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Have All the Predictions of 10 Years Ago for Communications Satellites Come True?

A decade ago, Western Union launched America's first commercial communications satellite. With Westar I, the company could connect various "satellite cities" around the country, providing the first domestic system for large-scale communications by satellite. So too had Western Union linked the Pacific Coast with the rest of the nation through the transcontinental telegraph system completed in 1861.

The Westar launch on April 13, 1974 received major coverage by the nation's press. Time Magazine wrote: "When a small drum-shaped satellite was maneuverd into orbit ... a new era in communications began." Writing in the New York Daily News, Don Singleton predicted that Westar would be "... as significant to the American people as the first dial telephone, or the first direct dial long-distance system." In fact, Singleton added, " ... the long-range significance of Westar might be far greater than all of those breakthrough put together." U.S. News * World Report described Westar as " . . . the forerunner of a series of electronics birds that can change the face of the whole communications business."

Have those predictions of 10 years ago measured up against the satellite industry today and market projections for the future?

The satellite communications industry in the US was slow to develop. Western Union had envisioned an early market for bulk sales of voice-grade supergroups to resellers--a market that did not materialize. Utilization of Westar facilities was expected to take three forms: expansion of the company's established services such as Mailgram; sale of wholesale services to other communications common carriers: and sale of retail sevices to government and commercial users.

By the end of 1974, the first Westar was joined by its sister satellite, Westar II, bringing a total of 24 commercial transponders on the American market capable of providing voice, video, data and graphic transmission to all 50 states and Puerto Rico. But it would be five years later before Western Union's pioneering satellite investment would turn profitable. At a meeting of security analysts in 1979, Western Union's newly elected chairman and chief executive officer, Robert Flanagan, would announce that "Western Union is in the satellite business to stay."

The turnaround in bottom-linge performance was in large part due to the discovery by the broadcast and cable industry of the inherent benefits of satellite transmission: economy, high-quality signal reproduction and point-to-multipoint nationwide coverage, which in turn could help fulfill their business objectives.

Westar became a significant broadcast television carrier in 1977 when the Public Broadcasting Service began satellite program distribution. Today, PBS transmits via Westar IV to earth stations that link nearly 300 continental and offshore public television stations. Westar V is currently used by at least 468 of the 500 television broadcast licensees in this country.

Satellites made possible the development of the cable industry and provided the ideal transmission mode for cable programmers. Home Box Office provided leadership to other cable programmers who sought to aggregate on the most desired satellites. Westar V, dedicated to the cable industry, currently delivers programming to nearly 50 percent of US cable systems, serving over 75 percent of all cable subscribers in this country.

In publishing, Dow Jones was quick to perceive the technical advanteages of satellite transmission for daily regional printing of The Wall Street Journal, as well as the economic advantages of transponder ownerships. Dow Jones now owns two transponders on Westar V.

While data and other digital transmission means are evolving, voice is still the largest market segment in the satellite industry. However, private voice and business data networks, long-heralded as a ripe target of opportunity for satellite marketers, have not experienced the rapid growth that had been predicted. With the AT & T divestitute this year, however, there is expected to be increased market development of this promising satellite application.

Immediate effects of the AT & T divestiture to date are seen in increasing competition with resulting customer choice. Greater options are available to business and industry in the design ad implementation of transmission systems tailored to a company's unique requirements for internal communications.

At this time, when US telecommunications managers are actively engaged in architecture assessment and future planning, it seems opportune to examine briefly two selected Westar customers who have chosen a satellite solution as part of their end-to-end telecommunications network.

Citicorp and IBP are profiled because they demonstrate contrasting volume requirements (from transponders to individual circuits), an intriguing mix of transmission moders, equipment selection and sale/lease arrangements within an overall design that allows for technical flexibility and network growth.

Citicorp is a multinational financial services organization. Its staff of over 60,000 people serves the financial needs of individuals, businesses, governments and financial institutions in approximately 2,400 locations. These locations include branch banks, representative offices in 40 states and the *district of Columbia, as well as 94 countries throughout the world.

Citicorp's role in the finanncial world has served to shape an understanding of how technology and telecommunications are eliminating time and distance barriers that once isolated national markets.

Walter Wriston, Citicorp chairman, and his senior management discussed this role in their 198i annual report: "Citicorp continues to make sizeable investments in the technologies that are changing the shape of the financial services industry. Perhaps most symbolic of our overall commitment and leadership was the June (1982) launching of Western Union's Westar satellite, which made Citicorp the first financial institution to own its own satellite transponders."

Citig the reasons why Citicorp chose to own its communications system, Citicorp's vice president for satellite ccommunications, Stephen Piraino, includes the following; control of telecommunications costs; assured availability of scarce transmission facilities: tailored service offerings; and privacy and security of communications.

