Hughes Ups the Ante in Satellite Network : Communications: The company proposes expanded system to cover the globe. Othersalso have big plans for space.
A mad scramble to build electronic highways in space--and to pay for them--got crazier Thursday when Hughes Communications proposed a fivefold expansion of its plan to launch a system of satellites offering two-way voice, video and data services.
Just eight months after unveiling a $660-million Spaceway project that would target only the United States, Hughes has gone back to the Federal Communications Commission seeking permission to build an expanded $3.2-billion worldwide system.
The Hughes expansion seemed to reflect a brightening outlook for the role of satellites--in addition to fiber-optic cable and cellular technologies--as Earth becomes connected on the fast-evolving information superhighway.
“As we continued to do technical work and market analysis,” said Kevin McGrath, chief executive of Hughes, “we realized that the things that make this proposal attractive in the U.S. make it even more attractive for the rest of the world.”
The new Hughes plan comes just four months after Teledesic, a company started with seed money from Microsoft Corp. founder Bill Gates and McCaw Cellular Communications Inc., astounded the world with an ambitious plan to build a $9-billion network using 840 low-orbiting satellites.
But that’s not all. Other proposals in the works include a similar 48-satellite system from Loral Corp. of New York and a 77-satellite system from Motorola to offer worldwide mobile communications services.
Teledesic says it finds Hughes’ new proposal encouraging. “We see this as an endorsement of our assertion of the global demand for broad-band services,” said Russell Daggatt, president of Kirkland, Wash.-based Teledesic. “There is room for many competitors providing different kinds of services.”
Hughes’ McGrath, who met unsuccessfully with McCaw last month to discuss possible cooperation between their two companies, agreed there is room enough in space for all the applicants and more. The companies are now working with the FCC on ways to efficiently share the type of frequency required to operate many of the networks.
The first hurdle is finding the cash. Motorola was first in the race and has already lined up some deep-pocketed Japanese backers. Teledesic has a few million dollars in seed money from its two wealthy founders, but has yet to line up a major backer. Hughes is owned by General Motors but says it needs major strategic partners both to help finance the project and market its services.
The money will go to the plan that offers the best reward for the least risk, and Hughes contends its plan for nine satellites to cover the globe is quicker and far less risky than Teledesic’s complex proposal.
Hughes would have two satellites operational for the United States by 1998 and the rest in place by 2000. Since the satellites are “geostationary,” meaning they float 22,300 miles high above a certain point, each satellite could be put into use as soon as it is in position. Fewer satellites also means fewer risky rocket launches.
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By contrast, the Teledesic plan would require hundreds of successful rocket launches before it could begin service, since its satellites would be placed in fast-moving, low orbits about 435 miles above Earth.
Teledesic’s Daggatt says the low-orbit approach allows users to get service with smaller, cheaper receivers. He says the Hughes system would have difficulty offering many kinds of communications services because its satellites would be so far from Earth there would be split-second delays in transmission.
Both companies, however, agree that satellite systems are an important supplement to current telecommunications systems. Daggatt sees a combination of cellular and satellite service as the most economical means of providing phone service to developing countries.
McGrath sees satellites providing crucial communications services to multinationals everywhere. An oil company that had drilling samples from an oil rig, for example, could beam that information for evaluation by its supercomputers at home with just a 26-inch antenna and a two-way communications system. If such systems were sold in the millions, as Hughes hopes, they would cost less than $1,000 each.
* RECORD PROFIT: Hughes Communications parent General Motors reported its highest quarterly earnings ever. D2
