Satellites in Telecommunications Networks: Failures in Creating a World Satellite System

Special Report: 2001, Satellites in Orbit
By Laurent Gille

The idea to place telecommunications relays on spatial orbit was suggested by Arthur C. Clarke as soon as 1945. In June, 1990 Motorola announced their intention to build a world system of mobile satellite communications called Iridium. The American company wanted to create a new market. The daring initiative left most observers sceptic but attracted investors ready to support a risky project. Open on November 1, 1998, the network is disconnected on March 17, 2000 with a four billion dollar deficit. It is a considerable failure for one of the most brilliant companies of the electronic era. This failure results from operational difficulties and the overestimation of the potential market but also from a poor market strategy. The Globalstar and ICO projects have also met serious difficulties. In July ICO withdrew, leaving Globalstar with a monopoly position. However Globalstar had already accumulated 1,3 billion dollars of losses. Investors initially seduced by this market may in the future disdain these sectors with potentially considerable strategic consequences for numerous actors.

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