UNION INTERNATIONALE DES TELECOMMUNICATIONS INTERNATIONAL TELECOMMUNICATION UNION UNIÓN INTERNACIONAL DE TELECOMUNICACIONES Paris, 12 October 1993 Preparing for the Global Mobile Culture Dr Pekka Tarjanne Secretary-General, International Telecommunication Union (ITU) INMARSAT Mobile Communications Conference, 12-14 October 1993 Ladies and Gentlemen, It is a pleasure and an honour for me to address this distinguished conference on the future of mobile satellite communications. I'm confident that there will be an exciting future for this emerging new market. But the fact that we are all gathered in one place, rather than engaging in dialogue via a satellite video-link is a sign that the technology still has a long way to progress before we can truly think in terms of a global mobile culture. Our hosts today, INMARSAT, have probably done as much as any organisation to make the concept of a global village a reality: * by enabling journalists to bring us live reports from the political hot- spots of the world; * by facilitating the rapid establishment of disaster relief and rescue operations wherever they are needed across the globe; * by creating the possibility for business and other travellers to stay in contact wherever they may be, on earth, in the sky or at sea. The science fiction dream of global teleaccessibility is today an achievable reality, at a price. But the percentage of the world's population that has access to such facilities or can afford to use them is infinitesimally small. Thus, to talk of a "global" village is still to imply the existence of a select club with a high entry price. One of the tasks of the coming decade is to widen the membership of this club and to reduce the entry price. The title of my presentation is "Preparing for the global mobile culture". During the next three days we will be hearing a lot of detailed discussion about the technical feasibility of mobile satellite services and their possible applications. I will take the bold step of assuming that the technical constraints, substantial though they may be, can ultimately be resolved. Instead, I would like to focus on the other types of barrier to the establishment and market acceptance of global mobile satellite services: specifically, the economic, regulatory and political barriers. Like the technical constraints, the economic, regulatory and political barriers can probably ultimately be overcome. But this process may prove very slow and there is a considerable danger that the potential users of a global mobile satellite system may simply not be able to afford it or may choose to use alternative technologies. Economic barriers At this conference, we are essentially discussing the birth of a new venture: a mobile satellite communications system that offers potential users a go-anywhere, use-anywhere personal telephone. Certainly satellite systems can, and do, provide many other data and information-based services. But the major demand driver, and possibly the only service that could justify the planned level of investment, is two-way voice communications. However, this particular baby is not the first-born in the family. It already has brothers and sisters with whom it will have to co-operate and compete if it is to grow to be strong and healthy. To be more specific, many of the services which global mobilephones could provide are already offered by terrestrial mobile systems. At the end of 1992, there were already more than 20 million cellular telephones worldwide and this will probably increase to around 100 million by the time that "personal" mobile satellite services are commercially available, towards the next century. Furthermore, the long-established fixed-link telephone network has become more "mobile" recently with the growing use of calling cards, credit- card telephones and country-direct services. These services enable travellers to use telephones in foreign countries as if they were using their home telephone. Again, these services will be well-developed and much more sophisticated by the time that mobile satellite services are in a position to compete directly with them. The main economic barrier to the development of personal mobile satellite services therefore will be the need to interconnect and compete with existing mobile and fixed-link services. If satellite services are not to remain just as a niche market, then they must be able to demonstrate a competitive and/or functional advantage over existing services. Initial estimates put the cost of calls placed using satellite mobilephones at around US$2-3 per minute. This would be competitive with some existing international telephone routes, but not the high volume routes. So, in the short-term during the period when investors will be expecting a return on their investment, it is unlikely that satellite mobilephones would compete on price with the terrestrial network. It is also doubtful whether they could compete on functionality in those countries which already have well-developed networks. Furthermore, the terminal handsets which offer dual-mode, terrestrial or satellite use are likely to be more bulky and more expensive than their equivalents for use on terrestrial services only. So how can personal mobile satellite services compete effectively against terrestrial systems? In short, they must offer connectivity in those parts of the world which are poorly served by existing services. A number of aspects can be identified in which existing services are failing to deliver: * Existing mobile services are heavily concentrated in the richer nations. Even though more than a hundred countries now offer a cellular radio service, nevertheless more than 90 per cent of mobile subscribers are located within the 24 advanced industrial nations of the OECD. Mobile satellite services must prove themselves to be genuinely global in coverage and accessibility; * Existing analogue mobile services generally offer a low level of roaming and mobile-to-mobile connectivity. This is largely due to the fact that there are several different competing standards for analogue cellular radio and many more standards for cordless, PCN and other mobile radio services. The changeover to digital cellular radio may lead to some market rationalisation, but the GSM standard is not universally recognised. While there may be room in the world market for more than one satellite service supplier, there is unlikely to be room for more than one mobile satellite standard. In this sense, the role of the ITU as a supplier of global, rather than just regional, standards continues to be important. * The majority of the world's population lives in countries which still have a penetration rate of less than one telephone mainline per 100 population. In at least 50 countries, this basic target has still not been attained. Furthermore, the waiting list for telephone installation is more than 40 million worldwide and is growing rather than declining. Satellite services may offer some hope for providing services in some of these more economically and geographically marginal areas of the world, though not necessarily at an affordable price. These sort of tasks -- extending the reach of the global telephone network, extending connectivity and serving the unmet demand for telecommunications services -- are all laudable, but it is still not clear whether such an exercise could be profitable. Global satellite service providers offer a vision of how basic telephony could be extended but not necessarily how the service could operate on a commercial basis. Some of the activities being targeted by satellite operators, such as disaster relief or humanitarian aid, would never be commercial operations per se. Yet it will be necessary for the service to reach a much wider, and a much richer, user community if the service is to be commercially viable. Regulatory barriers Overcoming the economic barriers to the development of a global mobile satellite telephone service involves identifying potential users and potential