Cellular handsets that also can act as a satellite phone could be available in the next three years, thanks to an agreement announced today in which Qualcomm has agreed to develop an integrated chipset with satellite communications providers Mobile Satellite Ventures (MSV) and ICO Global Communications.

Devices equipped with the chipset would transmit signals over a traditional terrestrial cellular network when in an available coverage area but would be able to link to a satellite service when a terrestrial network is not available. The chips are expected to be available in 2010.

"This agreement marks a truly historic milestone in the evolution of the wireless industry,” Alex Good, chairman, CEO and president of SkyTerra Communications—parent company of MSV—said in a statement. "For the first time, satellite communications can achieve economies of scale traditionally enjoyed in the cellular marketplace today.”

MSV spokesman Tom Surface said the announcement is the second of three steps for his company to realize its next-generation satellite goals. In July, SkyTerra announced it had secured the $500 million in funding needed to launch MSV’s next-generation satellites in 2009 and 2010.

Traditionally, satellite phones have required large antennas so signals can reach satellites 22,000 miles from the earth’s surface. However, the next-generation satellites being launched are so large that next-generation handsets can have a form factor similar to that of modern cell phones.

With the Qualcomm deal, MSV has a partner that will develop an integrated satellite-terrestrial chipset that can be placed in a variety of handheld devices, Surface said. “The [satellite] capability will be in the chip,” he said. “It will be up to the users and their carriers to activate the capability.” To that end, MSV has been negotiating with commercial wireless carriers to establish distribution and service agreements, Surface said.

Roger Entner, vice president of communications for IAG Research, questioned whether wireless carriers would want to partner with a satellite provider “This would be something more for someone like FEMA—a catastrophe-proof solution that also works outside the general footprint,” Entner said. “It’s just not a mass market.”

Mobile wireless consultant Andrew Seybold agreed that the addressable market is limited but believes it can be a valuable one to carriers, as it would be attractive to customers such as public safety, government, utilities and energy-related enterprises.

“If the carriers can make extra money doing it, they’re going to offer it,” Seybold said. “I don’t see why any network operator wouldn’t offer it as an option. ... For a certain segment of the population—people who are out on oil wells, people who are on ships, first responders—it makes a whole huge amount of sense.”

Seybold said he does not believe the integrated satellite service would be a threat to existing commercial roaming arrangements between carriers, because even next-generation satellite service likely would be significantly more expensive than roaming service on another wireless carrier’s terrestrial network.

“I don’t think the economics are going to work [to use the satellite option for normal roaming],” he said, also noting that satellite links typically are not effective indoors. “But it gives a tremendous amount of coverage where there’s no coverage.”