WILMINGTON, Del. - ICO Global Communications Ltd. has filed for Chapter 11 bankruptcy, leaving the Globalstar consortium as the only low-earth-orbit satellite communications provider still planning to do business as usual.
ICO chief executive officer Richard Greco said in a statement that his company had every intention of continuing to develop its LEO system, based on recapitalization, while it reorganizes under Chapter 11.
ICO was created through a spin-off of the U.N. agency Inmarsat in the early 1990s, when privatization of satellite assets was encouraged. Hughes Electronics and TRW Corp. were major investors.
ICO's filing follows by less than three weeks the bankruptcy of LEO communications pioneer Iridium LLC, which has its network of satellites in orbit but cannot develop a plan to attract subscribers at rates that would allow Iridium investors to recoup the billions spent to launch the network.
Globalstar partners Qualcomm Inc. and Loral Space Systems assert that the greater amount of intelligence resident in the Globalstar ground stations will make their system cheaper overall to maintain, but many analysts say the proponents of LEO space satcom markets are missing the larger point.
"There is no fundamental problem in the satellites or gateways for any of these networks," said a source close to Iridium investor Lockheed-Martin Corp. "The problem is that no one at Iridium, ICO or Globalstar paid attention to how widely cellular basestations and wireless local loops were being deployed around the world. When someone's seen a PCS handset weighing a couple of ounces that can link them up with 90 percent of the locations on the planet, who's going to pay big bucks for a clunky, oversized phone to cover that other remote 10 percent?"
Globalstar has pledged to keep the completion of its own network on track. The Lockheed source predicted that current investors in Globalstar will keep the faith up until the time the satellite network is deployed, "but new investors will be soured by these markets for quite a while. Where are any of them going to find new money until they can answer the basic question of where subscribers will come from?"
In early August, ICO announced that it had failed to gain $600 million in necessary funding commitments and was pursuing other possibilities. ICO has $41 million in assets and $18.3 million in liabilities, while its Bermuda affiliate ICO GC (Holdings) has $2.57 billion in assets and $1.18 billion in liabilities. The company said it needs at least another $1 billion to begin launches in late 2000.