Wal-Mart to kick off satellite communication system

Discount Store News, May 13, 1985

Wal-Mart to Kick Off Satellite Communication System

To the skies!

That's where Wal-Mart is going to provide faster, more flexible and less expensive communications between its headquarters here and its distribution centers and farflung network of stores.

The diversified $6.4 billion discounter is one of the first major retailers in the nation to start to use the advanced technology of a satellite communication system to provide voice, computer data and even video transmissions.

Wal-Mart has a $16 million contract with M/A-Com, a leading supplier of high technology communication equipment and systems, for a turnkey satellite communication network to connect its headquarters with two of its distribution centers and 750 Wal-Mart discount stores and Sam's Wholesale Club units.

M/A-Com's Integrated Satellite Business Network (ISBN) utilizes a Hub earth station at Bentonville that communicates with Personal Earth Stations at the DCs and the stores by bouncing signals off one of the satellites in permanent orbit around the earth. The signals are in the Ku-band assigned to fixed satellite service.

M/A-Com doesn't own or lease any satellite. Wal-Mart expected to select the specific satellite it will use for its network this month; the cost of leasing time and a portion of that satellite's Ku-band for the company's signal is expected to run about an additional $50,000 a month.

Bob Martin, Wal-Mart's director of information systems, said the ISBN should pay back its costs within four to five years through such factors as faster transmission of computer data, cutting the discounter's $10 million annual phone bill and the ability to provide such new services to the stores as same-day delivery of the latest training film.

The pilot ISBN program will start next month and will involve the Cullman, Ala., and Palestine, Tex., distribution centers and 10 stores to be selected from units in Florida, New Mexico and Kansas.

Still Developing

To provide time to work out any bugs, installation of the system in the other stores will begin early next year, with about 50 units a month getting the equipment.

The Hub earth station at Bentonville consists of the main transmitting and receiving equipment, including a nine-meter dish antenna along with the control unit and interface hardware to direct the system and connect to Wal-Mart's computer center and headquarters telephone network.

The antenna dish, the only part of the ISBN in public view, will be set up on the ground about 150 ft. away from the west corner of Wal-Mart's headquarters building.

The Personal Earth Stations at the two DCs and the 170 stores will consist of a 1.8-meter dish antenna, transmitting and receiving equipment and interface hardware to connect to mini-computers and telephones. The Hub station needs the larger dish antenna to be able to pick up the weak signals transmitted by the Personal Earth Stations. The earth satellite will provide some signal magnification, but the larger Hub dish will insure the best reception of the broad range of information that will be carried on the narrow portion of the satellite Ku-band frequency that will be assigned to Wal-Mart.

The situation is similar to TVs and radios; the larger the antenna, the better the reception.

The Hub station will control the entire network, including the transmissions from the Personal Earth Stations. Communications to and from the CDs and stores will be staggered so that there will be an orderly flow of signals on Wal-Mart's narrow Ku-band portion, thereby avoiding short bursts of massive transmissions that would require a more expensive wider band that wouldn't be in use for long periods of time.

The voice and computer transmission on the system will be digital data that can be sent at 56 kilobits per second, (kbps) compared to the 12 or 24 kbps transmission over telephone lines.

The video signals will be broadcast analog video, transmitted on a separate part of Wal-Mart satellite frequency, and picked up on a standard satellite FM video receiver like those used by consumers or such businesses as hotels and motels for video broadcasts.

Wal-Mart video and accompanying audio signals will be scrambled for greater security, and its receivers will include a descrambling module.

Martin noted the video feature means that Wal-Mart can make a training film on video tape and then transmits that tape to all the stores, which will record the training film on a VCR. This will provide faster delivery of the training information and avoid the need and expense of mailing out film or tape to the 750 stores.

Why It Was Done

The discounters decided to buy a satellite communication system to get a better fix on its communication costs. The ISBN is a known fixed expense, while the cost for telephone service, currently used for all communications, continues to increase.

Additionally, Wal-Mart is in 20 states and has to deal with more than 300 telephone companies. The satellite network means the discounters will now deal with M/A-Com for system maintenance and training and the earth satellite company for the signal cost.