Europe’s satellite business prepares for lift-off

Date: 09/04/1998

Three years after the US won a key share of world airwaves, Union telecom firms are fighting back, says Peter Chapman

EUROPE's telecoms ministers felt as if they had been mugged when Teledesic - supported by Bill Gates - launched a successful smash-and-grab exercise on the world airwaves at a key 1995 conference.

Teledesic was able to secure the radio spectrum allocation it needed for its ambitious 8.3-billion-ecu plan for 288 satellites to offer lightning-fast Internet and data transfer services to customers across the world by 2002.

Gates and partner Craig McCaw had the support of a lobbying campaign by political heavyweights such as US Vice-President Al Gore at the Geneva World Radio Communication's conference (WRC).

Europe's own telecoms heavyweight, Commissioner Martin Bangemann, was a trifle irritated by Washington's intervention which, he said, got Teledesic to the top of the WRC's agenda.

In private, Bangemann, dubbed Mr Information Society by former White House Internet policy chief Ira Magaziner, was simply furious that Europe's chance to influence the evolution of cyberspace was slipping away.

To make things worse, he couldn't do a thing about it. The EU does not have a collective vote at the biennial WRC, which is run by the United Nations' International Telecommunications Union. Voting is by individual nation states.

More importantly, the EU knew it did not have the public cash to propose and build its own system. With no Union alternative immediately on offer, the fear was that Teledesic, with its high-tech Boeing military technology, would soon get its teeth into the emerging Internet market after clinching the share of airwaves it needed to run services.

But three years and many Bangemann speeches later, Europe is no longer high and dry in the Internet satellite business.

Among a clutch of systems on the drawing board but struggling to win financial support are two other 'Internet in the sky' projects with a real chance of success.

SkyBridge, a consortium led by France's Alcatel Alsthom, plans to launch 64 satellites into orbit, 1,457 km from earth, targeted to reach 15-20 million users by the end of the next decade. The partnership, which was awarded the radio spectrum it required two years after Teledesic, aims to be first in the market with 32 of its satellites in place by 2001.

What is more, it plans to do it more cheaply than its rival at an estimated cost of 3.2 billion ecu Alcatel's project partners include Aerospatiale and CNES of France, the US' Loral Space & Communications, Japan's Sharp, Mitsubishi Electric and Toshiba, and Belgium's Société Regionale d'Investissements de Wallonie.

Another initiative comes from US microchip and radio giant Motorola. The company has chosen European expertise to design and manufacture 70 low earth-orbit satellites for its Celestri system. Matra Marconi Space, a jointly owned subsidiary of the UK's GEC and France's Lagardere, has won the 1-billion-ecu contract for the project. This also gives the firm a share in Celestri, with a launch set for 2003.

So, three years after Teledesic burst on to the scene, there seems less reason to fear that Gates will extend his de facto monopoly of computer software to Internet infrastructure.

“It's good to see that the Europeans are still in there fighting,” said one Bangemann aide.