Lockheed Unveils Plan for Global Network : Communications: The $4-billion satellite system will compete with archrival Hughes’ Galaxy/ Spaceway system.
Lockheed Martin Corp., joining the rush to build a global communications system for the 21st Century, announced plans Tuesday for a $4-billion satellite-based network to provide business and government with high-speed voice, data and video transmissions worldwide.
The aerospace giant’s announcement came one day after archrival Hughes Electronics Corp. announced plans to expand its proposed system, called Galaxy/Spaceway, which would provide similar services with 15 or more satellites and at a cost exceeding $3 billion.
Hughes plans to turn up the rivalry another notch today by announcing that Galaxy/Spaceway will use a next-generation satellite that will succeed Hughes’ workhorse HS601, the best-selling commercial satellite in history. Hughes has sold 56 of the orbiters--which are built at its plant in El Segundo--since the HS601 began service in 1987, and will continue to offer it.
Los Angeles-based Hughes will introduce the new HS702, which can handle more complex transmissions than its predecessor, at a telecommunications conference in Switzerland, said Steven D. Dorfman, president of Hughes’ Telecommunications and Space Co. division.
The Hughes and Lockheed Martin networks are meant to provide high-speed data transmission for holding video conferences, linking computers and other desktop electronic products, and sending X-rays and other medical and technical data around the world.
Compared to existing telecommunications links, the new networks are supposed to be able transmit more data in more complex forms and at higher speeds, yet still be “affordable.”
But the competition is intense. Newly formed Teledesic Corp. has proposed an audacious plan of using 840 small satellites to provide similar services. PanAmSat Corp. also has launched satellites to provide international video transmissions.
There is also a rash of companies--including Motorola Inc., Loral Corp. and TRW--that have proposed satellite systems for hand-held mobile telephone services worldwide.
The proliferation of these programs--most of which are scheduled to begin service in the late-1990s--has some analysts questioning whether there will be enough customer demand to support all of the systems.
“That’s the $64 question,” said Jerry Cantwell, an aerospace analyst at the investment firm Lionheart Research in New York. He said that although such services will be a major growth area, “investors are trying to figure out whether there will be enough demand in the world to make all of these systems economically successful.”
Indeed, there recently have been signs that investors are having doubts.
Globalstar Telecommunications Ltd., a mobile-phone system being developed by Loral and Qualcomm Inc., planned to sell $400 million of debt securities. But it got a cool reception from investors and, instead, announced Tuesday that it will seek $250 million of bank financing.
Another proposed mobile-communications system, the 66-satellite Iridium project led by Motorola, withdrew a planned $300-million offering of high-yield “junk bonds” last month after investors balked at the terms.
Nonetheless, Lockheed Martin said it would seek U.S. and foreign investors to help finance its proposed system for business users, which it calls Astrolink, according to the Bethesda, Md.-based company’s filing with the Federal Communications Commission.
“We’ve been looking at this for a while, and we believe there’s going to be tremendous growth in this area,” said Lockheed Martin spokesman Ron Meder.
If Lockheed Martin’s Astrolink proceeds, it would provide another boost to that company’s Sunnyvale, Calif., plant, where the company’s satellites are built. The plant already is building satellite components for the Iridium system.
