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World: New Space Race Pits Two Companies Against Each Other

Bellingham, Wash.; 24 February 1997 (RFE/RL) - The first "space race," pitting the United States and the Soviet Union in the Cold War, was a competition in search of military and political advantage.

Today's space race, unfolding in a post-Cold War world at the threshold of a new century, is largely a non-governmental quest for commercial dominance. The increasing proliferation of communications satellites will, as early as next year, begin making the transfer of voice and video and data both instantaneous and global.

Two companies well along in this current race are focusing primarily on satellite-based telephone services able to reach the remotest corners of the globe. Both Motorola, with its Iridium venture, and Loral, with its international Globalstar partnership, have successfully recast themselves from defense-oriented firms to commercial-oriented enterprises.

While competing, Iridium and Globalstar appear to be heading primarily toward widely different segments of the emerging space-based telecommunications market.

Motorola's Iridium sees its profits coming mainly from globe-trotting executives who benefit from being instantly in touch no matter where in the world they may be. Its services are expected to include rapid Internet access and video conferencing, allowing meetings between widely separated participants.

Loral's Globalstar, in contrast, has a more basic orientation. It is preparing, as early as the second half of next year, to provide telecommunications services to those parts of the world presently unserved or underserved. Based in California's computer heartland of San Jose in "Silicon Valley," Globalstar's partners include German, French and Italian telecommunications providers, Ukraine satellite-launching services and Russia's RJSC Gasprom, RSC Energia and JSC Gascom.

Spokesman Dave Benton tells RFE/RL that "Globalstar is on time and on schedule in the production and deployment of its worldwide mobile satellite system."

With Ukraine's help, it expects to launch the first four satellites of its planned 48 low-orbiting "birds" as early as August. If all goes well, Benton says, Globalstar will begin offering telecommunications services before the end of next year. So, too, will Iridium.

Iridium and Globalstar may be the farthest along in their development plans, but they are not alone in the satellite telecommunications race. Other entrants are London-based ICO Global Communications and Odyssey, whose partners include Canada's Teleglobe and TRW, based in Southern California.

Iridium, according to "Business Week" magazine, is the most technologically sophisticated of the developing systems and will be the most costly to use. Its appeal, thus, will have to be to customers for whom performance -- and not cost -- is a leading consideration. Its phones will likely cost about $3,000 each and use of its system is expected to carry a price of $3 a minute and bypass local telephone companies.

The Globalstar strategy requires simpler and less-costly technology. It expects to charge about $750 for its phones and to make most connections through more than 100 local telephone systems, which will pay a wholesale rate to Globalstar of about 50 cents a minute. Its primary market will be the 60 percent of the world's population without adequate telephone service -- whether in China, Russia, Central Asia or Poland.

But leading in the current communications satellite race is not the same thing as winning it, of course. And for both leading systems, their chosen markets and the services they will offer remain to be tested in the open market.

That's why Lockheed Martin -- a major defense, electronics and aerospace concern -- is content, at this point, to play a behind-the-scenes role. It holds 20 percent stake in Loral but is also building components for Motorola's Iridium system, in which it also owns a small stake.

Lockheed Chairman Norman Augustine explained his company's caution this way to "Business Week": "The technology is moving so fast," he says. "One day you're No.1; the next you're No. 10."

It seems that if either of the front-runners should stumble, there will be no lack of players ready to succeed in their place.