INSIGHT: The Sky's The Limit... For SkyTerra + MSV
The satellite industry might soon be approaching a new era one in which satellite and cellular networks are combined and consumers are able to use both networks on handsets similar in size to what is currently on the market.
SkyTerra Communications, Inc., and its sole operating asset Mobile Satellite Ventures (MSV), have been working on developing next-generation satellite services that would redefine the way mobile devices are used. And with a $500 million commitment in funding from Harbinger Capital Partners, SkyTerras vision for the future is well on its way to becoming a reality.
SkyTerra currently operates two satellites and delivers mobile wireless voice and data services to customers in the public safety, security, fleet management, and asset tracking industries. The future of SkyTerra lies with its two new satellites MSV-1 and MSV-2. These satellites, which are expected to be among the largest and most powerful commercial satellites ever built, will enable the company to develop a next-generation integrated satellite-terrestrial network.
The launch of MSV-1 is currently expected to occur in the fourth quarter of 2009 or the first quarter of 2010, and the launch of MSV-2 is currently expected to occur in the second half of 2010.
An integrated satellite-terrestrial network will allow users to roam seamlessly and transparently between the satellite and terrestrial networks. Calls will go over the terrestrial network when it is available and then automatically and unnoticeably switch to satellite spectrum when the terrestrial service is unavailable. And because of ancillary terrestrial component (ATC) technology, the device will be similar in size, weight, look and functionality to todays cell phones.
Some analysts and others in the industry have questioned whether SkyTerra could secure the financing necessary to support the companys ambitious next-generation business plan.
The Harbinger financing commitment will fund SkyTerras business plan through the third quarter of 2010. Specifically, it will provide funding through a number of significant milestones, including the launch of MSV-1, the construction of MSV-2, and related satellite ground system, chip set and device development, and core network and back office system development.
We have obtained committed financing for our period of greatest financial need, said Alexander H. Good, SkyTerras chairman, CEO and President. We now look forward to bringing to market the services we believe will set a high-water mark for the mobile satellite services industry, and extend the marketplace for satellite services far beyond their historical bounds. This revolutionary satellite system is expected to provide service for at least 15 years and will ring in the era of integrated satellite-terrestrial networks.
Until now, communicating via satellite has required the use of bulky and expensive equipment and was typically only used in industries with workers consistently in remote locations. Consumers, of course, demand the portability of small, lightweight cellular devices, even though the terrestrial network has limited coverage and service is often unavailable in rural or remote areas.
With the development of an integrated terrestrial-satellite network, consumers, for the first time ever, will be able to communicate from virtually anywhere in the U.S. and Canada, seamlessly toggling between cellular and satellite networks.
This means individuals who live or travel to remote areas that are normally out of the cellular coverage area will now be able to stay in contact with friends, family, and coworkers. And outdoor enthusiasts, who often travel outside areas with cellular coverage, can use the expanded network to call for help in case of an emergency.
A key advantage for the public safety industry is the mobile device officials use everyday could become the same device they reach for during an emergency. Recent crises have illustrated that natural and manmade disasters often result in destroyed or congested landlines. The development of a satellite-terrestrial network along with the launch of two extremely powerful satellites will mean that emergency responders can use their advanced devices to stay in touch, even if the terrestrial network is damaged or congested.
Next-generation satellite services are likely to change the satellite industry. Given todays economic conditions, Harbingers commitment to SkyTerra is an important step to ensuring the construction of some of the largest commercial satellites ever built paving the way for an integrated satellite-terrestrial network.
In the companys July 25th announcement on the $500 million funding from Harbinger Capital Partners, SkyTerra Communications also announced that they have entered into a Master Contribution and Support Agreement (the Master Agreement) with affiliates of Harbinger with respect to the possible combination of SkyTerra and Inmarsat plc, a U.K. public listed company and a leading provider of global mobile satellite communications services.
The combination of SkyTerra and Inmarsat, assuming financial terms can be reached, makes a great deal of strategic and operational sense, said Good. It would greatly enhance spectrum efficiency and North American L-Band spectrum while providing a foundation for innovation in the global mobile satellite industry.
According to Good, the combination of SkyTerra and Inmarsat would also provide opportunities for greater efficiencies and scale benefits and coordination in the pursuit of next-generation integrated satellite-terrestrial networks, products and applications.