Though not as dramatic as the moon landing that took place 40 years ago Monday, a phone call over a satellite launched earlier this month was the first for a system that may dramatically expand mobile voice and data coverage in the U.S. and Canada.

TerreStar Networks announced Monday it has demonstrated a call over the TerreStar-1 satellite, which was launched July 1 from the European Space Agency Spaceport in French Guiana. TerreStar-1 is designed to complement 3G networks on the ground, providing essentially unlimited coverage for special handsets that have both cellular and satellite radios. Service is expected to span all of the U.S. and Canada, including Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands.

AT&T Mobility plans to resell the service, according to TerreStar, which said last month it was still negotiating a deal with a Canadian carrier. AT&T will begin by offering it for local, state and federal government.

The demonstration call was made between two TerreStar handsets with satellite as well as quad-band GSM (Global System for Mobile Communications) and tri-band HSPA (High-Speed Packet Access) capability. The first such device is set for launch in the fourth quarter of this year, the company said.

TerreStar aims to bring down the cost of satellite voice and data communications. Its first handset will cost about $US700 before carrier subsidy, compared with an unsubsidized cost of $US400 to $US500 for a typical BlackBerry, the company said. Future devices will use SDR (software-defined radio) technology that includes both cellular and satellite capability in one chip, which could bring prices down further.

Service will cost less than today's typical satellite phone rate of about $US1 per minute. Machine-to-machine communication, for purposes such as monitoring pipelines or electrical grids, may eventually be a key application for the network, according to TerreStar.