The countdown to commercial service for low earth orbit satellites has begun. Now operators must prove they can get their businesses off the ground. Mobile communications executives have promised any time, anywhere access for at least a decade. They are about to deliver-and we soon will discover if we really want it. The first low-orbit-but high-risk-satellite ventures will launch commercial service later this year. Be careful not to sell LEOs short.

The big long-distance carriers talk about global area networks, but these silicon birds are the real thing. They don't just interconnect cities, they blanket the entire planet-from rural areas and deserts to rain forests and mountaintops. LEOs will bring basic telecom services-virtually overnight-to the entire world.

Computing and communications industry veterans know North America is key to any new product.

It was here that PCs, LANs and cell phones got their start. No other market puts as much emphasis on saving time, cutting costs and having a competitive advantage. And no other market is so quick to separate the PalmPilots from the Bomar Brains. The ultimate marketing question is: Will they buy it in Peoria?

New telecom ventures fall into one of two categories. Some believe being first to market is most important. Others would rather sit back and learn from the pioneers' mistakes.

The first LEO satellite operators-Iridium, Globalstar and Orbcomm-are definitely in the first-to-market camp (Table 1). Not only do they believe that a huge market for their services exists, but also that the satellites they are deploying are just the first generation.

What's scary is that each of these operators must acquire millions of subscribers to fulfill its business plans. Inmarsat, a worldwide satellite network reachable with briefcase-sized transceivers that cost thousands of dollars, attracted only about 100,000 users. Its customers may turn out to be low-hanging fruit for Iridium, Globalstar and Orbcomm. But to be truly successful, they must create a mobile satellite market about 100 times larger than today's.

Iridium goes global Iridium, Motorola's brainchild, is on track to be first to launch commercial service. As of early April, 56 of Iridium's 66 satellites were in orbit, with another seven awaiting liftoff. Assuming everything continues smoothly, service will start in September.

Iridium was first conceived as a global cellular telephone and paging network. But the explosive growth of terrestrial wireless has forced Iridium to change its strategy. Instead of competing against terrestrial networks, Iridium plans to cooperate with them.

The company anticipates serving four types of customers: Iridium satellite (satellite only), Iridium city-to-city (terrestrial only), Iridium universal (satellite and terrestrial) and Iridium paging and messaging.

Although Iridium will partner with terrestrial carriers, it still is positioning itself as the first truly global cellular telephone and paging network. It has even obtained its own country code (+8816) from the International Telecommunication Union. Iridium claims to be the "world's only nation without borders, barriers or trade restrictions."

But most striking, Iridium expects that some of its customers will never use its satellite links.

How can this be? Although GSM claims to be a world standard, it is not popular in Latin America and has been excluded from Asia's first-and third-largest markets, Japan and Korea. All these countries, however, support code division multiple access (CDMA) or AMPS.

Iridium will provide true international roaming by integrating its satellite network, GSM core networks and CDMA/AMPS core networks. International travelers who spend all their time in urban areas may choose Iridium just for its ability to interconnect disparate terrestrial networks.

Iridium promises worldwide communications with one handset, one phone number and one consolidated bill. That means a GSM subscriber can be reached at a GSM phone number while roaming on a CDMA/AMPS network, and a CDMA/AMPS subscriber can be reached while roaming on a GSM network. Alternatively, the subscriber could use an Iridium number at all times.

The three major areas Iridium will target are international travel, cellular extension and vertical markets. The firm is focusing on the international traveler-anyone who travels overseas at least four times a year and is a heavy wireless user. People who often travel beyond the reach of a terrestrial network are seen as an important but secondary market. Also important are vertical markets such as industrial, military and governmental.

Motorola and Kyocera are manufacturing Iridium subscriber terminals. These include dual-mode units to work with both Iridium's satellites and leading terrestrial cellular standards-GSM, IS-95 CDMA, Japan's personal digital cellular and AMPS. Handsets can switch automatically to satellite mode when no terrestrial network is available.

