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Satellite Communications in the Global Information Infrastructure STEVEN D. DORFMAN This paper presents my views on satellite communications and the global information infrastructure (GII). I believe the GII is more important to the future of this country in terms of world leadership, job creation, and export revenues than the national information infra- structure (NII), which is often called the information superhighway. The GII is also of paramount importance to the world's newly emerg- ing global economy. Today's global marketplace requires a reliable, timely, and unrestricted flow of people, information, capital, and products. By creating a seamless, ubiquitous, and cost-efficient glo- bal information infrastructure, we provide the communications archi- tecture for the global marketplace. Satellites, in particular, will play a critical role in executing this mission. THE NATIONAL INFORMATION INFRASTRUCTURE Ever since Vice President Albert Gore first lit the fuse with his focus on the NII, the media have responded with a barrage of stories. Media megamergers, alliances, and acquisitions are frequent news. Stock prices soar at the mention of the magic phrase "interactive multimedia." Conferences are being held, and committees are being formed. Hundreds of billions of dollars have been pledged to build the NII. 39

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40 STEVEN D. DORFMAN Much of this interest is justified, because we are indeed on the brink of turning some fascinating concepts into reality. These in- clude viewing whatever we want, whenever we want video on de- mand; strolling through video shopping malls from our living room and ordering with a push of a button on the remote control; having two-way fiber optic video transmission into and out of the home; playing video games with someone in another state; telemedicine; and telecommuting. But so far, most of what we hear and read about the NII suggests that fiber will be the delivery system. Satellites are seldom men- tioned. Even the term "information superhighway" connotes some- thing that is land-based, which is why I believe this term is a misno- mer. It is true we already have 15 million miles of fiber optic cable crisscrossing the country. This is more than 300 times the mileage of our federal interstate highway system. However, I believe that satel- lites will play a major role in the NII, because they fulfill both of Vice President Gore's clearly stated NII policy objectives of competition and universal access. COMPETITION AND UNIVERSAL ACCESS IN THE NII The real story behind the hype about the NII is competition- how we are breaking away from the monopoly concept of telephone and cable service. The original thought that government would in- vest huge sums to help create the information superhighway is gone. Instead, telecommunication bills are being promoted to encourage competition for local phone, cable, and long-distance service. Now, the cable company will be able to compete with the local phone company and vice versa, while long-distance and local phone compa- nies will also be able to compete with one another. In this competi- tive environment nrices will droll. services will improve, and new 7 rip -a 7 applications will flourish. Regarding universal access, the second NII policy goal, the real issue here is the last-mile link to the home or office. This final mile, bridged either by wire or by satellite dish, is where the majority of costs are.

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SATELLITE COMMUNICATIONS THE ECONOMICS OF SATELLITE TRANSMISSION 41 Satellite communications will flourish in this new competitive environment and will help make universal access a reality. Hughes' newly launched DIRECTV service is a good example. We offer 150 channels of TV service to homes that have no cable. That is universal access. We also provide a competitive alternative to consumers who do have access to cable. While bridging the last mile to the home by cable costs $2000, providing this link by satellite costs $700. The economics favor satellites, if the playing field is kept level by pre- venting cross subsidies. Similarly, satellite communication will provide two-way, high data-rate services using very small aperture terminals (VSATs) where Integrated Services Digital Network (ISDN) is not readily available, and it will be a competitive alternative where ISDN is available. Moreover, satellites can provide mobile communication when terres- trial cellular communication is unavailable. Thus, with 20 gigahertz (GHz) of satellite transmission capacity available from geostationary orbit, a new realism is now replacing the hype. Many are now questioning whether the cost of a fiber to each home is justified if phone users or taxpayers do not pay for it. After all, how much are people willing to pay to save a trip to the local video store, especially when a service like DIRECTV can pro- vide video on near demand? As a result, alliances and mergers, such as the one between Bell Atlantic and TCI, are being reconsidered. Pilot interactive multime- dia systems are being carefully reviewed, and investments are being rethought. One Bell Atlantic executive recently described the firm's planned advanced video networks as "a little more difficult to de- velop than people thought." The company intends to invest $11 billion to develop these networks. Like other companies, Hughes is working vigorously to inject the already sophisticated NII with new capabilities and services that focus on satellite communications. I am particularly proud of our Galaxy Classroom project, where we have demonstrated the power of satellite-based distance learning by accelerating the learning rate of K-4 students by one grade in 40 schools around the country. We will expand this program to 20,000 schools. We support the efforts of Congress, the Justice Department, and the Federal Communications

