"Global Telecommunications in the Future"

A Symposium on New Directions

In Mechanical and Aerospace Engineering

Princeton University

April 20-21, 2001

Good morning, and thank you Professor Miles for that generous introduction.

I am pleased to be with you today and also delighted to be here at the invitation of Norm Augustine, our retired chairman and CEO of Lockheed Martin Corporation. Norm, of course, is a Princeton alumnus and former faculty member.

Norm is a legend in the public and private sectors and it is an honor to be speaking at his alma mater, which has graduated so many giants of aerospace and other industries.

Another gentleman to whom the U.S. space and telecommunications industries are indebted is Dr. Joseph Charyk. Dr. Charyk was scheduled to lead this morningís discussion on the beginnings of COMSAT and global communications systems, but could not be with us due to family reasons.

I would add that both Norm and Dr. Charyk are recipients of the National Medal of Technology, one of our countryís highest honors.

It was Dr. Charyk, the first president and chief operating officer of COMSAT and ultimately its CEO, who essentially built the organization that I lead today. And it was COMSAT, now part of Lockheed Martin Global Telecommunications, which led the technological revolution that forever changed world communications.

Archimedes, who invented the concept of the lever, once boasted, "Give me a place to stand, and Iíll move the Earth." He was suggesting, of course, that from a spot in the heavens, he could change the world.

I would propose that weíve delivered on the challenge posed by Archimedes. But instead of a lever, weíre using satellites in space. Weíve indeed changed the world with information from where we stand today in geosynchronous orbit around the Earth.

This is an ideal spot to begin our story. For while Iíve been asked to speak on, "Global Telecommunications in the Future," it is vital to review history to set the stage for where our industry is heading.

On August 31, 1962, President John F. Kennedy signed the Communications Satellite Act, which called for America "to establish, in conjunction with and in cooperation with other countriesÖ.a commercial communications satellite systemÖ.which will contribute to world peace and understanding."

JFK was indeed prescient on the importance of moving America into the communications age, but neither he nor other leaders truly understood just how much the world would be altered in the process.

A few months after President Kennedy signed that bill, in early 1963, the Communications Satellite Corporation, or COMSAT, was created.

Shortly thereafter, Leo Welch, a former CEO of Standard Oil of New Jersey, was installed as the first chairman and CEO of COMSAT.

Joseph Charyk, who was undersecretary of the Air Force in the Kennedy Administration, was named COO.

It was these two gentlemen who took on the daunting task of not only putting together the company, but also creating an international communications consortium.

This consortium would become the instrument enabling COMSAT to carry out its statutory mission to be the U.S. participant in the establishment and operation of a global commercial communications satellite system.

And in August 1964, the International Telecommunications Satellite Consortium, better known as INTELSAT, was created.

What began with a handful of nations pooling their space communications interests grew to 30 countries within a matter of months. Within a decade, more than a hundred nations were part of INTELSAT. And today, there are 144 member nations.

Later this year, on July 18, INTELSAT will privatize, leaving behind its amazing legacy as an inter-governmental organization, while embarking on an exciting new future as a truly commercial enterprise.

Meanwhile, in April 1965, the first COMSAT satellite, designated "Early Bird," was launched. This satellite, later renamed INTELSAT 1, officially marked the beginning of commercial space communications.

More importantly, it spawned a completely new international industry and unalterably changed the way citizens of the world communicate.

Weighing just 85 pounds, the satellite was equipped with only 240 telephone circuits. Although primitive by todayís standards, Early Bird was truly a technological marvel.

Today, there are some 750 active satellites hovering above our planet, allowing us to watch television from exotic locales, place a phone call to virtually any place on earth, or withdraw cash from our account in Washington via a bank in New Zealand.

And itís because of pioneers like Joe Charyk that such activities have become common place. Today, we rarely pause to think about the wondrous technology that makes it all possible.