Motorola also plans to offer separate Iridium pagers. Kyocera handsets can be removed from their Iridium cradle when no satellite access is anticipated. Motorola handsets will support terrestrial standards using plug-in radio cassettes.

Motorola handsets also will feature an RS-232 interface for 2400 b/s data and fax.

Apples-to-apples comparisons of Iridium and Globalstar airtime charges will be difficult. Iridium will use intersatellite crosslinks to avoid most international landline charges and expects to charge an average of 25% to 30% more than comparable landline service. Globalstar will charge less for airtime, but its bent pipe architecture will entail greater reliance on terrestrial backhaul.

Iridium forecasts 5 million subscribers by 2002. Customers will be able to sign up for domestic or international service. The firm plans to sell through existing wireless operators and value-added resellers. However, Iridium has yet to announce any wireless service provider agreements in the U.S. The firm is licensed in 35 countries and claims roaming agreements with more than 100 partners serving more than 47 million wireless subscribers.

Iridium's WorldPage service will support alphanumeric and numeric-only paging. Belt-clip pagers will run up to 30 days on a single AA battery.

Iridium sees paging as an adjunct to its voice service. Many subscribers are expected to use it for voice mail notification.

So what does Iridium offer customers in Peoria? Well, Peoria, Ill., happens to be international headquarters for Caterpillar Tractor, a leading exporter of earth-moving equipment. Iridium could certainly help Caterpillar conduct business around the world. Caterpillar equipment is often used during the early stages of development-clearing land, building roads, and digging foundations-in locations that don't yet have terrestrial wireless service.

Caterpillar's business also encompasses industries that tend to operate in remote areas such as mining. Beyond Caterpillar, however, Peoria may have few Iridium prospects.

Globalstar links with terrestrials Globalstar has placed its first four satellites in orbit. Thanks to an aggressive launch schedule, it plans to initiate commercial service by the end of first quarter 1999. The complete constellation will consist of 56 satellites-48 operational and eight spares. Service will start with 44 satellites, which the firm expects to have in place by the end of this year. Three scheduled launches will lift 12 satellites each.

Like Iridium, Globalstar primarily is supplying voice communications. At first, one might think Globalstar is just a CDMA version of Iridium. But a closer look reveals important differences, both in terms of architecture and business plan.

The potential market is basically the same. But while Iridium is focusing on international travelers, Globalstar is concentrating on cellular extension. From a market perspective, it seems likely that international business travelers are better funded than those who travel beyond terrestrial coverage within their own country-to a mountain cabin, for example.

>From a distribution perspective, it seems likely that terrestrial carriers >will be more eager to work with a satellite network that extends their >coverage rather than touting itself as the one-network solution. >Globalstar's North American wholesale distributor is AirTouch Satellite >Services.

Globalstar's goal is to look and feel like PCS, says Mike Kerr, vice president and general manager at the company. Unlike Iridium, it will not offer separate pagers, but will support integrated short message service.

It's no surprise that the LEO satellite business is knee-deep in international politics.

What may be a surprise is that Globalstar's handset suppliers include Qualcomm and Ericsson, two fierce competitors. But it makes sense. Qualcomm needs Ericsson to access GSM markets; Ericsson needs Qualcomm to complete GSM's footprint. The third Globalstar handset maker is Italy's Telital.

Qualcomm will manufacture both hand-held and fixed Globalstar phones. The former will include tri-mode handsets supporting Globalstar satellite, terrestrial CDMA and terrestrial AMPS. The fixed phones will be used in special phone booths, rural calling centers and at remote industrial locations such as offshore oil rigs.

But Ericsson, which will supply dual-mode Globalstar-GSM terrestrial phones, received the lion's share of the firm's first handset order. Globalstar also will support data at a raw bit rate of 9.6 kb/s.

Globalstar was founded as a joint venture between Loral Space & Communications and Qualcomm. Its strategic partners include AirTouch Communications, Dacom/Hyundai, France Telecom/Alcatel, Daimler-Benz, Vodafone, Alenia Spazio, Elsag Bailey and Finmeccanica.

