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Technology Stocks : ORBCOMM [ORBC]

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To: Webster who wrote (3)5/26/1998 5:46:00 PM
From: Francis Gaskins  Read Replies (1) of 13
 
"Teledesic's Future Tied to Iridium"
wired.com

With one stroke of his pen, Craig McCaw tied the
fate of his beloved Teledesic network of satellites
closely to that of an ambitious Motorola project
that will soon be in the orbital spotlight.

On Thursday, McCaw and Motorola chief
Christopher Galvin announced they were
combining their ambitious "Internet in the sky"
projects, Teledesic and Celestri.

The deal created a team of telecommunications
and aerospace giants, with Motorola swapping
places with Boeing as the primary contractor of
the system, due mostly to the former's vast
experience with wireless and satellite
communications.

But the company was also helped along by the
completion of launches of its Iridium project.

Iridium, a network of 66 low-Earth orbit (LEO)
satellites, promises to bring cellular paging and
calling services to every square centimeter of the
globe. By comparison, Teledesic proposes to
bring video, data, and other bandwidth-eating
applications at a rate that is as much as 2,000
times faster than a 28.8 Kbps modem. A complex
288-craft LEO satellite network will beam the
applications to consumers around the world.

Although its services are much different than those
planned for Teledesic, Iridium is regarded as a
dress rehearsal of sorts for global satellite
communications services. It is the largest
communications constellation ever sent aloft and,
with a 23 September start date, it is closer than
Teledesic to actually opening for business. If
Iridium succeeds, the investment community will
be more accepting of the even-more-ambitious
Teledesic.

But if the plan fails, Teledesic may be financially
out of luck.

"Everything depends on Iridium," said Marco
Caceres, senior space analyst with the Teal
Group.

"It's clear in the investment community that if, on
23 September, they turn on the switch and it
[doesn't] work, it would be bad for Celestri," he
added.

"They won't be able to raise US$15 billion or
whatever it will cost if their $5 billion system isn't
working," noted Caceres, who pores over satellite
system proposals and papers to advise investors.

With such pressure, why would Motorola choose
now to partner with Teledesic? Because the
company has had its eyes set on Teledesic before
it even filed papers with the FCC for Celestri, said
Brett Lambert, vice president of DFI International,
an aerospace consulting firm.

Last year, when Teledesic announced its
partnership with Boeing, Lambert said, "Motorola
licked its wounds and came up with Celestri,
which was a more reasonable proposal."

Meanwhile, Motorola kept itself in the running for
the contract to build the Teledesic
communications satellites, a piece that was still
missing in the Boeing partnership. Teledesic
sought Boeing for its vast experience as an
integrator of complex systems, and its savvy in
international negotiations.

What Boeing lacked was the experience and
facilities to build communications satellites -- a
not-so-incidental task, given the scope of the
Teledesic network.

Teledesic presents a new set of technological
challenges with LEO satellites, in terms of the
sheer quantity of satellites needed and their
lifespans. LEO satellites, which travel at altitudes
between 434 miles and 441 miles above the earth,
last an average of five years. Teledesic claims that
its will last seven.

A more challenging task lies with what goes inside
the satellite -- a communications system that will
operate in an unused part of the Ka-band.

"These LEO sats are pretty cutting-edge
technology," said Caceres. "All of Boeing's
experience [in satellites] is what it bought when it
purchased Rockwell, and those are GPS [global
positioning systems], an entirely different
technology," he said.

So when Teledesic looked around at the players
that could jump through the technological hoops
and do so quickly, Motorola emerged as the only
possibility. That's because with Iridium, Motorola
flexed a certain type of muscle that caught the
attention of many in the satellite industry,
including Teledesic: It churned out one satellite
every five days once its production line was up and
running.

That fast pace -- communications satellite
production is typically measured in months, not
days -- allowed Iridium to put up its constellation
in less than a year's time. Still, for Teledesic to
meet its ambitious plans to launch the entire
288-satellite constellation in a year, it will need to
be even faster, noted satellite insurance broker
Richard Alden.

"From an insurance standpoint, Teledesic pushes
the envelope in quality control," said Alden,
president and chief of Space Machine Advisors.

To meet its goal, Teledesic may have to turn out a
satellite a day, particularly if it's to produce spares
and ready a fleet to refresh the system. But this is
a problem that's not insurmountable, particularly
with Motorola's Arizona production facility.

"[This plant] is probably the only place in the
country -- in the world -- that has the capacity to
build that many satellites," said Caceres.

Nonetheless, there is a small matter of quality
control and reliability of the system, a problem
that is currently plaguing Iridium, which has five
satellites that have failed and another two
threatening to go on the fritz, reported Alden.

"From an insurance standpoint, [Teledesic] sort of
pushes the envelope of quality control," said
Alden. "With an all-LEO network, you have to
remember that LEOs have less of a lifespan than
GEO, so you've got to launch them, giddyap."

It is for this reason that Iridium may prove to be a
model for Teledesic in another way -- a smaller
constellation, Caceres opined. To get there,
Teledesic may have to become more like would-be
competitors Skybridge and Celestri, which use a
mix of GEO and LEO satellites.

"I would be surprised if Motorola didn't push for a
hybrid network," Caceres said.
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