Lockheed sets plan for satellite venture Company to launch, operate network of nine spacecraft

October 04, 1995|By Michael Dresser and Ted Shelsby | Michael Dresser and Ted Shelsby,SUN STAFF

Lockheed Martin Corp., a leader in putting communications satellites into space for others, announced yesterday that it wants to build, launch and operate a $4 billion system of its own.

The Bethesda-based company said it filed an application with the Federal Communications Commission last week for permission to launch a constellation of nine geostationary satellites ringing the globe. The project represents a new effort by Lockheed Martin to increase operations in the civilian market and to reduce its dependence on the defense business in the post-Cold War era.

Lockheed Martin said it intends to provide voice, video and data services, a role that would bring it into competition with virtually every player in the satellite communications business. Those rivals would include Maryland-based Comsat Corp., Orion Atlantic, Columbia Communications and several of its own best customers.

"This is an area of space that we have not been a part of in the past," said Tim Burris, a spokesman for the company created by the merger of Lockheed Corp. and Martin Marietta Corp. "We have made satellites and we have made launchers. but we have never been in the telecommunications service business."

The company's planned Astrolink system would operate in the part of the radio spectrum known as the "Kaband." This high-frequency band is the Wild West of the satellite communications business -- lightly occupied, highly coveted and with few settled rules.

"It's sort of like a land rush. You stake your claim. Whether you do anything with it is another matter, said Walt Morgan, president of the Communications Center consultancy in Clarksburg.

Despite the uncertainty, Lockheed Martin could face heavy competition for licenses in the band, which has drawn increased interest as other parts of the spectrum have become crowded.

Scott Blake Harris, chief of the FCC's International Bureau, said that there were at least six other applications to operate in Ka and that more could trickle in. Also seeking to operate in the Ka spectrum are AT&T Corp., Motorola, Echostar, Netsat, Hughes Electronics Corp. and Loral Corp., he said.

Many in the industry fear the FCC will require contenders to participate in a spectrum auction similar to the ones it has conducted for wireless phone services. But Mr. Harris said the FCC has not decided how it will allocate the licenses.

"It's too soon to see how many systems can be put in the band," he said, adding that he hopes the FCC can decide the issue in 1996.

Mr. Burris said Lockheed expects to be able to build its first Astrolink satellite eight months after it receives FCC approval. He said that the first satellite probably will be launched in 1999 and that the company is hoping to have the system in operation by 2000.

Mr. Burris said the global system that Lockheed Martin envisions would cover the globe with two satellites stationed over the Americas, two over the Atlantic, two over Eastern Europe, Africa and Western Asia; two over Eastern Asia and Australia; and one over the Pacific.

He said services the company anticipates offering include two-way video services and video conferencing, global Internet services and high-speed data applications that could send X-ray or other medical images from doctors in one part of the world to counterparts overseas for consultations.

Mr. Burris said the Astrolink system also could provide telephone connections. He said Lockheed Martin would not seek to sell service to individual customers but would provide service to telephone companies.

"Obviously, we think there is a need for the system," he said. "It can be used in developing nations that don't have the infrastructure for phone systems. The telecommunications market is growing dramatically. We see a very, very substantial market out there."

Mark Chartrand, a Baltimore satellite industry consultant, said Lockheed Martin brings a lot of credibility to the marketplace. "It's going to get a lot of people's attention," he said. "Nine satellites is a non-trivial-sized system."

But he noted that the satellite communications business involves serving a much broader clientele than either Lockheed or Martin Marietta are used to dealing with.

"They're used to selling to the government. How many Lockheed products have you seen on your Circuit City shelf?" Mr. Chartrand said. He suggested the company might want to seek a partner that "knows how to deal with the public."

Vance D. Coffman, president and chief operating officer of Lockheed Martin's Space and Strategic Missiles Sector, said the company would aggressively seek partners and investors in its planned system.

Lockheed Martin's vertical integration of all satellite-related functions, from launch to manufacture to providing actual services, carries distinct advantages. For one thing, it would put it in a better position to battle Hughes, its "arch-competitor" in the satellite manufacturing business, Mr. Morgan said.

But there also are risks in competing with companies Lockheed Martin supplies as a manufacturer, such as AT&T and Motorola's Iridium project. Problems with customers are one of the reasons AT&T recently announced that it would sever the link between its telecommunications and manufacturing arms.

But Mr. Morgan said that does not apply to the satellite industry because of the limited number of suppliers.

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