With the help of its partners, Globalstar claims to have inked service provider agreements in more than 100 countries. Because of its bent pipe architecture, Globalstar will require 60 earth gateway stations. The first four have been completed, six more are near completion and work has begun at an additional 25 sites.

Will Globalstar fly in Peoria? Iridium will be first to market, but only by about six months. It could take an international player such as Caterpillar Tractor six months just to evaluate the competing services. In the final analysis, they will be looking at cost, quality of service and the countries each is licensed to serve.

Globalstar's use of CDMA could be an advantage in remote industrial applications. CDMA's path diversity allows handsets to communicate simultaneously with multiple satellites. This could make a difference when walking around a surface mining operation with man-made hills and heavy equipment, either of which could block signals.

Globalstar's vision is not quite the same as Iridium's. Iridium is working toward a future in which a growing number of international travelers subscribe to just one network-its own. Globalstar hopes ongoing hardware integration and price reduction will inspire cellular operators to provide more of its customers with satellite-capable phones.

Orbcomm targets vertical markets And now for something completely different. Orbcomm is targeting worldwide paging, messaging and tracking. With 12 satellites in orbit and another 16 planned for deployment this summer-the full constellation will consist of 36-Orbcomm hopes to inaugurate full commercial service during the first half of 1999.

Unlike Iridium and Globalstar, which provide communications for people, Orbcomm is targeting things. What's clever about this strategy is there are so many things, including automobiles, rail and cargo ship containers, truck trailers and pipeline sensors.

The company expects about 70% of its business to be in vertical markets, with person-to-person messaging accounting for the remaining 30%, says Orbcomm Chairman and CEO Scott Webster. That's a big change from Orbcomm's original FCC proposal, which emphasized search-and-rescue applications.

Orbcomm is essentially a low-speed, two-way data and locating service.

Its transceivers will be low-cost, often being built into other devices. The typical communications session will not be a telephone call, but rather a data exchange. Some customers will link their host computers to the company's network via dedicated lines, but many simply will use the Internet.

However, communicating over Orbcomm will not be as simple as making a phone call. Most applications will require some custom software development because Orbcomm enables applications that were never before possible. The challenge will be energizing developers to identify and pursue those applications.

The company will sell its services through a combination of value-added resellers and direct sales to key markets such as oil and gas wells, storage tanks and trailers. Orbcomm is uniquely qualified to handle several markets such as automatic meter reading in remote locations.

Although Orbcomm touts the fact that it will cost one-tenth to one-twentieth as much to build and operate its satellite network as Iridium or Globalstar, it primarily is chasing low-budget applications. Orbcomm is betting that if enough devices are out there that need to track something, send an alarm or conduct a brief transaction, things will add up quickly.

Crucial to the company's success will be its ability to identify and sell to companies with large quantities of mobile and remote assets.

Subscriber device manufacturers include Panasonic, which has introduced the KX-G7001 subscriber communicator, and Magellan, a global positioning system receiver maker acquired by Orbcomm, whose PCS 1000 will support personal messaging and navigation.

But focusing on data, Orbcomm needs more than just subscriber devices. Orbcomm QuickStart Kit, OrbMail+ (Windows 95), Orbcomm QuickSensor and Orbcomm System provide software for basic messaging, real-time e-mail, device monitoring and application development.

Will they buy it in Peoria? Like Iridium and Globalstar, Orbcomm's best prospect in Peoria could be Caterpillar. But its service will cost a few dollars per month, putting it within reach of many other firms. The real question is whether there are enough such firms to pay the bills.

The LEO satellite industry has talked about what it will do for years. Now it is time to deliver the goods. Once the technology is deployed, there will be little opportunity to change it. It is time for the engineers to fade into the background while the sales representatives take center stage.

But this isn't your father's backyard satellite dish. LEOs are essentially antennas on very tall towers that can be reached via battery-powered handsets. If Iridium, Globalstar and Orbcomm can offer the right performance at the right price, they just might find the right markets.