Internet by Satellite Flexes Muscles

- by Paul Kallender-

For Star Wars devotees frantic to feast their eyes on the new prequel, "The Phantom Menace," but who still balk at the drudgery of enduring the hour-plus download time for the 30MB file, relief would appear to be at hand. In a trial conducted by CJ in early April, we managed to speedload Lucas' flashing vision of the future-past in all of 2 minutes, 44 seconds. Now that's just a little bit faster than schlepping down to the cinema with your DigiCam, or, more to the point, ISDN. Actually, 64kbps, or isdn speed, is the slowest service we provide" says Shuichi Samejima, president of Marunouchi-based NTT Satellite Communications Inc. (NTTSC), with evident pride. Samejima is touting his June 1-available Megawave service as Japan's newest solution for those tired of walking the pooch while waiting for multi megabyte files - MP3 audio, video, Microsoft's latest browser (Internet Explorer 5.0) - to download into their cache. And while practical speeds for home users will vary from 500 to 1000Kbps "depending on traffic," according to Samejima, Megawave shortens the download time on a typical 2.5MB file from 10 minutes - using a common analog dial-up Internet connection, or 5 minutes using ISDN digital - to all of 20 seconds. "What we are offering is quickness of reaction; we can process a high volume of data in a very short period of time," says Samejima. The need for speed Why is Megawave so fast? Because it bypasses terrestrial ISPs altogether on the return link, using a dedicated 30Mbps trunk beam from the company's N-Star-A satellite, parked 36,000 kilometers above our heads, bypassing terrestrial ISPs (Internet service providers) altogether on the return link. The system works by linking the user through conventional dial-up to their ISP via the company's Otemachi hub, then meshing the user's computer to the company's new \3.5 billion Network Operations Center (NOC) in Shinagawa. The NOC assigns the user another IP address, then links them to the remote Internet server where the desired information - Web page, digital music file, video file, etc. - resides, routing it back to the NOC. It's then that things go orbital, as NTTSC grabs the data, loops it up to N-Star, and then pumps it faster than a Tie Fighter back to your (NTTSC hopes) newly-bought antenna and PC add-on board decoder. But how can net service using a multi-billion yen satellite be provided cheaply enough for the common user? The key reasoning is that although satellite communications are indeed expensive, most data traffic is asymmetrical. When you or I request some data from a remote Web server - like the Jobs in Japan Web page from www.computingjapan.com - that plea usually only comprises a few bytes. While it's a costly waste to beam simple instructions to a satellite, it's on the return traffic (return link) that the satellite can kick in efficiently, rerouting past overloaded ISPs, ignoring busy signals, and avoiding all those copper line bottlenecks that delay our access and raise costs. The Empires strike out So not surprisingly, Megawave is actually the last of NTTSC's satellite-based Internet/intranet services, representing the latest development in a young but growing industry - Tokyo's super-fast satellite data transmission game. Now just over a year old, NTTSC forms the third of a triumvirate of companies, which include DirecTV platform provider Space Communications Corp. and Direct Internet Corporation, both of which are now upgrading not only their services but their entire approach. Originally a \400 million-capitalized, 51/49 percent, NTT-Japan Satellite Communications (JSAT) joint venture, NTTSC says it is confident that Internet-by-satellite is a viable broadband space highway to big bucks. Step one was finding the backers - including IBM, Sony, and Softbank (the latter at 1 percent) - who could provide key technology like the PC boards and descramblers. For step two, NTTSC has unleashed two business-use services, video-based Megawave Pro-V last September, followed by Megawave Pro-IP - for packet data - last October. Initial results have been successful, with the Mori Hanae group buying into Pro-V, and Tokai University the Pro-IP services. To date, some 15 concerns are receiving data streams at over 200 terminals. NTTSC now aims to achieve \7 billion in revenue in three years and pay off accumulated debts of \12 billion in five years, says Samejima, who is thinking as big as he is fast. "Some say that Japanese companies' computer systems are now obsolete because many of them are working on mainframes, not a client-server basis. In a very