A Shift in the Satellite Market

Providers of satellite-based communication services are targeting an expanding customer base.

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Satellite services linking countries and regions around the world are gaining in importance as incumbent telephone operators seek to enhance their cross-border trade and expand their market share abroad.

Providers currently operating satellites in geostationary orbits high above the earth, such as Eutelsat, Inmarsat and Intelsat, are gearing up to meet this new demand, as well as to cater to a customer base that is no longer limited to government-owned telecommunications companies.

Eutelsat, created in 1977, offers telephony, telegraphy, telex, fax, data, videotex, TV and radio transmissions, as well as specialized services for radio navigation, space research, meteorology and satellite broadcasting. Eutelsat is extending its reach through the launch of new satellites, due to start this summer. Coverage will include the whole of the African continent, eastern Russia and Siberia and the Indian subcontinent, as well as its core countries in Europe.

Regional satellite providers like Arabsat are turning to Eutelsat to expand their coverage. Arabsat, which signed a long-term lease on Eutelsat's Hot Bird 4 earlier this year, said that the agreement would help it to target ''the vast community of Arabs living in Europe and in the surrounding countries.''

Also in the Middle East, Kuwait's Mobile Telecommunications Co. has joined telecoms operators from Qatar, Bahrain, Saudi Arabia, the United Arab Emirates, Yemen and Egypt to subscribe to mobile and fixed-line services due to be provided by the Thuraya geostationary satellite, which is being launched in 2000 by the UAE national carrier, Etisalat.

The U.S. giant AT&T has combined its long-distance carrier services with a complete range of ship-to-shore and shore-to-ship communications through an alliance with Inmarsat, the London-based organization created in 1979 to provide worldwide mobile satellite communications for the maritime industry. The AT&T Inmarsat Mini M service uses the new generation of Inmarsat Series 3 orbs to provide global coverage using a portable, low-cost phone.

Station 12, the satellite-communications subsidiary of PTT Telecom Netherlands, is also using geostationary satellites to provide its customers with global mobile services for voice, fax, telex and data messaging.

BT, France Telecom and Deutsche Telekom use Intelsat's global satellite systems to provide basic long-distance telephone services. The organization, which offers voice, data and video services to customers in more than 200 countries and territories, is currently completing the launch of its latest Intelsat-VIII series of orbs.

More cross-border trade expected

Global trade in satellite-based telecommunications is expected to escalate rapidly in the next few years thanks to the launch of constellations using low and medium earth, as well as geostationary, orbits.

Eutelsat, Inmarsat and Intelsat have the advantage of being able to serve their customers using fewer satellites due to their positioning in a higher orbit above the earth. The development of smaller portable receivers and handsets is also helping to bring down costs, thereby attracting new private carriers seeking to make mobile communications available to business and individual users internationally as well as to governments and incumbent operators serving national markets.

Moves by governments, telecommunications and satellite operators, manufacturers and service providers to agree on common approaches to licensing for global mobile personal communications by satellite is also enhancing cross-border trade in satellite services.

Last year, the International Telecommunication Union sponsored a series of meetings among these players to reach agreement on measures that will allow customers to use satellite handsets wherever the service is authorized, without the need for a local license.

Member states of the World Trade Organization also agreed last year to lower customs duties on imported satellite terminals and other telecoms equipment.

Inmarsat and Intelsat are now making moves to restructure their organizations to open them up to the private sector. Inmarsat plans to become a fully privatized company by January 1999.

A meeting of Eutelsat's 48 member governments this month is expected to decide on measures to restructure Eutelsat to separate its political and commercial operations and set up a new incorporated company.

Pamela Ann Smith

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