TELEDESIC: Fall of Iridium forces rethink
Wednesday October 13 1999
By Alan Cane in Monaco
Teledesic, the satellite communications group backed by Microsoft's Bill
Gates and mobile phone entrepreneur Craig McCaw, is rethinking its business
strategy following the bankruptcy of Iridium, the satellite phone pioneer.
The company has raised more than $1.5bn to build an "internet-in-the-sky"
based on a large constellation of satellites in a low-earth orbit.
The original plan was to offer low-cost access to broadband services such as
the internet in direct competition with optical fibre.
But the failure of Iridium, the first company to offer worldwide mobile phone
services using satellites, has forced the company to review its plans, said Bill
Owens, who shares the role of chief executive with Mr McCaw.
Speaking at the Etre computer conference in Monaco yesterday, Mr Owen
said three months of detailed design review had been extended to allow time
to examine Teledesic's development and options.
He said that at a time of business and technological uncertainty, it was best
to take stock before critical decisions were made.
The new options include becoming a "one-stop-shop" for all satellite
communications services; finding ways to get into commercial service faster
than the planned start date of 2004; and examining different kinds of satellite
patterns.
Among the options was the possibility of acquiring the satellite constellation
that Iridium has already placed in orbit, although Mr Owens said that Iridium's
technology was not compatible with Teledesic's.
However, the two companies share a common investor in Motorola, the US
electronics group.
Mr Owens said technology costs were changing so quickly that it was difficult
to make firm design decisions.
The original plan had been to launch 840 satellites. Now it seemed that 288
would be adequate and that number could fall further.
Launching costs were also falling rapidly. Within a few years the cost of
putting a pound of payload into orbit would be one tenth of the cost today.
Iridium's problems have caused difficulties for all the satellite communications
companies. ICO, a rival to Iridium, followed it into Chapter 11 of the US
bankruptcy code earlier this year.
Mr Owens said the company was waiting to "see what happens".
One development he will be watching closely will be the progress of
Globalstar, a rival to Iridium and ICO, which begins service this month.
Sir Peter Bonfield, British Telecommunications chief executive, told the
conference that the convergence of mobile telephony and the internet offered
European companies an opportunity to narrow the gap in the "new internet
economy" that is rapidly opening up with the US.
He warned that there was no room for complacency in Europe.
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