Cellular telephone titan Craig McCaw is forming a holding company combining the satellite interests of his planned Teledesic "Internet in the Sky" and London-based ICO Global Communications, which emerged today from bankruptcy.
ICO-Teledesic Global will be an umbrella company for New ICO and Teledesic. McCaw will be chairman of ICO-Teledesic and remain at the helm of Teledesic. ICO Chief Executive Richard Greco will step down. Russell Daggatt, a longtime aide of McCaw, will become acting CEO of the merged company.
ICO-Teledesic will roll out in 2 phases, beginning in early 2003 with ICOs ready-to-launch satellites, according to Teledesic spokesman Dave Bowermaster. Teledesics team has been upgrading ICOs ground system to allow it to transmit mobile voice and data at 144,000 bits per second, about three times as fast as a common modem.
Phase 2 will begin in 2004 with the implementation of Teledesics high-speed fixed wireless system, which will transmit computer traffic for large IP clients at 64 megabits per second.
"We are not going to be combined operationally," said Teledesic spokesman Dave Bowermaster. "ICO will pave the way for Teledesic."
"This (plan) will teach them a lot about the fixed broadband and mobile broadband systems, and will give them experience with dealing with a MEO (middle Earth orbit) constellation," said Clay Mowry, a spokesman for the Satellite Industry Association in Arlington, Virginia.
Hughes to benefit
One company that is likely to benefit from the merger down the road is Hughes Electronics.
"It's good news for Hughes because the project is on again and they willcontinue to play a major role in it," Bowermaster said.
Hughes, based in El Segundo, California, will take over the role of integrating ICOs 12-satellite system (10 working and 2 in-orbit) and is a likely shoo-in for supplying Teledesics planned constellation of about 100 or so satellites in the future.
"Its good news for Hughes because the project is on again and they will continue to play a major role in it," Bowermaster said.
Hughes referred all calls to ICO and Teledesic.
A Wall Street Journal report Wednesday said that Hughes would likely pocket a windfall of close to $1 billion due in part to a possible order by ICO of 8 more satellites beyond the 12 already announced.
But both companies say that no commitments have been made for 8 new birds. "Its misleading because we have no plan to purchase 8 more satellites," ICO spokesman Joe Tedino said.
New company to be called ICO-Teledisic
Within the next week, McCaw is expected to formally merge ICO and Teledesic into one company called ICO-Teledesic Global, sources say.
ICO-Teledesic said that it plans within the next week to propose that New ICO merge into the holding company. The deal is subject to approval by New ICOs board, shareholders and by federal regulators.
ICO filed for bankruptcy last August, a few weeks after Iridium collapsed.
Funds to resurrect ICO have come from companies affiliated with McCaw, including Eagle River Investments and Teledesic. Also investing are Motorola, Saudi Prince Alwaleed Bin Talal amd Indian entrepreneur Subhash Chandra.
One question still open is how the two systems will be integrated.
Constellation questions
There has been some speculation that Teledesic is leaning toward a MEO system versus a low Earth orbit (LEO) system for its constellation.
At the International Business Forum and Exhibition last week in Arlington, Virginia, William Owens, Teledesic co-CEO and vice chairman, praised the cost-effectiveness of a MEO system, which requires fewer satellites than a LEO system.
"We will be looking at what ICO will be doing and see how it is configured," Bowermaster said. Details on how the two companys systems will work are still being hammered out.
"We will overlap somewhat in our customer base," Bowermaster said.
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