Taking war coverage into new orbit

By PETER GRIFFIN

As the war in Iraq enters its final stage, satellite companies are rubbing their hands at the boosted demand for their services the conflict has generated - and the free publicity that has come with it.

Satellite company Inmarsat reconfigured a back-up satellite over the Indian Ocean just to deal with the war demand of journalists.

Inmarsat's president and chief executive, Michael Storey, said media accounted for only 5 per cent of the company's revenue. But satellite had revolutionised news coverage of the conflict in Afghanistan and Iraq.

Television networks placed more importance on getting pictures out immediately, rather than worrying whether they were of broadcast quality - hence the jerky, pixelated, yet live images of the advance into Baghdad.

"That BBC ethos of having a universal standard of quality actually limited the ability of reporters to cover a story. CNN could not afford to embed its journalists using the existing broadcast technology," Storey said.

While 57 per cent of Inmarsat's business is marine communications, many of the journalists reporting in the Middle East are using its 64kbps mobile ISDN, which is accessed using a laptop-sized modem and antenna set-up.

Storey, who was in New Zealand last week to catch the World Rally Championship, which Inmarsat sponsors to the tune of $6 million a year, said the company did a relatively small amount of business in the South Pacific, mainly in the marine industry.

Auckland-based Simunovich Fisheries, which operates its fleet far out to sea is one large local customer.

Inmarsat, through its distribution partner Xantic - a joint venture between Telstra and KPN - had been evaluating the Probe satellite tender to see if it would be feasible to participate.

"The issue always comes back to cost. Usually Governments or the World Bank partly fund these things."

With the satellite terminals costing between US$15,000 and US$20,000 ($27,000-$36,000) and data charges in the region of US$11 per megabyte, rural users are unlikely to show interest without heavy subsidisation.

Storey defended the pricing, pointing out the costs of running a satellite network.

Building the satellite cost around US$100 million, buying a launch rocket, US$100 million, and launch insurance was a further US$40 million.

"That's a quarter of a billion dollars just to get it up there and if it doesn't work, it's space junk."

Inmarsat is "betting the shop" on its next investment - spending US$1.6 billion to launch three new satellites in 2005.

If all goes to plan, the satellites will have a data transfer rate of 432kbps to 85 per cent of the world's geography.

"Hopefully it will be a successful launch but when its 36,000km up you still have to hope that it talks to you," said Storey.

"They fly for you for at least 10 years and you're flying them every minute like a helicopter. No telecoms company thinks that far ahead. They're all worried about next year."

The new satellites will increase Inmarsat's data capacity ten-fold, bring prices down and allowing the size of terminals to be reduced to that of a handheld computer.

Previously owned by a syndicate of Government-owned telcos, Inmarsat's shareholders have largely been privatised.

The larger ones are Telenor, British Telecom, Comsat and KDDI. Telecom was also a shareholder at one stage.

The plan now was to list the company because many shareholders wanted to sell their stakes.

"I've prepared five initial public offerings and executed none, the market has retreated every time," Storey said.

With revenue of US$463 million last year and an operating profit of US$314 million, Inmarsat had emerged from the satellite operator meltdown of the last couple of years in reasonable shape.

Rivals Iridium and Globalstar invested billions only to go into Chapter 11 bankruptcy, be bought and resurrected for meagre amounts.

Storey said he had looked at scooping up the assets of Iridium but "could never see a mass market for a handheld satellite phone".

But Inmarsat itself had been burned, having to make a US$150 million write-down on its investment in satellite company ICO, which was salvaged by communications mogul Craig McCaw.

While he counts author and early satellite visionary Arthur C. Clarke as a customer and friend, Storey does not quite buy the sci-fi writer's prediction of each village having its own satellite.

Instead, Storey's vision is of major space stations in geostationary orbit providing everything from broadcasting services to high-speed internet access.