It hasn't been a good week for the satellite industry. Both DirecTV and EchoStar have dropped out of the bidding in the Federal Communications Commission (FCC) spectrum auction for Advanced Wireless Services. But a little-noticed news item out of Colombia, of all places, might provide a glimmer of hope for the beleaguered industry.

There, an alliance between optimization solutions provider Verso Technologies Inc. (Nasdaq: VRSO) and Israeli satellite company Shiron Satellite Communications Inc. has resulted in the first cost-effective deployment of a GSM cellular-over-satellite solution. Verso's NetPerformer GSM-optimization technology reduces the bandwidth requirement for the cellular backhaul traffic by up to 65 percent, according Verso vice president of global accounts Greg Kustudia -- offering comparable dollar savings on network capital expense and operating costs.

That, adds Kustudia, means that for operators, "the ROI can be weeks, and typically it's six months, on the investment in our equipment alone."

And that, along with the advent of "broadband IP" transmission technology over satellite networks, means operators will be able to penetrate remote areas once considered inaccessible to wireless coverage.

"It's a great fit. The combined solution with us and Shiron enables operators to get into areas where before they typically couldn't justify the costs," explains Kustudia.

Initially, the primary applications for the optimized GSM/satellite networks will be in the developing world, in remoter parts of Asia, Africa, and Latin America. Already, organizations that operate in such infrastructure-free places -- such as the military and the oil and gas industry -- are using Verso's optimization technology to reduce the costs and bandwidth requirements of their satellite telephony.

Houston-based oilfield services company Parker Drilling, for instance, shifted from a radio system connecting its offshore rigs to a satellite-based IP transmission system five years ago, and more recently chose Verso's NetPerformer voice and data router using a software option that allows managers to broadcast to multiple rigs over a single satellite frequency.

An offshore rig can now transmit two voice calls, email, and maintain Internet access simultaneously using just 64 Kbit/s, according to Charlie Cox, telecom manager for Parker Drilling.

Further applications will likely be found in disaster recovery, when physical infrastructure is destroyed or damaged.

"When Katrina hit, our equipment was deployed by a number of system integrators down there," points out Kustudia, "particularly first responders using push-to-talk applications."

Ultimately such cellular-over-satellite applications will likely remain a niche market. For satellite companies seeking novel ways to increase usage of their bandwidth, however, they're welcome news.

Another glimmer came yesterday when Hughes Network Systems Inc. made it known that it has completed over-the-air testing of the broadband IP capabilities of its Spaceway 2 satellite. Hughes plans to use the Spaceway system -- the first to carry on-board switching and routing capability -- to deliver a variety of broadband services to governments and enterprises.

— Richard Martin, Senior Editor, Unstrung