After a somewhat rocky start eight years ago, the oil and gas segment of the satellite communications market chugged along at an uneven, but upward, rate of growth. Everyone knew the business was a natural. The need for services was evident. Seismic, drilling, production, pipelining, even administration and maintenance - every aspect of the oil and gas market - required crisp, clear, and efficient communications at every step. Because energy companies must, by nature, function in remote parts of the world, wireless and rapid-fire data transfer by satellite seemed a sure shot.
Not much has changed today, except the field of service providers has matured. Much like the energy industry did in 1998 and 1999, the satellite communications business has entered a stage of mergers and consolidations.
At some point, a few sturdy survivors will emerge, most likely the largest and strongest of the lot. Innovators will come along, from time to time, to challenge them. But producers and service companies are likely to deal in the future with familiar names: AT&T, MCI Worldwide, Comsat, CapRock, Globalstar, Telenor, and British Telecom.
But new combinations take shape and names change. Here are a few examples:
- Station 12, a combination of Holland's KPN, maritime software specialists SpecTec, and the satcom operations of Australia's Telstra, has become Xantic, a marketer of global telecommunications services.
- Iridium and ICO Global, promising newcomers at one time, folded up and went out of business due to pressing capital demands. Stratos Global, once of Canada, has been buying up companies everywhere, and has gained a strong position in the Gulf of Mexico. Earlier this year, it signed a contract to market services formerly operated by Iridium.
- Lockheed Martin Global Telecommuni-cations (LMGT) purchased Comsat Mobile last year but is negotiating today to sell those assets to Telenor, a telecommunications giant in Norway.
Inevitably, telecommunications will engulf oilfields, onshore and off, at home and away. But don't let a market reorganization fool you. Prices may not fall sharply. The best to hope for is price stabilization, with some downward pressure due to competition
But the good news is this: deeper pockets allow equipment upgrades and extension of services into remote regions. Even with fewer service providers, services may improve and better tools may appear on the market.
List grows smaller
Inmarsat and VSAT remain the most popular satellite services. Microwave and cellular are popular means of communications for the offshore, but limited in range. Inmarsat, the first global satellite service, offers limited bandwidth and charges by the minute.
VSAT is regional, using only "spot-beam" satellites, but provides broadband service in remote areas. VSAT operates off Ku-band and C-band frequencies while Inmarsat uses L-band. The choice of what to use depends on where you are and how much you're willing to spend.
Stratos Global dominates the Gulf of Mexico, largely with microwave. The company entered the US market by acquiring IDB Global in 1997. Stratos later obtained Canada's Teleglobe satellite business. Late in 1999, Stratos purchased Shell Offshore Services' microwave operations. Four months later, Stratos bought DataComm of New Orleans.
In the US Gulf of Mexico, the largest provider of satellite communications is CapRock Services Corp. of Houston. Today, CapRock offers VSAT networks with circuits up to 768 kb/s (kilobits per second). PetroCom provides some satellite services, while they dominate in the offshore cellular market. Coastel, of Lafayette, shares the cellular market with PetroCom.
CapRock, an integrated communications provider, merged in August 1998 with IWL Communications. For 18 years, IWL supplied communications equipment and service to companies working in the Gulf of Mexico. Together, they offer voice, video, Internet, and data links from corporate offices to remote, hard-to-reach places around the globe.
CapRock operates one 8-meter C-band hub in Houston, two 5.6-meter Ku-band hubs in Friendswood and two Ku-band stations in Lafayette, one a 7.5-meter and another 4.5-meter Ku-band. These are spread out to provide backup in case of a storm or emergency. From these points, CapRock provides service throughout the Gulf of Mexico and deep inside South America.
Schlumberger, an oil-service giant, joined a few years ago with Cable & Wireless of London to form Omnes, an integrated service provider. That operates today under a different name - Schlumberger Network Solutions. The latter then purchased DMS in Aberdeen and markets those services in a broad area.
Future technology
Starting up a business is difficult in a sea of bigger competitors. SkyComm International Inc. was created in 1999 to build and market the services of an all-ATM satellite communications teleport in Houston.
ATM stands for asynchronous transfer mode and has been adopted worldwide as the core network technology of the future. It can handle voice, data, video, and other multimedia streams using the same protocol and underlying hardware technology. ATM scales in capacity from T1 speeds of about 1.5 mb/s to OC-48 or 2.5 gb/s (gigabits per second).
