NYTimes. True Believers Push Satellite Telephones
nytimes.com
The satellite telephone business has two strikes against it, but that has not
stopped some entrepreneurs and investors from betting that the next
multibillion-dollar swing for the fences will indeed produce a home run.
Now at bat: Globalstar Telecommunications, which is controlled by Loral
Space and Communications. Globalstar is just starting to introduce its
service -- a $3.3 billion system of 48 satellites designed to provide
telephone calls nearly anywhere in the world.
Last year, Iridium L.L.C., which has been offering a similar service, failed
to attract nearly as many customers as it needed and was plunged into
bankruptcy, forcing its main backer, Motorola , to write off $2.3 billion.
Two weeks later, ICO Global Communications, another contender,
which had not yet launched its satellites, filed for bankruptcy protection
after failing to raise additional money from investors.
Despite such setbacks, Globalstar's stock surged to a 52-week high last
month. Many investors appear to be betting that Iridium failed because of
its own design and marketing mistakes rather than a fundamental lack of
demand for satellite telephones. Globalstar's chance of success should be
evident in the coming months.
But the biggest personal bet on satellite telephones is being made by
Craig O. McCaw, the billionaire cellular telephone pioneer. In
November, Mr. McCaw agreed to raise $1.2 billion to bring ICO out of
bankruptcy. He is also reported to be looking at investing in or buying
Iridium. And if those are not enough billion-dollar bets to sate his
gambling appetite, he still has Teledesic, a proposed $10 billion system to
provide Internet service using 288 satellites, starting around 2004.
-- ANDREW POLLACK |
