AT&T (s t) today introduced the TerreStar Genus (s tstr), a relatively thin cellular smartphone that can use a satellite network for backup voice and data communications. The $799 handset is targeted at users that must have connectivity everywhere, such as government employees, disaster recovery and maritime workers. But it’s also a tangible clue as to why LightSquared’s planned wholesale LTE network will be such a hard slog.
The Genus runs the older Microsoft Windows Mobile 6.5 (s msft) operating system, and, unlike satellite phones of the past, is pocketable thanks to an internal antenna. Satellite connectivity from anywhere in the U.S., Virgin Islands, Puerto Rico or territorial waters doesn’t come cheap though: Engadget reports a $25 monthly fee plus per-minute and per-message charges of $0.65 and $0.40, respectively.
With such service fees and a meaty $800 hardware cost, I wouldn’t expect sales of the Genus to rival that of AT&T’s other popular smartphones. After all, the Genus isn’t meant to compete with the Apple iPhone (s aapl), BlackBerry Torch (s rimm) or AT&T Captivate, just to name a few consumer devices. But considering the design and features that TerreStar (s tstr) integrated into the handset, the device looks nothing like the bulky pre-smartphones used with the old Iridium satellite network. It helps that there’s no flip-up, external antenna on the Genus, although for satellite communications, a user must maintain a line of sight with the southern hemisphere and must also hold the phone from the bottom. You can see the warning label for where to hold the device on a satellite call in this unboxing video.
As the newest dual-mode handset with support for both land and sky, the TerreStar Genus shows why satellite providers will be relegated to niche markets, barring any regulatory changes. The company most likely affected will be LightSquared, which is planning a nationwide LTE network that will combine it’s satellite network with a to-be-built terrestrial network. Unfortunately, a 2003 FCC ruling requires that these providers operate and build a network using both terrestrial and satellite, which also means the devices running on that network should have the ability to access both networks.
That means more phones like the Genus: too expensive for millions of consumers and a step behind the latest and greatest smartphones, making them undesirable for most. For a minimum cost of $3.5 billion, LightSquared thinks it can cover the majority of U.S. consumers with ATC spectrum, but if expensive, dual-mode phones are required, the impossible mission will be attracting enough customers. Maybe that’s why it’s touting its paltry 13 MHz of spectrum that’s unfettered by ATC restrictions, or why its first customer is a utility that doesn’t require handsets.
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