This teleport would be a cornerstone of a satellite-based global broadband multimedia network providing voice, high-speed Internet, data and associated applications and services. Vertex-RSI SatCom Technologies, a former engineering division of Comsat, designed the teleport.
SkyComm has secured a prime site next to the US National Aeronautics & Space Administration (NASA) Johnson Space Center, as well as the necessary licenses and clearances to build the teleport. SkyComm is seeking investors for a second round of financing necessary to complete the project.
Initial configuration will include two 11-meter satellite dishes with associated hardware and electronics to provide Intelsat B services, and one 7-meter earth station for Ku-band service. Total capacity for this configuration will be 270 mb/s.
The site has three existing redundant synchronous optical network (SONET) rings, which will be connected to the teleport. The teleport will interface with the US Southwestern Bell (SBC) telephone system via a programmable switch. SBC will provide necessary routing to the end users for dedicated and switched circuits. SkyComm has entered into an agreement with BroadWing Communications, Inc., for co-location, interconnection, and carrier service in North America.
The teleport at Ellington Field east of Houston will also consist of a data storage bank capable of housing 300 to 500 terabytes for international business clients. According to the business plan, SkyComm intends to build a second teleport at White Sands, New Mexico, and a third at Cape Canaveral, Florida.
Dual satellite phones
New products continue to arrive on the market at a rapid clip. Globalstar, a limited partnership, is a consortium of international telecommunications companies established in 1991 to deliver global satellite telephone services through a net of exclusive service providers.
Phone service for Globalstar is delivered through special multimode phones, which work just like traditional cellular phones when in an area with cellular coverage. When the phones are out of range, the instruments easily switch to satellite mode.
Three wireless manufacturers-Ericsson, Qualcomm and Telit-build Globalstar's mobile satellite phones, only slightly larger than traditional hand pieces. For isolated regions outside cellular range, Globalstar fixed phone options include models made by Ericsson and Qualcomm and payphones built by Schlumberger. As a wholesaler, Globalstar sells access to its system to regional and local telecommunications service providers around the world.
Isolated area modems
Qualcomm Inc. of San Diego and Globalstar USA (US provider) teamed up to market Globalstar commercial data services, a two-way data satellite communications using a Globalstar satellite data modem (GSP-1620) made by Qualcomm. Using Globalstar's constellation of 48 LEO satellites, the modem provides a wireless Internet Protocol (IP) data link to remote locations where terrestrial and line and wireless services are unavailable.
The Globalstar satellite data modem provides an open-air full duplex data pipe that can be integrated into a monitoring and control system. Using Code Division Multiple Access (CDMA) technology, the modem sends data to a Globalstar gateway in a given territory, which forwards packet data to the Internet. The modem is compatible with Windows dialup networking and offers 9.6 kb/s maximum speed and works easily from the field with a laptop.
Such a service expands Globalstar's capabilities beyond Internet and e-mail access to encompass supervisory control and data acquisition (SCADA) for telemetry and fleet management. Exclusive contracts between Qualcomm and Globalstar allows this service to be offered for a single unit retail rates beginning at $10 a month for service and usage charges of $0.15 per kilobyte second.
SCADA monitors manage, control, and track telemetry devices used throughout oilfields in remote sections of the world, and the service becomes widely used offshore as well. Oil and gas pipeline operators can supervise and control flow in real-time at multiple points without having to deploy field personnel, reducing costs and decreasing response time. Besides that, a mobile market can track vehicle locations and collect engine and environmental data at the same time.
Telemedicine, a thriving field in many remote parts, may easily find a use for mobile data collections. Globalstar currently has this equipment under test for a number of trial clients.
Upgrading speeds
Advanced software that maximizes the use of transmission capacity to allow speeds up to 256 kb/s over the Inmarsat global satellite system network has been introduced for the first time to the market.
Through a strategic alliance between Xantic and enabling technology provider Innovative Communications Technologies, a program called Inmarsat Capacity Expander (ICE) will be offered. Xantic will deliver high data-rate connections as well as multiple, simultaneous lower data-rate connections.
