The world within reach: Despite their 'gee whiz' appeal, satellite telephone service providers' ultimate success will depend on how well they handle the basics--including pricing plans and customer service

Rocket science alone may not be enough to ensure the success of the new mobile satellite telephony networks. The biggest strength of satellite-based telephone service providers will be their global coverage. But they must plan the supporting infrastructure well enough to ensure that they can really deliver their promise.

The ABCs--activation, billing and collection--can make or break a telecommunications service provider. And satellite-based telephone service providers' global scope complicates decisions regarding support systems.

Everyone observing the development of satellite networks is focused on two major issues--space-age technology and commercial viability. The sheer scale of the mass production of nearly 140 satellites to be launched between now and 2002 (Table 1), together with phrases such as low earth orbit (LEO) and middle earth orbit (MEO), has a sci-fi appeal for many. Another concern is to ensure the satellites talk to each other, operate properly and communicate with the ground systems (Figure 1).

>From a commercial standpoint, analysts have questioned whether these enterprises can raise the hundreds of millions of dollars needed to put satellite telephony networks in place, and whether those networks will be commercially viable. Such thoughts are only natural among inventors and investors alike, particularly in the U.S., where the recent rush to snap up C block licenses for large sums has ended badly for at least one telecom company, making people nervous about speculative ventures in mobile telephony.

Another important factor will be satellite operators' ability to satisfy the demands of individual companies in each consortium while maintaining business momentum. Staying focused on the job at hand and not being delayed by investor disagreements will be crucial to get to market as scheduled. Some of the consortia appear unwieldy, and investor politics could affect their ability to compete.

Meanwhile, satellite operators should focus on the simple factors that will make or break their global satellite networks. Potential customers will soon forget about the satellites. They will buy based on the quality of the network and the price, and they will stay if these two are matched by equally high standards of customer service.

Marketing fundamentals In many ways, satellite networks are targeting niches at extreme ends of the customer spectrum--the global traveler at one end and the outlying village at the other.

The "wireless village network" will offer global communications from a fixed handset in the most remote locations. Meanwhile, in countries like China, customers who may wait years for fixed line services, may well consider satellite technology despite the high cost.

Providing superior service will involve a complex mix of factors, based on the classic "four Ps" of marketing--product, price, place and promotion. Operators must consider all four factors in designing customer care and billing systems for multiple markets around the world. They need to establish strategies for segmenting the potential market in terms of wholesale vs. retail, taking into account geographic and geopolitical differences, as well as demographic variables.

The strength of a global brand needs to be balanced against the need for local appeal in many markets. The challenge of providing customer service that surpasses customer expectations should not be underestimated. The customer in this case is not a homogeneous entity but could be anyone--a wealthy entrepreneur in Bangkok, a fishing company in Alaska or a service provider with pay phones in remote villages in Zimbabwe. Customer care systems that can flexibly meet these disparate needs and support a winning marketing mix are few and far between.

With such massive initial investment, satellite operators will need to establish revenue streams quickly and effectively, and practical issues will be crucial to success. Each of the four operators--Iridium, Globalstar, ICO and Odyssey--likely will adopt a different approach to service delivery.

One of these organizations may intend to cover the globe through a series of regional franchise holders that will provide both wholesale and retail services.

These franchise holders will sometimes act as wholesalers to service providers in individual countries--that is, they will handle the calls but will not deal with the customer. In other cases, however, the franchise holders will act as retail outlets as well, representing the "face" of the satellite company as far as the customer is concerned.

Another operator may have individual service providers in every country, offering a much more localized service. The operator will then work in a purely wholesale mode, with the local service provider handling all contact with end users.

Each method has its own implications for delivering service and establishing billing and call centers. Indeed, global satellite telephony may be only part of a mix of mobile telephony services marketed by an established provider such as Vodafone, which may sell a Globalstar handset but also offer its own service. Variables such as these will affect customer perceptions and, ultimately, the satellite service provider's visibility and corporate identity.

Pricing is another concern. A price plan that is the same worldwide may be an effective marketing tool for most global satellite companies. Because this must be legal and acceptable to market conditions in each operating area, it may be difficult to arrive at a value proposition in every country across the globe. Most countries' price plans are completely open, and this is the major area in which telcos compete. However, in places such as Indonesia, the government sets price plans.

Pricing policies also must concentrate on making the service affordable and competitive in today's--and tomorrow's--mobile telephony marketplace. Expensive technology is being introduced at a time when rates are being steadily undercut in many markets. By the time the global satellite technology comes to the market, the current rates may be significantly lower. An expensive solution will not tempt customers.

Communication is key To maximize their initial investments, operators are searching for means to optimize standardization of their systems and the functions that they perform. Although this is a sound financial strategy, operators shouldn't allow it to affect their ability to meet the needs of the various market segments. Operational aspects such as providing service to multilingual countries, if handled correctly, will remain invisible to the customer.

English is the de facto language of computer systems, and it may be possible to use this as standard in Europe and North America, but it will not be acceptable on a worldwide basis. Service providers must adopt customer service and billing systems for usewith certain languages, keeping in mind that some countries have multiple languages.

In addition to multilingual customer call centers, internal help desks must be able to offer true around-the-clock support to local representatives. If a billing system goes down in China, will the European help desk be able to offer maintenance advice in the appropriate language?

Communication will pose a particular dilemma for computerized systems that presently are not set up to cope with multibyte-based languages such as Japanese, Chinese and Korean. This also has slowed the adoption of "global" standards such as Unix and Windows in these countries.

Standardizing billing around the world will be another major challenge because many countries have their own business procedures. Operators must resolve a number of complex issues that resist standardization. One regional franchise may be dealing with several different countries every day and will therefore want to bill its customers in their own currency. Meanwhile, the franchise's own accounting will probably be done in yet another currency.

Additionally, operators will need to deal with settlements between various countries for traffic that crosses network and international boundaries. Finally, there is the issue of taxation: Each country has its own quirks and anomalies, none more so than the United States, where tax policies have been a thorn in the side of many billing systems.

So while the search is on for standardization, many hidden pitfalls--unless correctly addressed--could lower the cost benefits.

With the intense pressure on early and steady return on investment, billing and payment strategies must be right the first time. Nothing can be taken for granted.

Not all countries have a reliable postal service, for example. Some customers expect to be able to visit an office where they can ask for the balance of their account and settle it on the spot. And nothing is more different around the world than payment methods, both in terms of the way in which people pay--check, cash, credit card, direct debit--and cultural attitudes toward payment in general--in other words, whether to pay at all.

This means that service providers will need to customize collection methods for each particular country. Neglect of such fundamental systems will result in franchisees and country operators going out of business, leaving potentially large gaps in a "global" network.

As huge amounts of money are plowed into tomorrow's telephone technology, global satellite companies are becoming industries in their own right. Each consortium includes at least one major telephone company, and each has the backing of a large aerospace vendor. In many ways, the market is holding its breath in anticipation, while the rockets shoot into the sky. It remains to be seen whether spectators can be rapidly converted into satisfied customers.