From...

April 16, 1999
Web posted at: 5:47 p.m. EDT (2147 GMT)

by Matt Hamblen

(IDG) -- When Mobil Corp. in Fairfax, Va., installed a two-way satellite network in 1997 to link its point-of-sale applications at 6,000 service stations to a central database, it hit on an innovation that continues to grow.

The network has lowered operating costs, increased connection reliability and enabled $69 billion Mobil to implement improvements such as the Speedpass program that helps 2.3 million customers save time at the gas pump, Mobil officials said.

Ease of use

"It's an easier network to manage and control [and] a much better marketing and sales tool," said Terry Kueker, implementation manager for the Very Small Aperture Terminal (VSAT) project at Mobil.

The Speedpass system was enabled with a VSAT network built by Hughes Network Systems Inc. in Germantown, Md. It has created an 8% increase in data traffic for Mobil, Kueker said.

Analysts described the Mobil VSAT network as the second largest in the U.S., behind a network built by General Motors Corp. The U.S. Postal Service is building a VSAT network that will be the biggest, connecting 25,000 post offices.

The most significant benefit Mobil realized in picking the satellite system from Hughes over a landline network was gaining broad reach to service stations in 28 states, analysts said.

"VSAT is a viable alternative to frame relay and some other traditional networks, especially for somebody like Mobil [that's] trying to serve so many states," said analyst Jose del Rosario at Frost & Sullivan Inc. in Mountain View, Calif.

Satellite systems are also reliable, analysts said. Incidents such as the satellite that veered off-course in space last year, causing a two-day pager outage, affect only about 2% of total satellite time in any given year.

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Mobil officials wouldn't divulge the cost of their satellite network because the company is in a quiet period, with its merger with Exxon Corp. pending. But Mobil has saved on the cost of leasing lines from multiple telephone companies, company officials said.

Installing, operating and maintaining a VSAT system costs $125 to $175 per month for each location on the network, Hughes officials said. "It's much easier for us to manage," said Bill Pragman, manager of computer and network operations at Mobil.

"Before, we had leased lines from maybe 30 to 40 carriers. And before, we couldn't tell where in a link was the outage," Pragman said. Daily outages per station averaged two hours previously, compared with only 20 minutes under VSAT, he added.

Mobil avoided a costly upgrade of its point-of-sale equipment when Hughes built software to convert traffic from a proprietary asynchronous protocol used on the previous network to Internet Protocol packets. When a customer waves his Speedpass radio transponder at a pump or seeks authorization via credit card, the data goes to a rooftop dish, up to a satellite and then down to a Hughes hub in Minneapolis, where it travels across multiple T1 lines to Mobil's Lenexa, Kan., data center.

From there, an authorization might be shipped to a bank or other credit-card company, and the approval or denial is shot back to the user. The entire process takes only three seconds — about two seconds faster than under the old patchwork network.

Kueker said VSAT allows easy migration to newer point-of-sale technologies, such as touch-screen applications. The network also might be linked to fuel-tank monitoring devices, he said.

Equity analyst Adam Sieminski at Alex. Brown & Sons Inc. in Baltimore said Mobil's pending merger with Exxon is likely to produce an expansion of Speedpass and other innovations because the new, $250 billion entity will have the capital to handle such projects.

But Sieminski said Mobil needs to expand Speedpass to more sites than the 3,500 service stations where it's now installed if the program is to be as effective as possible. "I've driven to the Shell [station] down the street in Baltimore because I couldn't get my Speedpass to work," Sieminski said.

VSAT also increased the reliability of network transmissions from 99.6% to 99.8%. That will save nearly 1 million lost credit-card transactions per year, based on a daily average of 1.2 million transactions.