Showing that there is safety in numbers, one-time communications satellite rivals Teledesic and Motorola announced Thursday that they will combine resources to build the much ballyhooed "Internet in the sky."
The new partnership creates what the parties dubbed the "Dream Team" of satellite communications -- Motorola, Boeing, Matra Marconi Space, and Teledesic -- which hopes to transmit video, voice, and data to the doorsteps of consumers. The deal will see a marriage of Motorola�s Celestri and Teledesic�s satellite systems, communications schemes that rely on a weave of low-Earth orbit satellites to relay signals to networks on terra firma.
What the combined network will look like -- and cost -- are issues the principals are still hashing out. In remarks before a space conference in New York, Teledesic co-founder Craig McCaw talked around the question of money. What was clear, however, is that building this ambitious network won't come cheaply. What the exact cost will be, and how it is borne, has yet to be agreed upon.
"[System costs] are not a fixed thing," explained McCaw.
"It�s not like a car where you can choose how big and how much it will have. If we want, it can cost $20 billion ... or $50 billion. We can choose for it to cost anything we want," he said.
Teledesic first appeared on the telecommunications scene in 1994, when it filed an application for an FCC license to build, launch, and operate a satellite network that would be all things to all people. Through a geodesic weave of 844 satellites, plus spares, the company proposed to link homes to the Internet, transmit video conferences between businesses, and serve as the local phone company in underdeveloped areas where there was no phone service.
Last year, the network was pared down to 288 after aerospace giant Boeing agreed to invest $100 million in the project and become the systems integrator. But the cost to build the entire network remained the same, $9 billion.
Shortly after Boeing joined Teledesic, Motorola chimed in with a high-powered satellite network of its own, the Celestri project. This network proposed to bring the same services that Teledesic promised, only it would do so with 63 LEO and 4 GEO satellites -- all for a $12.9 billion price tag. Although neither had launched a satellite, Teledesic had something Motorola needed to play in this arena -- an FCC license. Motorola had submitted its application for a license for Celestri last spring, a process that can take two to four years to complete.
By combining forces with Teledesic, Motorola gets the license it wanted and a chance to play in the new generation of satellite communications. Motorola is making an investment in Teledesic valued at $750 million, giving it a 26 percent stake in the privately held company. Just how this dilutes the overall investment picture remains to be seen. Up to now, Teledesic�s high-powered investment duo of McCaw and Microsoft chairman Bill Gates have each held a stake of roughly 30 percent.
For now, the companies maintain that nothing -- neither the size of the constellation nor the price tag -- will change. The companies said today that the new network will begin offering services in 2003.
For Teledesic, the company now has the communications satellite contractor it has sought for some time. Motorola, having just completed the launch of its Iridium communications network, is an attractive partner for many reasons, not the least of which is that it holds the keys to another part of the Teldesic puzzle: worldwide connections with telecommunications companies.
"[Motorola] will be a key part of our success," said Steve Hooper, Teledesic's co-chief operating officer. "[The deal] creates the ability for us to get licenses around the world, thanks to Motorola�s experience. Iridium has 100 plus countries."
Officials at both companies said that the deal does not change the management structure of Teledesic. McCaw and Hooper will remain at the helm of the company. Motorola will focus on building the communications satellites.
