Bad news could spell disaster for some industry players. The industry on the whole has had an arduous time convincing investors to unfold their wallets.
Motorola-backed Iridium, the only operating global satellite communication provider, is expected to announce Monday the results of its negotiations with banks, led by Chase Manhattan, over $800 million in debt. Today is the deadline for meeting the terms for the loan.
United Kingdom-based ICO Global Communications will announce tomorrow how much it will actually see of $600 million pledged by investors. The company has already raised $3.1 billion of the $4.7 billion it says it needs.
Globalstar, a Loral-backed company, can take a deep breath. It says it has already raised the $3.8 billion it needs for the development, construction, and deployment of its service, which is expected to start operating in the fall.
Global satellite communications promise to expand the realm of telecommunications with mobile phones that work virtually anywhere in the world. The greatest effect of satellite phones is expected to be the connectivity they will provide to developing countries that have only basic telecommunications services.
And while the major players get ready to compete with one another, ICO says it expects there will be more than enough demand to fuel each of the companies. It predicts 30 to 40 million users worldwide.
Few doubt the long-run potential, but many wonder whether the companies can market themselves well enough to stay solvent, let alone turn a profit, in the next few years.
Iridium, the first player in the market, has done little to quell concerns about the industry's short-term success.
Their original pricing system was a major miscalculation, offering service at prices too high to attract a broad subscriber base. After five months, they had only 10 percent of the subscribers they had predicted.
This only helped fan the flames of their financing woes, which continue to today.
"Iridium poisoned the waters through poor execution," says Merrill Lynch analyst Thomas W. Watts.
So the market remains shaky as the other two major global providers prepare to begin service.
Globalstar will be the first to test the waters. Its major advantages are solid funding and a completed satellite array. The company's shares rose 11 percent Friday after the market got wind of glowing comments made by an online newsletter, the Gilder Report.
But a weakness, according to Watts, is its limited service area. By the end of 2000, Globalstar service will cover only about 25 percent of the oceans, and 75 to 80 percent of land excluding Antarctica, according to spokesman Mac Jeffery.
ICO is not expected to begin service until 2000, but its satellite network and service are expected to be better than its competitors, according to Watts.
ICO's satellites were sent deeper in space, giving each a larger scope, or footprint, of coverage. Thus, it can operate with fewer satellites and ground stations than its competitors.
This would allow the company to transfer extra capacity to hotspots without cutting off service elsewhere; if many calls are being placed from Bosnia, for instance, an ICO satellite covering Europe could transfer bandwidth from a less-busy country.
Its weakness, however, is its incomplete funding and satellite array. Its first satellite launch isn't scheduled until the fall, and fewer than half of its ground stations are ready for operation.
And, according to Watts, all three could eventually face external competition from regional satellite service providers, which will rely on geostationary satellites for service.
Satellite phones are expected one day to be a boon for truckers, journalists, diplomats, oil workers, businesspeople and others who require instant worldwide communication.
But if the funding woes don't work themselves out, the market would be sending an unmistakable message: now is not the right time.
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