Much has been written about Citi-satcom, Citicorp's sophisticated state-of-the-art corporate communications system. (The Citicorp satellite communications system is planned to be a 10-station TDMA network, operating at 60 Mb/s for digital T-1 circuits. It is currently operational among four city locations--New York City, Sioux Falls, Los Angeles and San Francisco.) What is perhaps less well known is the innovative use that Citicorp has made of Western Union's Westar V satellite, terrestial transmission facilities. local loop and contract satellite services.

Western Union contract satellite services provide long-term maintenance and operation for two digital entrace terrestrial radio links that connect Citicorp facilities in Los Angeles and San Francisco with two Citicorp earth stations, part of the TDMA network previously mentioned, collocated at Western Union's earth station sites ate Steele Valley and Sky Valley, California. In addition, Western Union provides maintenance for these Citicorp TDMA earth stations.

Western Union has installed fiber-optic cable in San Francisco expressly to serve the Citicorp traffic between the Western Union central office and radio facilities in San Francisco. Citicorp leases Western Union digital cable circuits to reach selected customer locations.

Digital traffice from San Francisco to the Citicorp earth station at Sky Valley is carried on Citicorp--Western Union shared digital facilities. A similar system operates between the Los Angeles and Steele Valley earth stations.

The digital traffice from both cities to their respective earth station sites in RF-protected California valleys, is carried by a 90-Mb/s system capable of handlng 56 T-1 full duplex circuits with a minimum capacity of 1,344 voice circuits. The 90-Mb/s tansmission consists of two 44.736-Mb/s signals, plus service channels for voice orderwire. The individual signals are combined by time-division multiplexing in the rado equipment. At the satellite earth station ends of the system. TDMA multiplex equipment combine the 56 1.544-Mb/s signals to provide satellite transmissios to the other Citicorp network stations.

All equipment on the digital entrance links is protected by redundancy. The lowest level multiplexing equipment is protected in a 1:7 configuration. All other equipment is protected in a 1:1 configuration. These entrance links have exhibited excellent error-free transmission for long periods of time during the past year. Continous circuit monitoring is provided by Western Union's Network Management Control (NMC) center at Upper Saddle River, New Jersey.

Citicorp's telecommunications requirements for voice, data, and video teleconferencing will be provided increasingly by their wideband digital satellite network. Implementation of videoconferencing, for example, among major Citicorp facilities, represents one of the new corporate applications now being provided over satellites.

A wholly-owned subsidiary of Occidental Petroleum, IBP is the largest meat packer in the world. Formerly know as Iowa Beef Processors, the Nebraska-based company procures, slaughters and processes almost seven million head of cattle yearly for domestic and world markets. Coincidentalyy, IBP is the largest producer of cattle hides for the leather industry and glandular by-products for the pharmaceutical industry.

With $6.5 billion in annual gross sales and 12,000 employees, IBP oeprates 11 beef plants a two pork plants in five midwestern states, Texas and the Northwest. Because of the critical need to communicate on cattle prices a dvoluem with cattle buyers in remote sites, IBP chose a satellite solution three years ago for their voice network. Using Westar III circuits, IBP transmits and receives from 4.6-meters earth stations located in Kansas and at the company headquarters in Dakota City, Nebraska.

A VHF tower is collocated at each earth station site to transmit signals to the car mobile radios of the cattle buyers. The radios are capable of transmitting and receiving clear or scrambled signals, important for price confidentiality in feedlot negotiations. Because prices change quickly, the IBP cattle procurement staff requires an immediate, reliable and secure voice system.

"Because the fresh meat industry traditionally operates at a profit margin of one percent, it is important that cattle buyers be immediately aware of fluctuations in cattle prices," says IBP Manager of Communications Mary Ellen Hulse. "In addition, we must tightly schedule when and how many cattle are sent to a plant to maintain peak operational efficiency."

Looking to the future in the light of changes in the telecommunications environment, Hulse acknowledges that IBP, like other large companies, is having to look at telecommunications alternatives. "Costs are a main consideratin," she says. "The future is uncertain with access charges, toll costs and private-line costs. We used to look at satellite transmission as applicable only to long-haul needs, but if short-distance leased-line rates change dramatically, we may have to rethink our applications."

The satellite market is currently assessed at more than $400 million and is expected to double by year-end 1985, reaching the $1-billion mark in the 1986-1988 time frame. Yet this is still considered an emerging industry--one in which innovative applications are just beginning to be explored and tested.
COPYRIGHT 1984 Nelson Publishing
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Copyright 1984 Gale, Cengage Learning. All rights reserved.

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Author:Knipp, F.M.; Williams, M.K.
Publication:Communications News
Date:Mar 1, 1984
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