pressing financial problem that is one of the reasons we are so excited about this project.