Birds of a Feather

Satellite firms pair up for survival

There may be some hope for business executives eager to get telecommunications in remote areas.

Although Wall Street seems to be abandoning the industry, satellite companies ICO-Teledesic Global and Ellipso are taking control of their own destiny. The two announced last week that they will collaborate and possibly merge in an effort to bolster the faltering satellite sector.

The companies will work together on technical, financial and strategic issues in hopes of avoiding the fate of predecessors Globalstar and Iridium. Amid much fanfare, Iridium launched and quickly failed, and Globalstar, though still offering service, continues to struggle with funding and customer acquisition.

"What were doing here is trying to bring creativity and thoughtfulness between players," said Bob Ratliffe, an ICO-Teledesic spokesman. "If were going to salvage the mobile satellite industry, we need to think creatively."

Money may be driving Ellipso into this partnership more than creative thinking, however. "Ellipso doesnt have any money, and thats the bottom line," said Greg Caressi, research manager at Frost & Sullivan.

With backers including Craig McCaw, Bill Gates and Saudi Arabian Prince Alwaleed Bin Talal, ICO-Teledesic is well-funded. But Ellipso, like most other satellite players, isnt. "Weve been negatively impacted as a consequence of Iridiums failure and Globastars trouble," acknowledged Gerald Helman, vice president at Ellipso.

While Ratliffe indicated that three constellations — from New ICO, Teledesic and Ellipso — are still in the works, that plan could change. Helman said its not clear yet how many networks the companies will build, and others doubt all three will launch.

"Teledesic will never happen," Caressi said, noting that the plan for Teledesic includes 288 satellites — an extremely expensive proposition that would be difficult to pay off. The New ICO satellites, however, have been built, and the system is still on schedule to launch commercial service in 2004, Ratliffe said. ICO-Teledesic may want to see how well New ICO does before moving forward with another constellation.

If the collaboration between the companies proves successful, it could lead to a strategic alliance or merger of their assets.

In other satellite news, Orbcomm Global, the satellite data company that recently filed for bankruptcy protection, may have been scooped up by Australian wireless technology firm Advanced Communications Technologies. ACT placed the high bid — $14 million — on the $1 billion constellation and is waiting for approval from the bankruptcy court.