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Boeing to help build satellite network

Boeing will invest up to $100 million for a ten percent stake in Teledesic, a Bill Gates and Craig McCaw venture to deliver telephony and Internet access via satellite.

Boeing (BA) announced today that it would invest up to $100 million for a ten percent stake in Teledesic and act as the chief contractor for the company's satellite network for telephony and Internet access.

The aerospace giant will build and launch the network in a contract worth $9 billion. Teledesic, which is privately held, includes Microsoft chief executive Bill Gates and McCaw Cellular founder Craig McCaw as chief investors. (McCaw has since been bought by AT&T and morphed into AT&T Wireless Services.)

Commercial operations are scheduled begin in 2002. Initial customers are expected to be multinational corporations, such as Shell Oil, which would want to link their offices worldwide, executives said today.

The venture faces stiff competition from telecommunications carriers, cable television operators, and start-ups that are rolling out their own networks for broadband data transmission on cable systems, phone lines, and wireless networks.

The deal melds the technical know-how of two Seattle companies--one a longtime Fortune 500 giant and the other a technology start-up. "The relationship between Boeing and Teledesic is the perfect collaboration," McCaw said in a statement. "Boeing and all the associated suppliers it brings to the table will ensure that Teledesic is a global endeavor."

Last month, Teledesic received approval from the Federal Communications Commission to build a two-way telecommunications network. The company's 288 satellites are designed to orbit 50 times closer to Earth than typical communications satellites, which may result in quicker transmissions to terminals and antennas like the pizza-sized dishes for direct-broadcast satellite, or DBS, used by many consumers.

Boeing rose 5/8 to 95-3/8 in midday trading today.