18:650 - Global Telecommunications
Case Study 3: AQUILA - Satellite Access Network
Prepared by: Helena Geraldes, Nicole Holden, and Hunaid Sulemanji
Instructor: Professor V. Sridhar
Developing countries usually show very low income per capita and population, mainly distributed in rural areas. When designing a communication system, two main objectives should be met: "connection cost similar to that of normal PSTN connection, and possibility to integrate the chosen access solution into the architecture of any national public telephone network".
The system requires approximately $3 billion investment during the life of the satellite (15 years), or $3000per terminal o $200 per year per terminal, or $200 per year per terminal. Satellite and gateways - $1 billion, and one million of small terminals - $2 billion ( the life of the terminal is half of a satellite, so the investment has to be doubled).
A business plan estimated the cost to be $100-$200 a month, which is equivalent to 10 cents per minute on the basis of one hour of traffic per day. Number of terminals is essential to this calculation since the price breakdown is on per-terminal basis.
Major cost drivers are:
What this article does not discuss, but does mention briefly, is who should be responsible for the purchase of the satellite and maintenance and supervision of the whole project. A cost of $100-$200 a month seems rather reasonable by US standards, but how is it comparable to the income of the population in developing countries? Who would purchase a terminal for $1000 US? How would the infrastructure look, if every village were supposed to make an investment in one or more terminals? Can the people afford it? Can the government afford to make such an investment?
The main issue is the satellite and the gateways. It is obvious that either a large institution or the government branch would have to make this investment. It raises issues such as whether the foreign companies are allowed to enter this market, and if so, would they find it profitable enough to make the investment.
The two other alternative technologies to GEO stationary satellite services that could satisfy the communications needs in a similar fashion are:
Both of these technologies are capable of providing narrowband data services such as telephony, fax and data communications, and internet access.
WLL technologies are fixed wireless network systems and can provide basic telephone based services in hard-to-reach places where the cost of local loop is high. Furthermore, the deployment is rapid with easy installation and maintenance. The per-line capital cost of wireless local loop is in the range of $250 plus the cost of CPE, cost of operator's license and frequency usage, and cost of interconnection to wired backbone network. Other major investments are costs to setup base transceiver stations and mobile telephone switching office per cell. However, the cost of CPE and associated WLL costs are steadily decreasing because of economies of scale. With the lack of proper regulatory authorities, close coordination of frequency spectrum allocation could be a potential problem for countries in Africa. Comparing these costs to the GEO solution, they appear to be similar considering the cost of satellites/gateways ($1000M for 15-year life cycle) and the cost of small terminals of limited life ($1000 per terminal similar to cost of CPE).
The other more costly alternative is the LEO satellite services. LEO's provide full portability with narrow or broadband services. This technology is expensive starting with the cost of satellite at $2-6 billion and the cost of CPE. Compared to Aquila's GEO solution, this alternative would be very expensive and would be reserved for a specific clientele.
In terms of providing "universal service" the GEO solution is a very good one. It achieves the goal of providing the villages with the access to the phone line and all the necessities and emergencies of the day-to-day life can be handled.
Authors also state that the "provision of at least one telephone per village would encourage the development of local economies and slow the migration of people from rural areas to the towns".
The small subscriber terminals are designed as consumer products. Therefore, if the areas will experience economic development, more lines will be needed and more people will be able to afford to make an investment into a terminal, helping the development of the areas further.
The telecommunications network in Western Europe has already attained one of the highest levels of coverage as estimated by ITU. The teledensity in most of the Western European countries is well above 20/100, and in some cases levels are the highest in the world (such as Sweden and Finland). Furthermore, with the process of liberalization and de-monopolization (instituted by the European Union), the telecommunications services are almost totally liberalized. This means that new services have to face competition from those already in place, who in many cases have already crossed their breakeven points, and thus can offer quality of services and pricing schemes that are highly competitive. Furthermore, in terms of the PSTN network, the incumbent local carriers who are essentially public owned monopolies, still carry a very high weight in terms of their influence on the local regulatory bodies. Thus an alternative like that one offered by the Aquila system would face acceptance problems by the regulatory bodies, due in part from the lobby that the incumbent PSTN providers would do.
In terms of technological capabilities, Aquila's system is compatible with the system adopted by most European countries. In terms of wireless connectivity, the transmission is shared access to the satellite base on a multi-rate FDMA/TDMA technique with synchronized frames (such as GSM, the common European system uses these both these techniques). Also in terms of other characteristics of network connectivity offered by Aquila, it is also compatible with the one existing in Western Europe, meaning ISDN and a good network of Internet Service Providers. Therefore it can be said that the system is totally compatible with the existing technology in Western Europe.
However, considerations have to be assessed as to the need for such a service. Aquila's technology is conceived essentially to provide connectivity to underdeveloped countries that do not have the proper telecommunication infrastructure in place. Unlike underdeveloped countries, Western Europe has a very sophisticated and reliable telecommunications infrastructure. Aquila's system, although providing affordable rates, would be faced with fierce competition from both -- the local PSTN in terms of access fees and from the local cellular carriers, which would jeopardize its goal of providing fast and affordable service (cost estimation of between $100 and $200 a month). Therefore for Western Europe, Aquila's system would not be the ideal solution. However for other regions of the world which are gradually attaining higher level of teledensity but are still far behind the ideal numbers, such as South America and the Asia Pacific Region, this system represent a viable and affordable alternative.