Made for each other: Time will tell if Internet via satellite is viable

The Internet has burrowed into our worlds with its seemingly limitless offerings, and there is no going back. We use it to buy our plane tickets, we grocery shop from home, we browse for books and CDs by visiting Web sites and soon, we may toss aside traditional telephones for IP telephony.

With applications and interested surfers multiplying, the Internet is headed toward becoming a very crowded place. It soon will scream for more than terrestrial networks to quell demand. While some view satellites as a potential salve for traffic maladies and a way to reach the people that fiber does not reach, others are skeptical because of the recent ups and downs experienced by both Iridium and Teledesic.

"Fiber is the first choice of the U.S. However, as applications demand more from the network, companies will be faced with having to look at satellites because of local loop congestion," said David Puente, vice president of business development for The Loral Data Services Group.

Although the demand for satellite technology seems greater outside the U.S., Loral Orion, a part of The Loral Data Services Group, is taking a closer look at this market. "Fiber is so rich and cheap in the U.S. that [until now] Internet over satellites here has not been viable," said Carl Wu, executive director of Internet products for Loral.

These days, as shown by the recent Satellites and the Internet conference in Arlington, Va., satellite analysts and other industry members have found and presented reasons why using satellites for the Internet makes sense.

"It will be more prevalent mainly for access," said Christopher Baugh, satellite networks analyst for Pioneer Consulting. "In the long run, as the cost comes down, people will accept it more and more."

Currently, Internet via satellites has about 3% of the worldwide market share. Despite this, "the exploitation of Internet applications like caching and multicasting is where most of the growth potential for Internet and satellites is," said Sam Book, executive vice president of The Strategis Group.

Book added that he and his firm remain optimistic because the point-to-multipoint technology satellites use give them a competitive advantage in the business market, which demands high-speed data.

When America Online invested in Hughes Electronics Corp., the ISP community heard a wake-up call. The company, which has been a satellite player for nearly three years with its DirectPC offering, is expected to launch its Spaceway fleet of satellites in late 2002, said Paul Gaske, senior vice president and general manager for Hughes Electronics' broadcast product services group.

"The nice thing about satellites is that you can migrate important capabilities over time because it is not a fixed system," Gaske said. "We will begin to see more ISPs moving toward satellites because the problem with DSL is that it only covers a certain amount of territory."

Though satellites can help expand a company's national footprint, some people have worried that weather may be a potential setback. Also the Ka band, the frequency on which Spaceway will operate, has not been fully tested, adding to the industry's skepticism, said Baugh.

Despite lingering worries regarding satellite technology, companies like Intelsat are taking advantage of the fact that the use of satellites enables fast deployment.

"There are no technological barriers to deploy Internet applications via [geostationary orbiting] GEO satellites," said Ramu Potarazu, vice president of operations for Intelsat. "[With satellites] we can bridge connectivity domestically to other parts of the world. This way there is no world wide wait."

Hughes Electronics has encountered a couple of obstacles with DirectPC, including the installation of high-bandwidth service into the PC and the influx of content to the PC, Gaske acknowledged. But despite the initial hurdles, the company plans to move forward with broadband as the demand for more speed, detailed content and easy access continues to climb.

Nicholas Negroponte, co-founder and director of the MIT Media Laboratory, suggested that it is not how the satellite industry will change with with the Internet on board, but how satellites can help make the Internet more affective and far-reaching.