Satellite VoIP: Works For Me!


Why would anybody promote VoIP over satellite? Sure, low-earth orbit systems such as Iridium and Globalstar are OK, if you’ve got nothing else available (remember, they both went bust a while back). Geosynchronous satellites are a different story. It’s the physics, stupid!

I know people who use satellite Internet and they knew before they bought that Skype conversations will resemble a walkie-talkie style: "How are you? Over!" To which the other party would respond, "Fine, thank you. And you? Over!" At the speed of light, the best-case scenario is a half-second round trip to geo orbit. With processing, muxing and gateways, figure something closer to a full second (that’s "one-Mississippi," Bubba). Hey, if it’s free and you have no other Internet options, go for it.

But if you’ve got a geo spacecraft whose top priority is mobile satcom for voice services, you might want to give it up. Although we’ve advocated TerreStar’s prospects in the past, they filed for bankruptcy protection recently. In the satcom business, spectrum is king. You can’t do anything without that: no build, no launch, no services. What if you thought it over and decided you’d be better off offering one-way video services to "app phones" such as the iPhone, Android, Palm, BlackBerry, WP7 or WTF Nokia up to. People would pay extra just to have their videos stream without pausing or buffering. Well, at least some would. Add the option of doing two-way for data and you’ve got people out in the boonies ready to pay up. I know I would.

Looks like Charlie agrees. "Charlie," in this case, represents the smart thinkers over at EchoStar. They bought in to the Terrestar business and they’re ready to fight for the spectrum. Bankers: y’all better step back. The "massing of the troops" report, via International Business Times

A battle between EchoStar, Harbinger Capital Partners and holders of TerreStar Corporation’s common stock could be brewing over the value of the TerreStar’s spectrum and whether all of the company’s affiliates should be in bankruptcy at all, according to several people familiar with the case.

Attorneys for the holders of the series B convertible preferred stock filed a motion to dismiss the bankruptcy case against seven of the affiliates of TerreStar Networks, which filed for chapter 11 bankruptcy protection last month.

If the motion is granted it could force a change in the restructuring support agreement Terrestar Networks has with EchoStar, which has an investment of $464 million of the comany’s debt.

Under the plan put forward by Echostar, which also owns a stake in TerreStar Corp., TerreStar Networks would get $75 million in financing. The company’s $944 million of senior debt would become 97% of the equity of a new Terrestar Networks. The rest of the equity would be shared between the exchangeable notes, which adds up to $179 million, and the other unsecured creditors.

TerreStar Networks, a subsidiary of TerreStar Corp., had planned to operate a combined satellite-terrestrial communications network. But the company eventually found itself unable to operate under a $1.2 billion debt load.

The company has a complex structure involving a dozen affiliates and various cross-holdings. That has created a situation where a bankruptcy is no longer as straightforward as it might otherwise be. The licenses to the radio spectrum, for example, are owned by two different entities: TerreStar Corporation owns the 1.4 GHz spectrum while TerreStar Networks owns the 2GHz spectrum license.

In the motion to dismiss the holders of the convertible preferred stock say that the "above the line" entities — those 100% owned by the parent company, TerreStar Corp. — should not be included in the bankruptcy proceedings, as those entities weren’t in any financial trouble. But removing them from the chapter 11 proceedings would also remove the 1.4 GHz spectrum, which is one of the assets listed in the current restructuring agreement.

TerreStar Networks, by contrast, is 89.3% owned by TerreStar Corp., and is the company that filed for chapter 11. It is TerreStar Networks that issued $1.2 billion in debt, which eventually proved too heavy a load.

The EchoStar plan could also be blocked by Harbinger Capital Partners, which bought millions in 6.5% exchangeable notes this week.

Meanwhile, one of the holders of TerreStar Corp.’s common stock, Marathon Asset Management, plans to weigh in on the restructuring. Marathon has not filed a brief with respect to the plan, however.

 Looks like AT&T might lose this phone, too. I say make the TerreStar mobile chipset available and subsidize the cost with premium video services. Just because Qualcomm decided that Flo is no mo’ doesn’t mean we should all surrender to broadband bull from the terrestrial carriers.