applications. However, there are significant limitations on the ability of the International Satellite Organisations (ISOs) to sell services direct to end users. Traditionally, ISOs have provided only the space segment to provide connection between PTO networks. National signatories have then provided end- user connectivity. The status of the ISOs dates from an earlier period of history when most countries had just one national PTO, which enjoyed monopoly status over national territory and which provided international services on a joint basis with other national monopoly PTOs. It made sense to share the costs of international satellite systems between countries. However, in a world where many countries have multiple operators, and where the second cellular operator is usually in direct competition with the cellular subsidiary of the national ISO signatory organisation, then the position of the ISOs needs to be reviewed. A number of issues need to be addressed: * Should the ISO be given the right to market their services direct to end- users in competition with national signatories? * Should the ISOs continue to enjoy the privileges of an inter-governmental agreement, such as being exempt from taxation, even though the national signatories which own them are increasingly private companies? * Should the ISOs continue to combine certain regulatory rights with operational functions or should the two be separated? * Can the model of co-operation on which the ISOs are founded continue to prevail in an increasingly commercial and competitive environment? Mobile services are the fastest growing part of the satellite services market and it is inconceivable that the ISOs would stay out of this market. However, they will increasingly find themselves in a position in which they are competing with each other, with privately-owned satellite systems, and with their own national signatories. It is unlikely that a global mobile satellite system could be developed without the involvement of the ISOs, but they will need to gain far more commercial freedom than they have at the moment in order to develop this market. Other regulatory problems stem from the fact that there is no global regulatory body. Consequently, piecing together a global service around national regulations, bi-lateral and regional agreements and the international Radio Regulations becomes an elaborate jigsaw game. There is a concern that decisions taken in certain economically-important countries or regions would be imposed de facto on the rest of the world. Thus regulatory questions of licensing operators, assigning spectrum and endorsing standards quickly become political issues. Political barriers The third type of barrier which potential investors in a global mobile satellite system face is the political barrier of persuading each of the sovereign states of the world to permit the service to be offered across its territory. If a global mobile satellite service is to be established, then the service provider must gain access to the majority of countries, preferably using the same set of frequencies throughout the world. While it would be technically possible to block out certain territories, or to hop between frequencies, this would make the service more expensive, more difficult to use and more difficult to market as a global service concept. Most countries have traditionally retained the right to regulate market access to communications services operated within their boundaries and to derive benefit from it (for instance, through taxes or, where the operator is state- owned, through a direct share in the profits). In addition, most countries retain the right to regulate the use of terminal equipment within their territory (through type approval) and, in some cases, to exercise control over the nature of the material being communicated (such as controls over distribution of pornographic or subversive material). Indeed, the ITU is founded on the principle of national sovereignty. While it might be convenient to ignore national sovereignty and operate a global service to a borderless world, in practice this approach would be naive and would result in legal problems that would be difficult to resolve. The lively and lengthy discussion of spectrum allocations for low earth orbit (LEO) satellite services at the 1992 World Administrative Radio Conference (WARC), and the terrestrial spectrum clearing that this would entail, provided a foretaste of the difficulties that any operator of such a service is likely to encounter. While the service providers may choose to emphasise those services against which it is difficult to object (safety of life, disaster relief etc), many countries, particularly in the developing world, fear that a global mobile satellite service will be targeted at wealthy business travellers and foreign- owned subsidiaries of multinational companies. This is exactly the sector which national operators are trying to target themselves. There is a legitimate fear that a global mobile satellite service will be the "ultimate bypass"; effectively cream-skimming the most lucrative part of the telecommunications market. These fears are well-founded. Unless potential service providers of such a global mobile service can convince representatives from developing countries that they have more to gain than to lose from permitting the operation of such a service across their borders, then the service could be strangled at birth through political opposition. Conclusions In this presentation, I have attempted to identify some of the main barriers that face the proponents of a personal, global mobile satellite service. It is likely that this new service will represent a threat to the livelihoods of those service operators which provide services which are non- global, non-mobile and non-satellite based. In particular, developers of the new service must overcome a series of economic, regulatory and political barriers which are every bit as difficult to tackle as are the technical barriers to developing the service. However, I do not want to leave the impression that the service would be impossible to develop. On the contrary, what the telecommunications industry needs more than anything else as we enter the new century is a new vision, and the concept of global connectivity is an essential part of that dream. INMARSAT, Motorola and others have captured the imagination of the world with their vision of satellite telephones. Without such a vision, it would be increasingly difficult for the telecommunications industry to continue to attract the brightest graduates in competition with finance, computing, and other business sectors which are perhaps more glamorous. It is important that the international telecommunications community has a clear sense of direction, even if it is not sure of the best route to take. So what steps should network planners and policy-makers take to ensure that the massive investment that a global mobile satellite system needs produces a genuinely useful, universal and profitable service and not just a publicly- subsidised white elephant? The first element is careful planning, particularly from the point of view of market research on the potential demand for global mobility and the substitutability between different services. The second element is co-ordination between potential service providers, notably on the development of common standards and agreement on spectrum allocations. The third essential element is sensitivity to the expression of national sovereignty, particularly with regard to market access and universal service obligations. Not surprisingly, these three elements of planning, co-ordination and national sovereignty were exactly the issues being discussed 130 years ago when the International Telecommunication Union was being formed. They too were planning a service which was innovative, revolutionary and which required massive investments. They too faced much opposition. They too had a goal of global connectivity. The rest, as they say, is history.