SKYBRIDGE PLANS TO LEASE SPACE ON GEOSTATIONARY SATELLITES
Skybridge, which seeks U.S. license for advanced fixed broadband service using low-earth-orbit (LEO) satellites, has “adopted alternative” business while new constellation is being built and will launch business by leasing space on existing geostationary satellites, Vp Mark MacGann confirmed in short interview Thurs. Company will lease satellite capacity to prove system can work and to give it time to raise additional money needed to launch full satellite system by target date of 2003. Skybridge hasn’t indicated which satellites it might use, but Loral and Boeing are among strategic partners and investors and are likely candidates for contract. “That could be the case,” MacGann said. French company also will continue efforts to get U.S. license and “expects to receive one soon,” Skybridge lawyer Phil Spector told us.
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MacGann told us company still was committed to LEO system and U.S. service. “Our strategy on focusing and deploying” broadband system “hasn’t changed. We've very close to getting a U.S. license.” Attorney for company said it could happen by end of March. “It’s been very tough year for telecommunications companies, satellite companies in particular,” which are having “difficulties with their business plans.”
MacGann said Skybridge had been in “very intense negotiations” with service providers, including telecom companies. He said company wanted telecom operators to “come on board now” so they could begin manufacturing products and be in better position to raise money from financial markets. He said soft market caused by problems of other LEO systems and European 3G market had “created challenging” financial environment. “Our fundamental business plan is solid. There is still a huge demand for broadband services that isn’t going to be met” by terrestrial operators. Satellite systems “are the only way,” MacGann said.
Leasing capacity from GEO satellite is “recognizing there’s existing technology and capacity that can be used to eliminate vacuum that exists” in Internet markets, MacGann said. “We're trying to resolve bottlenecks that people are experiencing.”
Skybridge “faces an uphill battle” to prove system works, rival executive said: “This could mark the beginning of the end.” Industry official close to company denied Skybridge was in trouble, saying it was being proactive with strategy: “There isn’t exactly an overwhelming amount of investor confidence in these kinds of systems.” Vp-Strategic Affairs Mark MacGann told us that hurdles facing companies’ attempting to deploy new 3G technology had impacted Skybridge efforts.
Industry lawyer familiar with Skybridge said change in business strategy was necessary to “get the company out there to see what it can do.” Another industry official said soft financial market that contributed to Skybridge’s “inability” to raise enough money for LEO constellation was primary reason for shift in strategy. Analyst indicated “problems raising money probably contributed” to shift: “This is a great way for the company to prove it’s a viable operation. If they're successful, it'll be a lot easier for them to raise capital to complete their business plan.” Official with company that’s Skybridge strategic partner said: “This is a great opportunity for us to test the waters and see where we stand. We now have a chance to test the technology and evaluate the entire operation.”
Skybridge faces expenses of up to $7 billion to build and launch what is supposed to be 80 satellites and 200 international earth stations. Company has license in France and reportedly $4.8 billion contract with Alcatel to build birds, but construction has been delayed until Skybridge raises undisclosed amount of money. That has been “difficult” because of volatile investor market caused by failure and financial problems of other LEO satellite projects, including Globalstar, ICO, Iridium, Orbcomm. In addition, missing among numerous Skybridge partners and investors is big-name telecom company. In addition to Alcatel, Boeing and Loral Space, investors and partners include EMS Technologies, L-3, Mitsubishi, Qualcomm, Sharp, Telstra, Toshiba.