To illustrate, I remember a congressional hearing addressing funding for a new meteorological satellite for a government agency. As the debate heated up, one Senator interjected, "Why do we need a new satellite? I can get everything I need on the Weather Channel."

I guess weíve made some things just too easy.

Itís clear that huge advancements in key technologies have dramatically improved the performance and lifespan of satellites.

Developments in materials such as advanced composites allow lighter satellites at lower costs and greater communications capacity per pound.

Better thermal controls using super lightweight insulation also have contributed.

Advanced propulsion systems such as ion engines have helped extend the

mission-maneuvering life of a satellite.

Important power generation elements such as solar arrays and storage such as batteries have been made lighter and more efficient and their usefulness stretched significantly.

Better analytical tools on the ground have optimized satellite design and led to optimized weight/performance ratios.

Over the past four decades the power generation of satellites has grown from hundreds of watts to tens of thousands of watts.

Enhanced communications technologies, including solid state amplification and RF efficiencies, have enabled better use of on-board resources, including power and propulsion.

Changes in electronics have been profound. Miniaturization, and even micro-miniaturization, has vastly increased performance while resulting in extreme weight reduction.

Equal efforts have been put into technologies, such as radiation hardening, that make satellites more survivable, and redundant circuitry has improved reliability.

All of this is key because at the core, satellites represent a game of mass and power, and ultimately, dollars.

The rules of the game are simple: spend fewer dollars to get more pounds into orbit, maximize communications throughput per pound, and achieve the most revenue by keeping the spacecraft operational for as many years as possible.

Looking back, some of you may remember that the famed author Arthur C. Clarke first raised the feasibility of communications satellites in a technical paper he wrote in 1945.

Indeed, Mr. Clarkeís musings became a reality. His only shortcoming was not foreseeing the modern age of electronics and miniaturization.

In his vision of a constellation of massive geosynchronous satellites covering the Earth, he predicted you would need a large number of "men in space," whose only job would be changing the enormous vacuum tubes in the spacecraft.

Mr. Clarke, who pursued a career as a writer rather than as a rocket scientist, now refers to his idea as "How I Lost a Billion Dollars in My Spare Time."

But he certainly deserves the proper credit heís due for understanding just how efficiently information could move using satellites.

The life expectancy of Early Bird was 1-1/2 years. COMSAT was totally amazed when it remained active for over three years.

The life expectancy of modern spacecraft routinely exceeds 15 years.

Norm Augustine likes to say ñ "Our satellites typically last twice as long as they were engineered to live. In essence, itís buy one, get one free."

In one recent instance, a Marisat-F2 satellite was shifted from its geosynchronous orbit over the Indian Ocean to a more elliptical orbit over the Atlantic Ocean.

In its new orbit, the spacecraft is able to "see" Antarctica for six to eight hours a day, thus giving satellite communications access to scientists at the South Pole.

Why is that important?

Well first, until the satellite was moved, National Science Foundation researchers at the South Pole Station did not have any high-speed data transmission capabilities.

This satellite now allows scientists to transfer, rapidly and efficiently, the large amounts of data gathered each day in the year-round research performed at the South Pole.

But did I fail to mention that this satellite was originally launched in 1976 and already had been used by the U.S. Navy and commercial shipping industry for over 20 years?

The original life expectancy of Marisat-F2 was five to seven years. It now is the oldest commercial communications satellite in the world still in service.

Further, there is still enough fuel aboard the satellite to keep it in service for many years to come.

As an aside, because of its unusual elliptical orbit, the spacecraft is now referred to as "Wobblesat" within the industry.

Early Bird had 240 circuits. Todayís satellites typically have 36 to 45 transponders, each with hundreds of circuits. Spacecraft are now being designed with approximately 90 to 100 transponders, and that number will continue to increase.

This wondrous technology has been incorporated not only into communications spacecraft, but also weather forecasting, navigation and space imaging satellites, as well as important projects for the U.S. government, like Milstar.