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42 STEVEN D. DORFMAN Commission (FCC) as they strive to implement the architecture that will serve this country best in the 21st century. Increasingly, however, Hughes is also focusing its attention out- side the United States. As both industrialized and developing nations increase their demand for access to information, entertainment, and mobile communications, the GII is where the action will be. In a March 21, 1994 speech in Buenos Aires, Vice President Gore talked about the importance of the GII and did an excellent job of position- ing America for a leadership role. The ubiquitous reach of satel- lites their ability to provide that crucial last-mile linkmeans that satellite technology will play a major role in the GII. THE GII: MEETING THE WORLD'S NEED FOR TELECOMMUNICATIONS In recent years, the world has exchanged a bipolar, Cold War mentality for an environment that recognizes the benefits of multilat- eral trade and cultural exchange. A global economy has emerged. But developing nations are finding that in order to participate in this global economy, they must build significant infrastructureevery- thing from modern roads and air transportation systems to reliable electronic banking and telecommunications networks. A global information infrastructure will require massive devel- opment around the world. Many countries have only minimal access to communications technologies and very primitive or poorly devel- oped internal and external connectivity. China, for example, will spend $600 billion on infrastructure in the next 6 years. Without huge spending on such infrastructure, developing nations will experi- ence bottlenecks that will impede their economic growth and social progress. Ironically, because they have made limited investments in communications infrastructure in the past, developing countries will be heavy users of wireless, digital, and satellite technologies. PRIVATIZATION, COMPETITION, AND ADVANCES IN SATELLITE TECHNOLOGY As we move toward a seamless, ubiquitous, and cost-efficient global information network, three significant trends are shaping the future of satellite communications.

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SATELLITE COMMUNICATIONS 43 The first is privatization. Many governments cannot readily afford the major investments required to develop communications infrastructure and so are increasingly turning to sources of private capital. In Latin America, privatization is revolutionizing telecom- munications in places like Mexico, Argentina, Chile, Colombia, and Venezuela. In 1994, India ended its state monopoly on telecommuni- cations after determining it would have had to spend over $7 billion to modernize its phone system. As privatization takes hold, Hughes' international satellite con- struction business is becoming increasingly commercial. For in- stance, most of the satellites we now build for other countries are contracted by private firms. Hughes-built satellites serving Japan, Malaysia, China, Indonesia, Luxembourg, and Thailand were all con- tracted by private, nongovernment entities. Competition is the second key trend shaping the future of satel- lite communications. Competition from both domestic and foreign satellite service providers is driving down costs, spurring technologi- cal innovation, improving service, and expanding offerings to users. In August 1994, for example, Singapore announced it would let privately owned companies compete to provide satellite communica- tions links that previously could be supplied only by two govern- ment-controlled enterprises. By 1998, the European Union will de- regulate all basic telecommunication services, opening a $100 billion-a-year market to competition. Privatization and competition are also creating new regional sat- ellite operators, like Panamsat and SES. With the launch of PAS-3 in December 1994 and PAS-4 in 1995 both high-power Hughes 601 satellites Panamsat will operate the world's first privately owned global satellite system. SES, based in Luxembourg, covers Europe with high-power TV signals using HS601 satellites. Private compa- nies like SES and Panamsat are building and expanding their systems to compete against the old-line public satellite consortia. Along with added capacity, these new operators are infusing the international satellite transmission market with greater flexibility, improved per- ~ . . . . tormance, and competitive pricing. The third factor shaping the future of satellite communication and, along the way, helping to create a more universal and lower-cost global information infrastructure, is the quantum leap that has been achieved in satellite technology. Improvements in efficiency in space,

