The satellite constellation industry is in more turmoil than ever with ICO and Teledesic suspending merger discussions as both companies decide to go their separate ways in a bid to interest investors in their differing concepts.
But with nothing but red ink to show for its efforts the satellite constellation concept for communication services is facing an up hill battle to be taken seriously anymore.
While the concept of having a cluster of satellites positioned in orbit such to provide continuous coverage to hand held terminals sounds good, the fact is terrestrial cellular systems gutted the mass market for satellite phones years before the first Iridium satellite’s were even launched.
Although satellite voice, video and data phones are proving very popular among some work forces with specialist needs, the critical mass needed to drive mobile satellite communications is just not there.
For Teledesic the goal of building a broadband network in the sky is facing a sluggish market which has seen land line prices for IP access plummet.
Further highlighting this sectors difficulties was the decision last week by the Astrolink consortium of Lockheed Martin, TRW, Liberty Media Group and Telespazio to pull the plug on further funding until new investors could be found.
TRW reported an after tax loss of 157 million for its Astrolink exposure, with company officials adding, “the future viability of Astrolink is contingent upon its ability to secure additional funding. Astrolink is considering options, including whether to significantly delay the project’s launch date or to cancel the venture.”
For Lockheed Martin, the exposure was even bigger with the company reporting on Tuesday a hit of up to $420 million in the fourth quarter if the defense contractor were to write down its total investment in Astrolink.
According to a Reuters report Lockheed decided last month to stop any additional funding after completing a $400 million investment in the third quarter. The company also had a reported Astrolink-related backlog of $1.1 billion in satellite contracts.
