Satellite opens new channels for US businesses
Boston — A "quantum leap" in Us telecommunications was made possible last week with the launching of a satellite to serve industry giants with an interchangeable network of services ranging from telephone to video conferences to electronic mail.
Industry experts say the new satellite network, owned by Satellite Business Systems (SBS), begins a new era of improved corporate communications and competition in the telecommunications industry.
Jack Epstein, a vice-president at Booz, Allen, and Hamilton, a New York-based management and technology consulting firm, says, "The SBS network points to the emerging communications applications that everyone has been talking about for years. It will give companies the chance to do pilot tests with high-speed electronic mail and teleconferencing.
"The whole industry will be highly interested in learning from the experience of SBS customers. It wants to see how these new applications can improve the productivity of managers, professionals, and other white-collar office workers."
SBS, a partnership composed of International Business Machines, Aetna Life and Casualty Company, and the Communications Satellite Corporation (Comsat), already has signed up several top companies, including the Westinghouse Corporation, Allstate, General Motors Corporation, and Wells Fargo Bank -- for its new "Communications Network Service."
Tom O'Toole, manager of Telephone Service at Westinghouse, says, "Essentially we'll be using SBS for two reasons. We want it for coast to coast, and eventually overseas, telephone calls, data transmission, and facsimile transmission. We also want it for video teleconferencing. In this era of high energy coasts, we want people at Westinghouse to travel less. We're looking for new ways to make the whole corporation more productive, and that's where SBS fits in."
The primary attraction of the SBS network is its flexibility to switch from one communication application to the next, Mr. Epstein says. "The system makes big chunks of the satellite capacity available on a pool basis to a company.
"GM, for example, will have a certain number of channels available to all GM users. Those channels are assigned on request between specific points and for different applications, like voice, data, or facsimile as needed throughout the day."
Most of today's private network systems, such as those offered by AT&T, do not have the flexibility to switch to a wide variety of applications. Most offer only telephone services.
However smooth the new network services appear, Jerry Lucas, president of the Virginia-based telecommunications consulting firm TeleStrategies and a former chief scientist at Comsat, says the challenges are just now beginning.
"The problems will be in integrating the SBS system into existing corporate networks which are terrestial based -- either from terrestial microwave systems [towers] or from terrestial cable systems [underground].
"Most computers are not programmed to operate at such high data rates today. The companies will have to modify their software equipment to accommodate the new capabilities that SBS is providing."
Mr. Lucas also adds that the SBS communications system is a "very risky" program. "SBS has invested over $400 million in the network without a proven market for its highspeed data services, such as high quality ultrafast facsimille messages and video conferencing. They'll need at least 50 or 60 heavy users to turn a profit."
Last year total revenue for satellite business communications was only about expected to grow to $1.5 billion.
But SBS president Robert C. Hall, speaking from his McLean, Va., headquarters , insists that the five-year-old company "will be a $400 million to $500 million a year business in four or five years." He is also confident the company will carry out its plans to send up two more satellites by 1983.
Mr. Epstein adds, "When you're as ambitious and forward looking as SBS, with the biggest customers in the US, and guided by IBM, Comsat, and Aetna, you're bound to have significant and positive impact on the industry."
Currently, there are eight US satellites operating for telecommunications purposes. AT&T has three; Western Union, three; RCA, two. The Federal Communications Commision says applications are on file to put up 26 more satelites. The FCC will approve or reject these applications within a few months.