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THE CUTTING EDGE / PERSONAL TECHNOLOGY | TELECOM TALK

Ultimate Cost of Pager Debacle Still Being Calculated

June 01, 1998|ELIZABETH DOUGLASS

America's electronic tether--the pager--has returned to power, and its tiny chirping call can again be heard singing from backpacks, waistbands and purses nationwide. But last month's unprecedented satellite outage, which disrupted millions of pagers and television transmissions, is still reverberating with paging companies and broadcasters alike.

PanAmSat, the company that owns the broken satellite, must spend an estimated $250 million for a replacement, plus has to bear the cost of reassigning satellite space to its corporate customers in the meantime.

The company's insurance will cover just a fraction of that price tag.

Primedia Inc., which supplies educational broadcasts to schools via satellite, last week said the satellite malfunction prevented it from relaying its Channel One News program to 12,000 schools during the last few weeks of the school year. The result will be a $5-million reduction in second-quarter earnings, the company said.

AirTouch Paging, a subsidiary of San Francisco-based AirTouch Communications Inc., last week said the debacle will cost the company about $2 million, including customer service credits and the cost of overtime pay for employees who worked round-the-clock to restore service.

The paging company, which had reestablished service to most of its 3.1 million customers within 48 hours, said it will credit customers an average of 60 to 70 cents--the cost of two days' paging service.

"Although we are not responsible for the faulty Galaxy 4 satellite . . . we are crediting our customers for the service outage because we think it is the right thing to do," said Charlie Jackson, AirTouch president.

The chaos started about 3 p.m. May 19, when a malfunction aboard the Galaxy 4 satellite caused it to spin uncontrollably, cutting off its ability to send and receive signals from Earth.

It turned out that Galaxy 4, built by El Segundo-based Hughes Communications and owned by PanAmSat (a satellite operator owned mostly by Hughes), carried nearly all of America's paging traffic, along with signals for radio and television stations.

While most radio and TV broadcasters quickly found space on alternate satellites, for nearly two days--and longer for some--pager subscribers either panicked or rejoiced in the system's relative silence.

The paging companies could still carry traffic over ground-based networks but could only restore full service by painstakingly repointing each of several thousand ground dishes toward a replacement PanAmSat satellite.

Dallas-based Paging Network Inc., which has 10.4 million subscribers to its PageNet service, said it blanketed the country with technicians, even renting helicopters to get to some remote antennas, according to spokesman Scott Baradell.

"We estimate that our field technicians drove 75,000 to 100,000 miles in 24 hours," Baradell said.

Baradell said the company has not yet tallied the expenses for the overtime and other outage costs. So far, PageNet has been compensating customers on a case-by-case basis and has not announced plans for widespread credits.

MetroCall and several other paging companies mirrored PageNet's approach to customer refunds.

During the outage, a few wireless phone companies jumped into the void, trying to convince customers to switch to a mobile phone.

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Last week, at least one paging company also tried to score points with customers.

MobileMedia Communications Inc., which sells paging service under the MobileComm brand, bought full-page ads in USA Today and the Wall Street Journal touting its backup systems and quick response to the interruption.

"How did millions of MobileComm customers dodge the satellite disaster, while others were lost in space?" the company ad screamed in large type.

Because the Fort Lee, N.J.-based company relies heavily on a ground system, more than 60% of its 3.3 million paging customers were unaffected by the Galaxy 4 mishap. The company said the majority of its satellite-based customers had service within 24 hours.

"We had redundant space on another satellite, the GE-1, so we didn't have to wait to find out if Galaxy 4 would come back up, and we didn't have to wait to be given space on another satellite," said Krista Grossman, a MobileMedia spokeswoman. "We already had one ready to go."

Other paging companies--most of which had no backup satellite capacity--are not amused.

MobileMedia, they point out, is in Bankruptcy Court and in need of any advantage it can get.

"This is a competitive industry, but with something like this, I don't think it's the best time to seek competitive advantage," said Baradell of PageNet. "Everyone was affected by this--90% of the pagers were out."

SkyNet, however, earned points with its customers for having a more robust backup plan than most companies, according to Darryl Sterling, who follows paging companies for the Yankee Group in Boston.

"They spent more on disaster recovery because most of their customers are business subscribers," Sterling said. "They had dishes pointed at two different satellites and only had 15 minutes of down time."

Despite the widespread effects, Sterling believes the paging firms will not suffer much from the outage.

"The industry recovered very, very quickly, and it brought a significant amount of attention to the industry," he said. "In the future, there's probably going to be a few more layers of redundancy."

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Staff writer Elizabeth Douglass can be reached via e-mail at elizabeth.douglass@latimes.com

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