SKYBRIDGE MAKES GOOD ON PROMISE TO START SERVICE THIS YEAR
Skybridge will officially announce Thurs. plan to start offering broadband service to business customers in Europe, Asia and Latin America in July by using terrestrial infrastructure and leasing capacity on geostationary satellites, Vp Mark MacGann told us. He said move was effort by startup data and Internet company to speed service to market. In meantime, company will continue to raise money for construction of 80-satellite constellation of low- orbiting birds that eventually will take over primary responsibility for providing services to customers, who will be expanded to include individual consumers. Volatile stock market conditions and regulatory issues have stymied progress thus far, although company expects to receive license from FCC “sometime next month,” MacGann said. Shift in strategy was expected following revelations last month that company was moving in different direction (CD Feb 23 p3).
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MacGann said it had been a “tough year raising money” and company “couldn’t just sit on our hands and wait for things to get better.” He said starting service early would make Skybridge “more credible” to investors and “strengthens our case at the FCC.” For now company will target mainly ISPs for service that also includes e-learning. Individual consumers will be added when Skybridge has completed development of user terminals. MacGann believes Skybridge can secure 12% share of all Internet traffic that’s accessed on geostationary satellites. “We are looking to win a good chunk of that,” he said: “It’s a niche market. Anyone who wants to be a player” in broadband market “in years to come must gain a foothold now.”
Basic service now being offered by Skybridge involves delivering content to edge of Internet, where company will provide corporate clients with capacity for faster access to Web sites and distribute large Internet files for training, education and advertising where fiber links aren’t available quicker. MacGann confirmed company was building its own ground hubs to handle flow of broadband Internet data between satellites and terrestrial communications entry points.
Industry estimates have placed cost of Skybridge system at $7 billion. Company has raised $1.5 billion but it’s unclear how much of that is in cash or in vendor financing. Industry source said company hoped scaled-down business plan would allow it to ride out current uncertainty and investor skepticism for satellite projects in marketplace. Alcatel has $4.8 billion contract for construction and launch of satellites, plus design of part of ground stations, and major stakeholder Boeing appears to remain solidly behind project despite delays. Boeing had been scheduled to fly 40 Skybridge satellites on Delta 3 and Delta 4 rockets starting in 2002. In-service date for satellite constellation has been pushed back to 2003 from this year. “Skybridge is making a good business move to enter the market and we are supportive of their efforts to get to market quickly,” Boeing spokesman said: “We are still on board with Skybridge and believe they will eventually build their constellation of satellites.”