Special Report on Mobile Telecommunications: Satellite rings offer promise: In the future, people will be able to send and receive telephone calls from anywhere on the earth's surface. Steve Homer reports

SCIENCE FICTION should become science fact before the end of this decade. With a phone about the same size as one of today's cellular telephones, you will be able to make and receive a phone call anywhere on the earth's surface. You will no longer be able to avoid your bank manager by walking to the North Pole; you will no longer be able to say sorry you didn't call but you just couldn't find a phone in the headwaters of the Zambezi. Wherever you are, business contacts, your home and your office will be just a call away - at a price.

Five competing consortia propose to develop satellite telephone systems and all the pieces are beginning to fall into place. These operations will use low earth orbit satellites (LEOs) to send messages between mobile telephones. The best known, and most ambitious, is the Iridium system, lead by Motorola and with partners including Lockheed, British Aerospace, Matra Marconi and many others.

Iridium expects to have its first experimental satellite launched in 1996 and proposes to launch 66 satellites which will go around the earth in six different orbits like six strings of pearls. The whole system, including ground facilities, will cost dollars 3.34bn.

Iridium is expected to begin commercial operation in early 1998 with handsets costing between dollars 2,000 and dollars 3,000. Calls will cost dollars 3 per minute. Motorola hopes to find 2 million customers by 2002. Most - 65 per cent - of its customers will come from business travellers and high income users - those with annual incomes over dollars 100,000. While the costs are high, for these extensively travelled groups, the benefits are also tremendous.

At present there is a patchwork of different cellular systems. Even GSM, the much vaunted pan-European digital system which will not be available for several years, will still be totally incompatible with systems in the US, Japan and most other parts of the world.

The proposed Motorola Iridium phone will include circuitry to allow it to use your local cellular system, probably GSM in Europe, local systems in the US, Japan and elsewhere. Users will only need to access Iridium if they cannot get through on cheaper conventional cellular systems. The system will be expensive to use, but Motorola's thinking is that if you are finalising agreements on a dollars 300,000 project, what does a dollars 30 phone call matter? Popping an Iridium phone into the briefcase will seem as natural as taking the computer and the portable fax machine.

At the other end of the scale, one area that has been much talked about is the possibility that Iridium or some such system could help in spreading telephony to the remoter parts of the globe. A recent article in the Economist said that half the world's population lives more than two hours away from a telephone, so there is obviously a lot to do to bring even basic telephony services to large parts of the world.

Motorola believes countries like the former Soviet Union, Brazil, India and China could all benefit from its 'rural' systems. There could be a case for using satellites to sidestep the expensive introduction of basic telephone services but, and it is a big but, while these satellite systems may offer a cost effective replacement for the infrastructure - the cables and the telephone exchanges - it will be many years before these benefits can be placed directly in the hands of ordinary people. The problem is the handsets.

While the satellite system may replace thousands of miles of copper cabling between towns and dozens of local telephone exchanges, there will be the same demand for actual telephones. For satellite systems these will inevitably be much much more complicated and expensive than ordinary telephones. However, one telephone in a remote village is a lot better than no telephone at all, but at dollars 3 a minute, usage is bound to be a problem. Longer term, while low cost satellite telephony might look out of the question, there are many who believe that, in the early part of the next century, costs will have fallen so dramatically that some form of localised, low-cost satellite services will be a very real possibility.

Iridium is not just about talking to someone on the other side of the planet. It also about sending data, paging and position monitoring. Motorola believes much of its business will come from data traffic in the shape of faxes and of information sent from one computer to another. With its modern digital signalling system, Iridium will be designed to offer extremely high speed communications links, with even large computer files downloaded in seconds.

But before any of these satellite systems can begin operation, many problems need to be sorted out. Not least the potential oversupply of operators and the regulation of services.

There are proposals from Loral Qualcomm, TRW Space Technology, Constellation Communications and Ellipsat. Inmarsat, the maritime communications organisation, also wants to offer a service. Analysts think it is very unlikely that the market can support more than two services.

In the absence of any international agreement, the Federal Communications Commission in the US is making all the running. In August it distributed testing licences and there is a possibility that Europe will want to license its own systems to prevent American hegemony. There are, however, some hopeful signs. Earlier this year at the World Administrative Radio Conference, frequencies for LEOs were found without undue argument and there seems a willingness amongst administrative organisation at least to give these ambitious projects a chance to fly. Whether they will prove technically workable and economically viable is another question.