Inmarsat Group said it will use capacity leased from Thuraya Satellite Communications Co. of Abu Dhabi to transition its customers to the new Inmarsat 4 satellite starting this summer. Full commercial service of the company’s mobile-broadband service will begin around October.
Inmarsat officials said early indications are that the Inmarsat 4 satellite, now being moved from a test location at 8 degrees east longitude to its operating slot at 64 degrees east longitude, will be capable of slightly higher-speed transmissions than earlier predicted.
The high-end Inmarsat 4 terminals now are predicted to deliver closer to 492 kilobits per second, company officials said.
Starting in late May, Inmarsat 4 will assume the standard mobile communications traffic now managed by an Inmarsat 3-generation satellite. That satellite will be moved to a yet-undisclosed location, where it will be available for lease.
In July, a precursor broadband Inmarsat service that has been offered through leased capacity on a Thuraya spacecraft will be transferred to Inmarsat 4 as well, broadening the coverage area to include all of Africa and as far east as Japan, as well as the Middle East and Central Asia.
Inmarsat has been paying Thuraya $3 million a month for the capacity while waiting for its Inmarsat 4 system to become operational. User terminals developed for this service, capable of transmission speeds of up to 144 kilobits per second, will be able to use the Inmarsat 4 system at these same transmission speeds.
Several mobile satellite communications terminal resellers, including GMPCS Personal Communications of Pompano Beach, Fla., have begun offering these lower-speed terminals at prices as low as $500 on the assumption that this performance will be sufficient for some users.
“The Inmarsat 4 satellite offers a much larger footprint compared with Thuraya, and we think they will find an entry-level market,” said Jon Klein, GMPCS vice president and general manager.
The Inmarsat 4 satellite will debut Inmarsat’s Broadband Global Area Network (BGAN) high-speed data service, on which rests the company’s hopes for future revenue growth.
Four manufacturers — Hughes Network Systems of the United States, Nera of Norway, Thrane & Thrane of Denmark and Add Value of Singapore — are building BGAN mobile terminals to be used with the Inmarsat 4 spacecraft. These terminals will be tested over the next three months before being placed on the market for commercial sale. They are expected to retail from $1,500 to $3,500.
But retailers already are positioning themselves to be ready for the market. GMPCS announced May 10 that it has ordered 1,000 terminals from Hughes Network Systems for an undisclosed price. The company also plans orders from Nera and Add Value.
Klein said retail price levels for the terminals have not been fixed, and that final air-time charges also have yet to be announced by Inmarsat. But he said May 11 that he is optimistic Inmarsat 4’s BGAN service will find an early market “that has the potential to number in the tens of thousands,” and that terminal manufacturers will set production levels high enough to force down unit costs.
London-based Inmarsat has invested $1.5 billion to build three Inmarsat 4 satellites. The second is scheduled for launch on a Sea Launch rocket in October. A third is planned to be a ground spare.
Inmarsat Chairman and Chief Executive Officer Andrew Sukawaty said in a May 9 conference call reporting Inmarsat’s first-quarter financial results that the first Inmarsat 4 satellite, which was launched March 11 by an International Launch Services Atlas 5 rocket, is expected to operate for 18 years in orbit. That is 3-to-775 years longer than expected and is due to the accuracy of Atlas 5’s orbital insertion, Sukawaty said.
Inmarsat Chief Operating Officer Michael Butler said two of Inmarsat’s eight BGAN distributors have targeted the Chinese market — both for non-Chinese companies operating in China and for the domestic Chinese market. Butler said the BGAN terminal manufacturers are working on designs for fixed antennas to permit Inmarsat to attack the satellite communications market now served exclusively by VSAT — very small aperture terminal — manufacturers.
Inmarsat reported May 9 that its first-quarter sales were $127.4 million and its gross pretax earnings, or EBITDA, margin was 66 percent. It is difficult to compare the figures with 2004 because Inmarsat in 2004 introduced a new volume-discount scheme for its distributors that tends to inflate sales in the early part of the year before bringing them down later in the year as volume-discount milestones are reached.
Sales in the first quarter also were affected by heavy traffic following the late-December tsunami that devastated parts of Indonesia, Thailand and India. Sukawaty said traffic related specifically to tsunami-response efforts accounted for $2 million in first-quarter revenues.
Sukawaty and Inmarsat Chief Financial Officer Rick Medlock said the company continues to evaluate where U.S. military use of Inmarsat for communications to and from Iraq and elsewhere in the Middle East will stabilize after dropping from wartime peaks.
The U.S. Department of Defense is Inmarsat’s single biggest customer, accounting for up to 25 percent of the company’s business.