This enables applications such as streaming video content and high-speed Internet access from mobile or remote sites including offshore production platforms, mobile drilling units, ships, and aircraft. Coverage is possible for almost the entire globe.
An ICE-enabled terminal can double the data rate traditionally achieved in a 100 kHz channel (128 kb/s of throughput instead of 64 kb/s) or for a 200 kHz channel (up to 256 kb/s). ICE technology is based on the use of commercial off -the-shelf hardware and software that can be added in a retrofit kit to Inmarsat-A, B, and Aero H terminals.
Xantic now offers broadband access by satellite from the SES group in Europe, the operating arm of Europe's ASTRA and Sirius satellite systems. Xantic will install and deploy uplink and ground control premises at Hilversum and Burum earth stations. This enables a direct link to the Amsterdam Internet Exchange for customers to reach the US Internet backbone.
Another new service from Xantic provides prepaid high-speed Internet access to small and medium enterprises via a hybrid service. Providing a return channel via narrowband telephone line allows the end user broadband Internet access up to 600 kb/s. Xantic now has a number of additional new services under test to launch later this year.
Telenor on the prowl
Headquartered in Bethesda, Maryland, LMGT purchased the satellite network and product assets of the former Comsat Corp., which was the original owner of the US ownership position in Inmarsat.
In September 2000 Telenor negotiated to buy the Inmarsat portion of Comsat from LMGT. Telenor's purchase will include two earth stations in Southbury, Connecticut, and Santa Paula, California, linking the two US stations with Telenor's existing earth station in Eik, Norway.
While pursuing regulatory approvals in the US, Comsat Mobile will continue to operate as a business unit of LMGT. Upon completion of the transaction, Comsat Mobile will become a key part of the satellite mobile division of Telenor Broadband Services at a cost of $116 million in cash. The acquisition positions Telenor as a major global satellite mobile operator. Telenor Broadband Services AS is one of four core business areas within the Telenor Group.
Telenor also purchased in September 2000 one-third of LMGT's stake in Inmarsat Ventures Ltd., increasing its stake from 6.8% to the maximum permitted 15%. That makes Telenor one of the largest shareholders in the satellite organization. LMGT's stake goes from 22% to approximately 14%. Telenor has a presence in 30 countries and revenues of $3.9 billion in 1999.
Comsat Mobile, now a division of LMGT, manages more than 2 gigabits of data on Intelsat, New Skies, PanAmSat, GE Americom, Loral/Orion, and other satellite systems on behalf of US government customers.
With teleport facilities in Washington, D.C., California, and Germany, Comsat Mobile operates both C-band and Ku-band antennas that point to multiple satellite systems and can provide transmission speeds ranging from 64 kb/s to OC-3. VSAT networks implemented with Comsat's Link One have high-speed data rates up to 4 mb/s using frame relay and ATM and on ISDN Protocols.
Broadband expands in lower orbit satellites
Many satellite communications providers offer Inmarsat, a global service for all industries. Satellite communications uses in energy, mainly for multinational oil and gas producers, equals or surpasses that for the shipping and cruise-line trades.
To provide this service, satellites circle the globe 22,000 miles out in space. Communication requires a microsecond delay up and down. To overcome this delay, new providers launched in the past three to four years a variety of satellites in low-earth orbit (LEO) and medium-earth orbit (MEO).
Leaders in that field specializing in the oil and gas market include American Mobile Satellite (AMSC) and Globalstar, a consortium headed by Loral Space and Communications. AMSC covers the Gulf of Mexico, continental US, and part of South America. Globalstar operates a constellation of 48 satellites covering 100 countries on six continents.
But a new slate of overhead constellations is about to hit the market:
- Teledesic of Bellevue, Washington, expects to start operating in 2004. The network plans to offer broadband services - up to 256 kb/s. The company intends to put into orbit 288 LEO satellites to cover nearly the entire globe.
- Lockheed plans to develop a $3.6 billion system called Astrolink. Partners include TRW and Telecom Italia. They anticipate launching the first satellite in 2002 and providing broadband data services to North America, Europe, and South America in 2003. Three more satellites will be launched at six-month intervals to extend the network worldwide.
- Spaceway is a global broadband satellite system being developed by Hughes Electronics Corp. PanAmSat Corp. and DirecTV also invested in the $1.4 billion project.