Milstar, designed and built by Lockheed Martin, has distinguished itself as the first of its kind in many ways.

Itís the first satellite system to allow all branches of the U.S. Armed Services to communicate with one another on the same secure network.

Itís the first to operate at extremely high frequencies, and the first to provide

satellite-to-satellite communications.

Milstarís "switchboard-in-the-sky operational concept is considered revolutionary because the satellites handle all processing and traffic management without ground station relays, greatly enhancing data security and resistance to jamming.

Similarly, I would be remiss if I did not note important advances in launch vehicle technologies.

Our new Atlas 5, scheduled to make its debut next year, applies new designs, materials and processes to offer significantly higher performance and value to our customers.

It also will require less time for processing and launch preparation, thus enabling greater flexibility in launch manifesting.

As a sidenote, the Atlas 5 comes equipped with a Russian-built rocket engine ñ the RD-180 -- capable of generating over 860,000 pounds of thrust. Talk about mass and power.

I told you that Early Bird weighed less than 100 pounds. Today, with launch vehicles like

Atlas 5, we routinely place satellites weighing thousands of pounds into geosynchronous orbit.

So, as an industry, Joe Charyk at COMSAT and others at Lockheed Martin have a lot to look back on with pride.

They were the pioneers of global satellite telecommunications. They brought the world closer together.

And it was natural that our two companies would come together with complementary strengths to compete in a rapidly developing global marketplace.

So where are we headed? What is the future of the space industry and the global telecommunications marketplace at large? How will Lockheed Martin Global Telecommunications play in this market space?

First, we are confident space will continue to have a vital role in the future global communications infrastructure.

Remember that a single satellite, in geosynchronous orbit, offers wide multipoint connectivity over huge portions of the Earthís surface.

A telecommunications network founded on satellites can be deployed quicker than a terrestrial network. And with todayís technologies, transmission quality has been vastly improved.

And shortly, broadband satellite systems will be contributing to service delivery.

One such broadband satellite system is called Astrolink, and LMGT is a partner, along with Liberty Media, TRW and Telespazio of Italy.

When Astrolink is operational in 2003, it will be the first true broadband service provider, covering 97 percent of the worldís enterprises.

Itís designed to offer more service at a lower cost with global availability, rapid deployment and guaranteed levels of service.

Astrolink will offer service faster than

95 percent of connections currently available. Using mesh global connectivity, youíll be able to have true any-point to any-point communications while optimized bandwidth ensures there will be no weak links.

Today, companies have to plan their telecommunications requirements to address peak periods. This of course, is extremely inefficient.

Astrolink will offer instant infrastructure and its

"bandwidth-on-demand" will allow you to buy what you need and use what you buy.

We call it "pay by the byte."

Each of the four satellites in the Astrolink constellation will be able to accommodate nearly

five million simultaneous connections. Traffic can be redirected among any of the 58 beams that transfer data on each satellite.

Ka-band frequency allows higher capacity and throughput of up to 220 Mbps. Focused spot beams will allow the system to transmit to 200 population centers simultaneously. Another way to describe Astrolink is a "6.7 Gbps switch in the sky."

While once discussing telecommunications with Senator Jay Rockefeller, he noted that he divides his time between New York City and West Virginia, and that he wanted his constituents, small businesses, schools, libraries and hospitals to enjoy the same level of telecommunications service he receives when he visits Manhattan.

He challenged our industry to rise to the effort.

Astrolink can provide that level of service and erase yet another example of the digital divide.

Its 600-kilometer-per-beam coverage satisfies the requirements of urban areas with high teledensity, but also outlying rural areas with little or no service today.

Its on-board processor ñ made possible by Milstar technology ñ enables efficient,

point-to-point and multicast operations.

Providing much more than simple telephone, fax and data services, Astrolink will offer access to applications requiring high transmission rates, such as high-speed Internet services, electronic transactions, video-on-demand, video teleconferencing, telemedicine, telecommuting and private networking capabilities.