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44 STEVEN D. DORFMAN on the ground, and within the radio spectrum are lowering the cost of satellites and satellite services for everyone. For example, 30 years ago one needed a 100-foot antenna to receive one TV channel from a satellite, but today's DIRECTV can transmit 150 TV channels into an 18-inch dish. ADVANCES IN SATELLITES, EARTH TERMINALS, AND DIGITAL TECHNOLOGY Let us take a closer look at some of these technological ad- vances. Today's satellites are more powerful and efficient. Re- configurable spot-beam antennas shape the beams more accurately and weigh less. Miniaturization and component improvements have made receivers more sensitive and lighter. Traveling-wave tubes and solid-state power amplifiers have increased efficiency and, hence, require less prime power. Batteries and solar panels are more effi- cient and lighter. Microprocessors simplify tracking, telemetry, and control of the satellite. Modern composite techniques contribute to lighter-weight satellite structures, and on-board propulsion has be- come more cost-effective. In 1995, Hughes will launch the first commercial ion-propulsion system, for the Galaxy III-R spacecraft. This will save 800 pounds of satellite mass and more than $10 mil- lion per launch. As a result of these technological improvements and improved production efficiency, the Hughes 601 satellite is up to five times more cost-effective than its predecessor of the 1980s. Advances in technology are also yielding more efficient, lower- cost ground-based satellite terminals. At the 1977 World Adminis- trative Radio Conference, scientists predicted that 60 decibel watts (dBW) of power would be required to transmit TV signals to a one- meter dish. Since then, there has been great improvement in receiver sensitivity, antenna efficiency, and signal processing. Today, only 50 dBW are required to transmit TV to a half-meter dish, and receiv- ers can be purchased for less than $700. Finally, digital communication combined with digital data com- pression is enabling new satellite applications. For example, com- pression of digital audio signals has made satellite mobile communi- cations economically feasible by increasing the capacity of satellites tenfold. Compression of digital video signals will result in at least a fivefold increase in the capacity of a transponder to transmit televi-

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SATELLITE COMMUNICATIONS 45 sion channels. This, combined with the decreased cost of decompres- sion chip sets in ground receivers, permits new applications of satel- lite digital TV, such as Hughes' DIRECTV. In general, compression of digital signals will significantly reduce the cost of transmitting through satellites. I believe that the satellite communication market is elastic and that the reduced cost will increase demand. AN EXPLOSION OF SATELLITE COMMUNICATIONS We already see evidence that the increased cost-efficiency of satellite communications is stimulating demand. There is an abun- dance of new satellite capacity. Already, 145 commercial communi- cations satellites orbit the globe. Another two dozen were scheduled for launch during the last three months of 1994, and more than 100 new commercial communications satellites are on order. Nine hun- dred filings have been submitted to the International Telecommuni- cation Union (ITU) for future satellite systems, and that number excludes hundreds more low Earth-orbiting (LEO) satellites that companies such as Iridium and Teledesic plan to launch. At Hughes, we have our largest-ever backlog; in 1994 and 1995, we will be launching an average of one satellite per month for customers in Thailand, Mexico, Brazil, and other countries. The technological advances I described more powerful satel- lites, more sensitive lower-cost receivers, and digital communica- tions are bringing more than just cost efficiencies. They are also stimulating new satellite applications. I would like to discuss three of these: high-speed interactive voice, data, and video transmission; satellite mobile services, which will eventually evolve into hand- held terminals; and direct-to-home television broadcasting through satellites. Before discussing high-speed interactive communications, how- ever, we must consider that much of the world is still in need of basic telephony. In China, which has fewer than two phone lines for every 100 citizens, a private residential phone line from the Beijing Tele- phone Company requires a 6 month wait and costs $575, the average government worker's salary for an entire year. In Mexico, the phone system is so unreliable that when a call finally does go through, the common greeting is not "Hello" but "Who have I reached?"