short time a lot of systems are going to be improved, and that push could provide a lot of business opportunities," he says. Yes, maybe, but not if rival Space Communications Corp. (SCC), which licenses the Hughes Network Services (HNS) DirecPC system in Japan, can help it, says DirecPC marketing section manager Masaki Sagara. In what amounts to a direct counterattack, SCC is planning a huge service expansion of its own, plus upgrades, to make sure it gets its share of this hot market. Rolled out in January 1997, SCC's DirecPC works on a similar return-route, satellite-link system, like NTTSC, but uses different HNS-supplied protocols transmitting a 12Mbps stream at 64.4Kbps from its Superbird-A satellite. Services now include high-speed digital object delivery at up to 3Mbps - either on-demand or scheduled, content streaming at up to 6Mbps, and a 400Kbps Internet/intranet connection. However, until now, DirecPC has witnessed only modest growth, gleaning some 20 corporate clients and 9,000 terminals, says Sagara. One reason for this slow uptake was haste, with the company enthusiastically rushing to set the system up without really marketing it, he says. Another was what Sagara terms corporate conservatism, with technology-resistant, budget-wielding buchos (middle managers) initially reluctant to trust a satellite-based data service. This forced SCC to concentrate on persuading big denki (electronic) manufacturers like Fujitsu Corp., which now in fact markets the service, to try the system out experimentally before committing themselves. SCC hopes these trials will bear fruit, as improved confidence in the system seems to have penetrated even the gloomiest recesses of Tokyo's tardy middle-management, says Sagara; so much so that SCC is now ready to launch a fully-fledged assault on the corporate market. With SCC's corporate client base set to rise to 30 clients and 15,000 terminals during 1999, the company intends to more than triple its bandwidth, adding a 24Mbps service from Superbird-B this fall and yet another 24 Mbps by January 2000 on Superbird-C. SCC's customers are found in three broad business areas: corporate services on Superbird-A, undisclosed governmental services on Superbird-B (they won't say which ministries), and household services on Superbird-C, which already beams DirecTV Japan broadcast services to over 300,000 subscribers. "We estimate that we will be doing more than several billions of yen in sales over the next few years and that we will break even this year or next. Actually we don't now care if it is this year or next year ... It's just the beginning," says Sagara. But before that happens, SCC will have to make up for several newbie bloopers. Until now, DirecPC transmissions could only be picked up and decoded directly into desktops; the introduction of a LAN router - a surprising lapse - will allow direct gateway service into corporate networks/intranets. Another seemingly small, but vitally important, new hardware introduction that will add pep to sales would be the introduction of a USB decoder, which will finally make DirecPC accessible to all those laptops and notebooks that prevail in Kasumigaseki. "2000 will be the year that we take off! We have only just started!" says Sagara. Which side of the Force? Two systems, two protocols, two choices. For those of us who have already invested in digital satellite television and own PCs, the future looks, well ..., typically unclear. Currently, NTTSC sees explosive potential in the household market following the success of the SkyPerfecTV (SPTV) digital broadcasting platform on JSAT's JCSat-4 satellite. This bird will also provide the Megawave service, creating a win-win-win solution for NTTSC, JSAT, and SPTV, they hope. With 1.1 million SPTV broadcast subscribers in hand, NTTSC estimates that up to 60 percent of them will be willing to shell out an extra \40,000 or more for a PC board and a fixed, flat-rate fee of \3,980 per month. Also, NTTSC has been studying the figures, and now thinks it can glean up to a million more users over the next few years. "When we looked at the residential market, [we estimated that] it rose from about 10 million in 1997 to 14 million last year. About half are home users, with about 60,000 of them being heavy users. We originally targeted the heavy users, but we have changed our focus to all users," says Samejima. For JSAT, the business will add incentive to potential digital broadcast subscribers to choose SkyPerfecTV over DirecTV, and could quickly become a low risk - if minor - profit center for the satellite service provider, according to Yasuo Okuyama, general manager of