Satellite Business Systems has been turned on.
After five years of planning, delays, legal problems, rising start-up costs and revised strategies, revenues are starting to trickle into the coffers of SBS, as the firm's first customers are beginning to use the company's satellite services.
The Vienna-based company -- a three-way partnership of Communications Satellite Corp., Aetna Life & Casualty and International Business Machines Corp. -- is providing a virtually unprecedented voice, data and television communications service initially to companies but with an eye toward possibly handling communications to the home. Further, SBS has started offering basic voice-telephone service, essentially a different service than the company originally intended to market. e
Not only has the original big-business-oriented marketing strategy changed since the venture was formed, but the company also has brought the cable television industry into a unique experiment designed to utilize cable lines as a means to avoid linking customers with the lines of American Telephone & Telegraph Co.
That program is just one of the efforts under way at SBS. To list the plans of Satellite Business Systems is to survey the future hopes of the telecommunications industry. What the company finally is beginning to provide to business customers is the kind of technology people only forecast a few years ago. Ultimately, the company hopes to use its satellite, earth stations and other links to provide all of a customers' telecommunications needs.
With its first satellite launched last fall and another to shoot into space this summer, the company also is eagerly awaiting the results of yesterday's successful launch of the space shuttle. SBS is planning to use the shuttle to launch its third satellite in late 1982 or 1983, as the shuttle offers the possibility of massive savings on launch costs.
"We're a classic example of why the shuttle's delays are so important," Robert Hall, president of SBS, said last week. "Originally we had hoped to launch all of them on the shuttle."
Sending up the first two SBS satellites on the shuttle would have saved the company $34 million. Each conventional launch by a Delta rocket costs the company about $23 million, approximately $17 million more than the shuttle's per-launch price tag.
Nevertheless, Hall would prefer to dwell on SBS' start-up efforts. Last month Boeing Computer Services was hooked into the system, the first customer with actual service, with SBS providing the company with data and "slow scan" video hookups using the SBS satellite.
Unlike teleconferencing, the often bally-hooed television meetings link that has yet to become the widely used system it was expected to be in the middle 1970s, the slow-scan approach does not provide moving pictures but rather stills of people and charts.SBS soon, however, will offer a modern moving-picture teleconferencing system.
"In some meetings it's not important to see who you're meeting with," Hall said. "In others it's important to see the people and get their reactions and body language."
On another front, the SBS voice network is also operational, as IBM offices in Chicago have begun using SBS for some conventional telephone service, particularly between Chicago and San Jose, a busy circuit for IBM personnel. General Motors will also be using that type of service later this year.
Alternatives to using AT&T for voice service is no longer a revolutionary idea. But another facet of the SBS effort is. In San Francisco and New York, SBS is using a local cable television system to link its data network with customer's offices.
That method of transmitting data is important to SBS because it avoids potentially lengthy delays that firms run into when attempting to add new services to their offices via AT&T. With a cable system already in a building, signals are shot out of a window antenna, linking into an SBS earth station and into the company's satellite network.
"It's going to demonstrates two new alternatives to local distribution," Hall said. "This way we bypass the Bell System all together. It's also economic, because they're so darned expensive."
Many cable executives say that data communications will represent a key part of the future of their industry, while operators are only slowly realizing the potential of those plans. "The cable people look at it with mixed emotions," Hall said. "Many look on their business as a vehicle for home entertainment, but all of them want to talk."
Yet despite the rosy talk out at the shiny new SBS headquarters near Tysons Corner, and Hall's prediction that the company's staff would reach 2,500 in five years, more than double the current figure, many in the industry wonder whether SBS actually can meet its ambitious technological and sales goals.
According to documents filed with the Federal Communications Commission last year, SBS predicted that his year alone revenues would be $11.1 million. The company also predicted the revenue figure for both network and voice services would jump to $78 million in 1982, to $199 million in 1983 and up to $323.8 million in 1984.
Not until 1983 does the company expect to turn a profit. The projections indicate the company will lose $88.2 million this year and another $63.4 million in 1982. In 1983 the company would show a $12.5 million profit, a figure that will rise sharply to $88.8 million in 1984, the company predicted.
"There is no chance of a [stock] public offering any time soon," Hall said.