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48 STEVEN D. DORFMAN tile Corporation and the Canadian Telesat Mobile Incorporated, will for the first time give cellular car phone users ubiquitous roaming service across North America. Dual-mode handsets will route calls over cellular networks when they are available and by satellite when they are not. AMSC-1 and TMI-1 will interconnect with all existing cellular systems and with the entire public switched telephone network, creat- ing the first seamless network for nationwide mobile voice, data, and fax communications in the United States and Canada. The satellites will be capable of serving hundreds of thousands of customers. A follow-on AMSC-2 satellite with eight times the capacity of AMSC-1 will lower costs; more important, its tightly focused spot beams and on-board digital processing will reduce the needed uplink power to less than one-half watt. This will permit hand-held service, using lightweight pocket phones, for the first time. Hughes is one of several companies examining hand-held mo- bile telephone service in other regions of the world Pacific Asia, for example, where demand is great. While Hughes and others are cur- rently working on geostationary systems, several different entities have proposed projects that would provide worldwide hand-held ser- vice via a constellation of either low or medium Earth-orbiting (MEO) satellites. Two LEO systems are being built: Motorola's 66-satellite Iri- dium project and the 48-satellite Globalstar system from Loral/ Qualcomm. A MEO system based on 12 satellites is planned by Inmarsat. Construction of this system is scheduled to start in 1995. Each type of system proposed~EO, LEO, and MEO has cer- tain advantages. A GEO system is most suitable as a regional system and has the lowest cost. Ultimately, a series of regional GEO sys- tems could form a global system. A LEO system will be the most expensive service because of the large number of satellites required, but it will not have the transmission-time delay of GEO satellites. A MEO system will be more expensive than a GEO but less than a LEO and will have minimal time delay. I believe worldwide demand will be such that all three types of systems could coexist. Ubiquitous hand-held telephony, using a com- bination of satellite and terrestrial communications infrastructure, is a virtual certainty for the 21st century.

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SATELLITE COMMUNICATIONS 47 video. Spaceway will consist of four interconnected regional satellite systems operating in the Ka band and providing worldwide coverage. By transmitting in this high frequency band and by using tightly focused spot beams, we can transmit to or from ultra-small antennas measuring 26 inches in diameter. The price of these dishes will be less than $1,000. The Spaceway system will play two key roles. First, it will provide basic telephony to underserved areas of the world and offer these regions access to global telecommunication. Second, Spaceway will provide critical advanced communications support to the global marketplace, where huge quantities of information must be accessed and shared electronically. Spaceway will offer business users a wide variety of applica- tions, including desktop video telephony and conferencing, computer networking, technical tale-imaging, CAD/CAM transmission, and high-speed, low-cost access to the next generation of online multime- dia databases, at rates from 16 kilobits per second to 1.5 megabits per second, and higher if necessary. Spaceway will enable the entire world to have access to the kind of souped-up capacity that we are planning for the United States. And, it will deliver capacity on demand using asynchronous transfer mode (ATM) technology at a relatively low cost. Spaceway will offer two-way video for less than the current price of an international phone call and international phone calls for less than the current price of a local phone call. THE NEXT GENERATION: MOBILE SATELLITE SERVICES Meanwhile, our second new application satellite mobile com- munications- is about to take off. The pioneering work has been done by Inmarsat, which provides service to tens of thousands of maritime and aeronautical customers. The first land mobile services will be available soon via piggybacked payloads on the already- launched Optus and Solidaridad satellites of Australia and Mexico, respectively. In spring 1995, the first high-powerland mobile satellite, AMSC-1, will be launched, followed shortly by its twin, TMI-1. These satel- lites, which Hughes is building for the U.S. American Mobile Satel-