JSAT's business administration department. "Our digital broadcast subscribers are practically already connected without knowing it. It's foolproof. The service will be cheaper and faster than ISDN and people will notice this when the bills come in," he says. "We can roughly extrapolate that our corporate business will bring us into the black within five years. But for private users, we are seeking rapid growth ... most optimistically up to a million," asserts Samejima. The future, he says, is WebTV. Assuming that a viable video image requires a feed of 100Mbps, NTTSC can in theory only beam to several dozens of viewers and still keep the service running for others, admits Samejima. But NTTSC is now researching a multicast 400Kbps streaming format to get around the image quality problems and hopes to start offering selected programs from local WebTV providers, beginning with J-League excerpts, from June. SCC also sees a "huge potential" among its CS customers on DirecTV. With 300,000 subscribers to that service so far, the company's main focus will be on the corporate market for now, says Sagara, who is a little bit more shy in revealing what DirecTV has in store. There is another For those of you with doubts about these services, be comforted that you are not alone. It's worth pointing out that both NTTSC and SCC admit it hasn't all been a smooth ride. While SCC says it has turned the tide with Japan's skeptical middle management, SPTV subscribers rushing to shell out for a new PC board should be reminded that the Megawave service is, in fact, nearly six months late. Having signed up a couple of hundred test users, Samejima says that NTTSC has only just overcome a really basic problem - IP addressing - with NTTSC's protocol being rejected by their more humble partners'. That issue is now resolved, says Samejima; although customers still won't be able to send e-mail on Megawave, they can receive it, he says. Another issue, rather like that faced by SCC, has been conservatism, with only 15 of Japan's current 3,000 ISPs allowing the satellite link system to be interconnected to theirs. "They are not sure and they would like to develop support and guarantees for the system, basically because they do not understand it," says Samejima. However, with big ISP players like So-Net and BigGlobe signing up, NTTSC is convinced more will jump on the bandwagon. And while admittedly not as fast as the Megawave option, SCC argues reasonably convincingly that DirecPC, presently rolled out in different versions in 18 countries, is now the de facto world standard. Yes the system occasionally crashes, but data is safely cached at SCC's NOC before download, as is NTTSC's, so don't worry, says Sagara. "We now have a tried and trusted and operational system. It's more than just a gap-filler," he says. KDD sparks up its lightsaber While NTTSC and SCC retool, KDD has just announced its own entry into the market with KDD Skycast, which will offer 150Kbps on the outgoing channel and a maximum 2Mbps downlink bandwidth via 75 centimeter antennas, according to the company's public relations officer, Takeo Shimizu. While performance is undramatic, the service aims to offer a direct competition with Megawave Pro and DirecPC for corporate customers, but with the advantage of avoiding land lines on the request phase of the data transmission. But the biggest problem with these services, says Direct Internet Corporation (DIC) President Ryuichi Hanaoka, is that they are already out of date. Having been in business with its own 3Mbps package/ 400Kbps Turbo Internet service DirecPC format since 1997 (although he admits "I have to tell you, we haven't made any money yet"), DIC is already planning to expand out of Japan and provide a US-Asia service via PanAmSat's PAS-2 satellite. While deeply critical of his rivals ("DirecTV is a failure, why do SCC bother? ... NTTSC? They don't care if they make any profit or not, they're just NTT"), Hanaoka's main thrust is that as big as they talk, presently planned services simply lack vision. Hanaoka is plugging DIC right into California's 100Gbps Palo Alto Internet Exchange in the Napa Valley and plans to relay data to new partners in Korea, Taiwan, China, and Hong Kong. "It's a very big pipe; 70-80 percent of the world's Internet data originates from, or passes through, US servers. The Japanese market it very small, while our main customers will be in the US and Asia," he says. How DIC will do this is still proprietary information, says Hanoka. Watch this space. Paul Kallendar is a Tokyo-based science and technology writer.

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