Intelsat Champions Satellite Voice Over IP

Integrates voice, data by satellite to speed, ease carrier network deployment.

When is it acceptable to tolerate a noticeable satellite-based delay in a telephone conversation? When theres no terrestrial alternative.

Intelsat Ltd. is testing VOIP (voice-over-IP) gateways for carrier customers with the goal of enabling them to integrate voice and data over its satellite system and providing new—theoretically cheaper—calling services. A former intergovernmental satellite organization, the now-private operator is touting VOIP via satellite as a way to rapidly deploy reliable voice networks worldwide, recognizing that the technology appeals primarily to niche markets.

"The biggest challenge for us is to minimize the effects of latency," said Graeme Kennelly, business manager for Internet services at Intelsat, in Washington. "Our satellites will always be a long way from Earth. We cant do anything about that."

Telecommunication services that travel via Intelsats geostationary constellation of satellites—which do not target the U.S. domestic market—are not for everyone. But for enterprises with suppliers, partners or customers overseas with vulnerable terrestrial networks, the satellite-based services can offer a more reliable, if less smooth, alternative.

"Everythings relative. Here in the United States, we kind of take our phone quality for granted," said Michael Massey, an analyst for Pioneer Consulting LLC, in Boston. "In emerging markets and developing countries, quality takes a back seat to price."

Minutes of VOIP calls carried by satellite are projected to rise to almost 3 billion this year, up from less than 2 billion last year, according to Intelsat. The technologys appeal for international telecom carriers lies not only in the advantages of converged networks but also in its ability to bypass costly regulatory obstacles in countries with monopoly telephone systems still in place.

Intelsat officials said the companys legacy as a treaty-based organization run by signatories in member companies gives it an edge in the commercial marketplace. "Its really important in this business to have the relationship at the destination," Kennelly said.

Analysts said they dont expect users to see immediate price benefits from carriers using VOIP over satellite, but they said they do expect the technology to enable competition, which eventually will drive prices down.

"VOIP has opened up a door for second carriers to emerge in a lot of these countries," Massey said. "It allows competing carriers to establish their own connectivity, rather than sending everything through the incumbent carriers facilities."

Intelsat, which is based in Hamilton, Bermuda, with most of its work force in Washington, is required to offer public shares by years end.