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46 STEVEN D. DORFMAN Satellites, in the form of VSAT networks, already play a tremen- dous role in providing basic telephony in such areas. While voice is not a common VSAT application in the developed world, it is per- haps the most critical application in both public and private networks in places such as China, India, southern Asia, and Eastern Europe. VSATs also transmit two-way data and video for business applica- tions and offer the unique ability to overcome the challenges posed by distance and terrain. In Africa, for example, 70 percent of the people live in rural areas, and major business centers, like Cairo and Nairobi, are thou- sands of miles apart. The continent's vast mountain and desert areas would make it prohibitively expensive to provide telephony via fixed terrestrial links. VSATs offer an immediate, low-cost solution and the only real opportunity to rapidly advance the continent's economic development. It will be a very long time before the developing countries of the world have fiber optic networks approaching the sophisticated networks that exist in the United States. VSAT networks are providing far more than basic public tele- phone and government communications services. They're also being used for more sophisticated applications in banking, retail merchan- dising, oil exploration, and newspaper production and distribution. In Europe, VSATs handle Holiday Inn's international reservations system and Visa's global transaction network. The China People's Daily is published via a VSAT network. SPACEWAY: HIGH DATA RATES AND BANDWIDTH ON DEMAND With these VSAT applications as a starting point, we now find ourselves on the threshold of a new era of interactive high data-rate transmission. Microsoft's Bill Gates and cellular phone pioneer Craig McCaw made headlines when they announced an ambitious plan to launch a high data-rate global satellite business, Teledesic. The project would rely on a global network of 840 low Earth-orbiting satellites. Alternatively, Hughes has announced its intention to establish a global network of geostationary (GEO) satellites, called Spaceway, that will provide an interactive bandwidth-on-demand service for telephony, high-speed data exchange, and high-resolution interactive

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SATELLITE COMMUNICATIONS DIRECT-TO-HOME DIGITAL TV 49 High-power direct-to-home TV is already a reality. With the launch of Hughes' DBS-1 and DBS-2 satellites, every U.S. house- hold with a TV can now access a cornucopia of digitally pure video programming, accompanied by CD-quality audio, via an 18-inch dish. Using digital compression, Hughes' DIRECTV company and Hubbard's USSB are able to beam more than 150 channels of pre- mium programming directly into every American home. Competi- tors such as Echostar and Primestar have announced similar services. Demand for TV entertainment and information is also exploding internationally. Currently, more than 25 million privately owned satellite dishes in backyards and on rooftops across the world are delivering vast menus of programming directly into the home. SES, for example, is broadcasting programs in five languages to over 17 million privately owned receivers. After Germany and the United Kingdom, Poland is the European country that has the largest number of privately owned dishes, even though no Polish language channels are broadcasting and satellite dishes were banned there until 1990. Satellites with names like AsiaSat, APStar, Palapa, JCSat, Superbird, and Astra are sources of such familiar channels as CNN, HBO, ESPN, and MTV. Because most of the world has access to only a handful of local channels, there is enormous pent-up demand for more variety and for foreign programs. This demand can be filled most cost-effectively by satellite TV, especially when there is little or no cable. As already indicated, it costs less to provide access by satellite than to build a new cable or fiber link to the home. Because of these fundamental economics and built-in demand, Hughes is exporting its high-power direct broadcast satellite (DBS) technology to the rest of the world. We are building high-power satellites capable of direct-to-home broadcasts for China, Malaysia, Mexico, Australia, and Japan, among others. Australia, which has no cable and only a handful of broadcast stations in the major cities, got its first direct-to-home TV service in 1992 via an Optus satellite. A second Optus satellite went into service in 1994. Also, Hughes recently teamed up with three of Latin America's leading media companies in a joint venture called Galaxy Latin America (GLA). Beginning in early 1996, GLA will bring multi-

