Satellite Player Skyterra Ready to Try Again

msv-satellite-with-beamsAfter winning the right to offer a satellite and cellular-based mobile voice and data service, raising $500 million in capital and restructuring its ownership, Skyterra (formerly Mobile Satellite Ventures) is getting ready for what it hopes will be two game-changing years. The company will launch a new satellite in 2009, and in 2010, it will see Qualcomm (s QCOM) integrate radios into its cellular chips that can communicate with Skyterra’s satellite network. Skyterra may also complete a merger with Inmarsat, if regulators sign off on it. This all means Skyterra would have both the ability to provide service, and a reasonably priced device on which to provide it. But there’s still the issue of building a viable business model. To date, satellite phones (and service) have been niche products, and the companies providing service have a tumultuous history of investment and bankruptcy. But Chris Gates, vice president of strategy with Skyterra, says this time it’s going to be different. While Skyterra will still provide service to governments and people in remote locations — the traditional market — it will also seek to sell satellite coverage to cellular network operators as a service differentiator. The approach would essentially gives cellular carriers the ability to offer satellite coverage to customers for a fee.

With chips inside cellular handsets that offer the ability to talk to the satellite network, the MVNO strategy is possible in 2010. But overall, satellite service is currently too expensive and too slow. Gates says data service offered once the new satellite launches next year will have speeds of 200 kbps or 300 kbps downlink. With WiMAX, white spaces networks and possibly even alternative wireless networks emerging in the next two years, then satellite looks to be an expensive alternative to fill those coverage gaps from above. These other wireless options will provide free or cheaper broadband that’s much faster.

But Skyterra is not alone in its plan. Terrestar is launching a new satellite next year, while Finnish electronics firm Elektrobit is planning to launch a PDA-style device that connects with satellite networks hoping that services from Skyterra and Terrestar take off. Jani Lyrintzis, manager of EB Wireless Solutions, says 2009 and 2010 will be the comeback years for satellite service. It may be a comeback, but I’m not sure it will last.