While other satellite telephone operators have achieved limited success in the Canadian market, the superior quality and cheaper price of Globalstar Canada’s service give it an advantage over competitors, according to industry observers.
Globalstar is in the midst of rolling out its low-earth orbit (LEO) satellite-based phone service to a limited number of customers. Full-scale commercial availability is expected in the first quarter of 2000.
Globalstar’s main rival in Canada is Montreal-based Iridium Canada, whose U.S. affiliate Iridium LLC filed for Chapter 11 bankruptcy protection in August and is currently restructuring its money-losing operation.
Although Iridium Canada continues to offer its service, according to industry watchers, the expensive satellite network deployed by Iridium has made it hard for the company to start realizing a return on its investment.
“Iridium really has a gold-plated system,” said telecom consultant Ian Angus of Angus Telemanagement Group Inc. in Ajax, Ont. “It’s extremely sophisticated and very elegant technically.”
By contrast, Globalstar has a much simpler satellite network design which should help to keep down the cost of its service, according to Eric Kannen, president of telecom equipment and services supplier Spectrum 2000 Communications Group Inc., based in Sudbury, Ont. Kannen’s company plans to resell the Globalstar service, once it becomes available, to its northern Ontario customers in the mining and forestry industries.
According to Kannen, Iridium may have designed its satellite network as long as 15 years ago when long-distance rates were very high. To minimize use of existing terrestrial networks, Iridium chose to build telecom switching capabilities into its satellites, which drove up the price of its network.
Kannen estimated Iridium’s 66-satellite network cost between $6 billion and $8 billion to deploy, whereas Globalstar’s network of 52 satellites will cost in the region of $4 billion.
Globalstar’s network was cheaper to implement because the company designed it more recently to make maximum use of today’s low-cost long-distance networks, Kannen explained. Rather than having the satellites do most of the switching, Globalstar’s network uses a series of ground stations, called gateways, around the world to interconnect its satellites with the PSTN where most of the phone traffic occurs.
During a tour of a Globalstar gateway in Smiths Falls, Ont. — one of two gateways located in Canada — gateway telecom technician Michael Frere explained Globalstar uses “bent pipe” technology to relay phone calls from its handsets up to a satellite and then back to the nearest gateway on earth with minimal processing done by the satellite. Each phone call could be handled by as many as four satellites at one time, resulting in less dropped calls, he said.
Due to the lower capital outlay and ongoing maintenance costs of its satellite network, Globalstar will be able to offer its customers a lower-priced service than Iridium, according to Spectrum 2000’s Kannen.
“[Iridium has] Cadillacs up there that they have to keep replacing with Cadillacs, as opposed to the Volkswagens that Globalstar has — and they do the job, making use of the low-cost land-based network,” Kannen said.
Despite being a simpler satellite network design, Globalstar’s system provides superior voice quality than Iridium’s, according to consultant Angus.
Iain Grant, telecom analyst at The Yankee Group in Canada, located in Brockville, Ont., added that Globalstar’s handset “seems to be a lot more sanely developed and designed” than Iridium’s.
“You don’t need to have a banana stuck to your ear, as you do with Iridium,” Grant said. Globalstar uses a Qualcomm handset that weighs less than 13 ounces and measures 7 by 2.25 by 1.75 inches.
The handset uses CDMA technology, supports three hours of talk time, and features 9.6Kbps data capability, which includes the ability to send and receive short messages (up to 240 characters).
The handsets are available in tri- or dual-mode, and they cost $2,500. A fixed user terminal is $4,000.
International phone rates are still being finalized, but Globalstar anticipates domestic calls will cost about $2 per minute for inbound and outbound calls, according to Peter White, general manager of Globalstar Canada in Mississauga, Ont.
Currently, Globalstar has 44 satellites in orbit; it expects to have launched a total of 52 satellites by the end of the year.
Of 38 gateways around the world, Globalstar plans to have five in North America, located in: Smiths Falls, Ont.; High River, Alta.; Clifton, Tex.; Pueblo, Mexico; and Puerto Rico.
To help keep long-distance costs down and simplify dialling, White said, Globalstar will offer its Canadian customers a local phone number with either a 613 or 403 area code. Competing services require users to dial an international phone number even when making domestic calls, White explained.
Telecom consultant Angus said he thinks there is a need in Canada for satellite phone service, especially within the natural resource industries and northern communities. “Whether there is enough need is an obvious question,” he added.
“It is important to recognize that this is a brand new market, and there are a lot of people talking about going into it — a lot more than I think there is potential for,” Angus said.
Yankee Group’s Grant was equally cautious about how well Globalstar’s service will be received by users.
“The proof of the pudding is how well it works under situations of stress, i.e. more than one user on it, and we’re still a little bit away from that.”
More information about Globalstar Canada’s satellite phone service can be found at www.globalstar.ca.