With Astrolink, users will be able to transmit much more data much more affordably, and will not have to pay for idle time.

So, I think youíll agree that thereís still a lot of life left in satellite services.

And for everyone who points to Iridium, Globalstar and ICO, I would instead point to a greater number of success stories, including INTELSAT, Inmarsat, New Skies, Eutelsat, and SES-Astra.

These are companies that truly understand the market and the roles of satellites and the needs of their customers.

But it is a market demanding changes in the way we all conduct our business. A market that is becoming increasingly crowded and exponentially competitive.

How competitive?

Well, Iím reminded of the two good friends who were hiking together when they stumbled upon a grizzly bear and her cubs.

The mama bear, protecting her children, charged after the two friends. One friend panicked and began running as fast as he could, while the other calmly knelt down and began retying his shoelaces.

"What are you doing?" shouted the panic-stricken man, "You canít outrun a grizzly."

"I donít have to outrun the grizzly," said the calm one, "I just have to outrun you."

It is indeed a robust market marked by consolidation to achieve the requisite economies of scale.

Much like the consolidation that swept through the defense industry a few years back, satellite services companies now face the same choice.

Just three weeks ago, you read about the planned merger of SES Astra and GE Americom, located here in Princeton.

And there is ongoing swirl concerning other industry leaders, including PanAmSat, Loral Space & Communications and Eutelsat.

Clearly some well-known names will disappear. Just as clearly, we must think differently. Satellite communications cannot be viewed as an end unto itself.

We in the industry must instead focus our concerns on providing all the telecommunications services a customer needs.

And whether that is delivered via satellite or terrestrial fiber is usually irrelevant to the customer as long as the service is delivered reliably, securely, on-demand and

cost-effectively.

Quite simply, the customer ñ and LMGT as well ñ are agnostic regarding the source of transmission.

The real question is what role these satellite services will play going forward. Let me suggest that it will largely be a complementary, rather than competitive role with terrestrial providers.

First, there are functions satellites can provide that will never be displaced by terrestrial connectivity, particularly broadcasting.

Further, the inherent advantages of satellite systems, including instant architecture and ubiquitous coverage, will work well with terrestrial providers to offer that last 100 miles of serviceÖto perform the role of broadband route pioneerÖ and to offer a single network to geographically diverse multi-national companies.

Indeed, we are headed toward a scenario of integrated space and terrestrial interoperability, where the two segments are seamlessly merged into a global network. Satellite services will be an essential element of an intelligently integrated delivery strategy.

There are already over 50,000 miles of fiber in the U.S. One circuit alone can carry 155 megabits of information, and weíre talking fiber that contains hundreds of circuits and gigabits of information.

International consortia such as Global Crossing are laying 250,000-plus kilometers of new fiber to nearly every region in the world.

Some predict that technologies, such as dense wave division multiplexing, will result in thousands of times more capacity over the same physical fiber in the next few years.

Let me now call your attention to yet another dynamic changing the marketplace.

Most people talk about the power of communications. We believe that communications is powerÖ.power made possible by the rapid availability of information through the convergence of telecommunications and information technology.

The new revolution in communications is being driven by several factors, first and foremost being the incredible growth of the Internet.

According to some government estimates, the World Wide Web doubles in size about every 50 days. In 1993, Vin Cerf, widely known as the father of the Internet, projected that 100 million people would use the Internet by 2003.

By the end of 2000, 135 million people in the U.S. alone were Internet users. Worldwide, the Computer Industry Almanac projects that by the year 2002, nearly half a billion people will have Internet access.

The Internet adoption rate is phenomenal.

Defining "adoption rate" as reaching at least 25% of the American populace, the automobile took

54 years from the first sale -- the telephone

35 years -- the radio 22 years -- the PC 16 years -- and the web, just 8 years.

I personally knew the web was here to stay when my wife -- an avowed foe of technology -- began surfing up to two hours a day.