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so STEVEN D. DORFMAN channel satellite-to-home digital TV to millions of households in Central and South America and the Caribbean. Panamsat has an- nounced a similar system. The spectacular success of Star-TV in the Asian-Pacific region is a good window into the future of satellite-to-home TV worldwide. Star-TV uses 10 channels on AsiaSat, which Hughes built in 1990, to beam entertainment programming to 60 million homes in 53 coun- tries. Apparently, The Bold and the Beautiful and Santa Barbara are especially popular in India. Because of all these satellites, global viewership is rising expo- nentially. CNN International currently has 80 million subscribers, up from just 11.6 million in October, 1991. Soon, satellites will serve the entire world with direct-to-home digital TV, providing multiple programming choices from every corner of the globe. A VISION FOR THE FUTURE In 1962, President John F. Kennedy envisioned the United States using its technology to connect the world through satellite communi- cations. From this vision came the Communications Satellite Act and two of the most successful international organizations in history, Intelsat and Inmarsat. Now, more than 30 years later, we have the opportunity to trans- port President Kennedy's vision into the next millennium. By ex- panding on that vision, we can create a global telecommunications infrastructure that will make this a better world. This satellite-based network will allow schoolchildren in a remote African village to receive a superior academic or technical education from instructors in Nairobi, Cairo, or virtually anywhere in the world. It will enable a doctor in Afghanistan to transmit a patient's X-rays and medical records instantly to a consulting specialist in the United States. Local contractors in Sarajevo or Beirut will be able to rebuild their cities with the benefit of online engineering and architectural expertise from other countries. And, using workgroup computing, employees in the budding economic zones of Eastern Europe can contribute their talents to leading multinational corporations. An integral part of this global telecommunications infrastructure will be the satellite global phone, which we will automatically slip into our purse or pocket each morning. It will be a smart phone,

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SATELLITE COMMUNICATIONS 51 always in communication with our personal computer, even as we travel to the most remote corners of the world. It will know where we are through a global positioning system (GPS) chip set, automatically switching to satellite mode when we move out of range of terrestrial cells. Satellite-to-home television will keep us well informed and en- tertained and will help us learn and understand the values and cul- tures of other societies. Hundreds of millions of us will own personal satellite dishes, and we will be able to receive programs from every continent. Everybody will be watching news events as they happen, wherever they happen. There will no longer be any remote corners of the world. There will be challenges. We must modify the Comsat, Intelsat, and Inmarsat organizations so they can keep pace with today's tech- nology and the worldwide drive toward competition and privatization. We must formulate an international approach to the orderly alloca- tion of frequency spectrum for geostationary and low Earth-orbiting satellites in a highly competitive marketplace. Sufficient spectrum exists for all of the satellite applications discussed here, but it must be allocated efficiently. Another challenge we face is to create a global environment that permits the free flow of information across borders and, at the same time, protects copyrights. As in 1962, we have an enormous opportunity to shape the future of satellite communications around the world. By exporting our nation's rich store of satellite technology and know-how, we not only create new jobs in the United States and boost our own economy, we also further the economic and social progress of developing nations through improved access to education and health care. By exporting America's defining values of democracy and human rights, we will make this a better world.

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56 JOHN E. MAJOR signaling; the availability of computing brought on by the develop- ment of the microprocessor and advances in semiconductor technol- ogy; and the emergence of competition and choice spawned by new telecommunications policies worldwide. What is missing from this picture is wireless communications, the next generation of telecommunication technology represented by paging, cellular, and PCS services. Until recently, everything you could receive on a wall-attached television in your home, you could receive on a portable television, whether you chose to use it in an- other room, on a campout, or at a sporting event. That started to change with cable, when the delivered wired bandwidth for television services was effectively increased by two orders of magnitude. To- day, one buys a portable TV but ends up tying it permanently to the wall with a coaxial line. That has got to change. A similar shift has occurred in computing. Early on, what could be done with a portable computer, or what we then called a portable computer, was pretty much what could be done with an office or home computer. That changed when LANs and computer networks came into being. With that transition, the unnetworked portable com- puter became less useful than its LAN-based equivalent. These changes initially went unnoticed; after all, at least the new portable computer was portable when you carried it home. This too will change. In the near future, for a portable computer to be truly por- table, the network will need to be portable as well. Let us keep this perspective and move forward to the time when the NII/GII begins to deliver on its promises. People far from one another will be able to talk face to face, so groups can interact and decisions made more quickly; families will be united although they live miles apart; and high-speed computing and information access will be available in the home and office. Because of these develop- ments, people will be more productive and better informed. Today, the communications services that are available to a worker in his or her office are available when that person is on the move. In the future, that will no longer be true unless broadband wireless services are brought in line with broadband wired services. Some people say this cannot be done. Can you imagine what would have happened to television if, when it was first conceptual- ized, people had said that it would not work because it could not be made to fit into the bandwidth of the existing AM and FM radio