Meanwhile, quantum leaps in processing power, bandwidth and storage capabilities only add to Internet growth.

It was just 20 years ago when Microsoftís Bill Gates said, "640K ought to be enough for anybody."

Deregulation is another major factor affecting our market environment. Telecom reform will continue to lower barriers and increase the ability for a truly global and competitive communications sector.

In this country, the Telecommunications Reform Act of 1996 has fundamentally changed the way we do business, and how we will interact with the world in the future.

The legislation was designed to create fair rules in a new era of competition, affecting telephone service, both local and long distance, cable programming and other video and broadcasting services.

I cannot stand up here and tell you that it is perfect legislation ñ far from it -- but it certainly opened the market for the first time to true competition. And it is beginning to happen everywhere in the world where we do business.

Globalization also is a significant factor. The world financial system is now so interdependent that when Asia gets the flu, Latin America gets sick, and U.S. housing prices go up.

Instantaneous global communication means that news, good and bad, is transmitted in seconds.

And the amount of capacity and connectivity options continues to grow.

Concurrent with this build-up of infrastructure is a sharp decline in prices. It cost roughly $90 in 1978 to transmit 45 Mbps per kilometer over fiber; today, according to AT&T, it costs only

90 cents to transmit 40 Gbps.

For voice, the cost of a three-minute call from New York to London in 1935 was about $250 in constant dollars -- now that same call costs less than $1, and prices are continuing to fall.

Unless of course, you have a child who is studying abroad in Spain.

But keep in mind that 80 percent of the worldís telephones are located in just 25 countries, and the city of Tokyo has more phones than the entire continent of Africa.

So how does a company such as LMGT behave in such an environment? Where is our competitive advantage, what are our market discriminators?

We need to take full advantage of the new opportunity created by convergence ñ again, we define this as the marriage of telecommunications and information technology.

We call that converged marketplace "Infocom," which represents a new and improved way of service delivery and meeting customer requirements.

And our goal is to become the "partner of choice" in this emerging market space.

Spanning activities that range from transport to web hostingÖ.

from application maintenance to IT outsourcing and systems integrationÖ

to e-commerce,

LMGT has the ability to deliver highly secure, reliable solutions, that can be based on a single platform, that can be shared or dedicated.

Itís all of those ingredients packaged and delivered in a way that is tailored to the requirements of an individual enterprise and completely embedded in a framework of end-to-end security and superior customer care.

With these modular offerings, our customers can determine their own adoption rate and their own investment level.

They will be offered IT/telecom solutions that can stand alone or work togetherÖ

That can meet the needs of small to medium enterprisesÖ

or large multi-national corporationsÖ.

on a regional basis or globally.

We can help them be more competitive by allowing them to operate more productively, more efficiently and more cost effectively.

This is our vision. This is Infocom. And successful companies will make good on the promise of taking advanced technology capabilities available today to deliver what our customers are going to require tomorrow.

In my brief time with you today, Iíve reviewed the first 40 years of our industry, and given you a glimpse of where we think it is headed.

While it is difficult to predict the future with any degree of certainty, itís not unreasonable to expect ongoing seismic changes in our lives.

We will see connectivity and instantaneous communication truly shrink the world and make geography nearly disappear. The Earth will in fact become a virtual community.

Will that be the case? Weíll know in a few years. But rest assured the rate of change will continue to be faster with each passing day.

In closing, let me share with you of one of my favorite quotes from President Ronald Reagan, who said, "Information is the oxygen of the modern age; it seeps through the walls topped by barbed wire; and wafts across the electrified borders."

He certainly was right, and although the Cold War has officially ended, his words remain true today.

And we at LMGT take great pride in being part of the information revolution and the way it is improving all of our lives.

Let me congratulate Princeton on the 50^th anniversary of its graduate studies program for the College of Mechanical and Aerospace Engineering, and on the occasion of the 100^th anniversary of graduate education at the University.

Thank you very much, and Iíll gladly take any questions.