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SkyBridge ups broadband ante

The company will invest an additional $700 million in its broadband satellite network--heating up the rivalry to provide data communications from space.

SkyBridge said today it would invest an additional $700 million in its broadband satellite network in order to double the network's capacity--heating up the rivalry to provide data communications from space.

The announcement comes less than two weeks after Motorola said it was investing $750 million for a 26 percent stake in Teledesic, a similar venture led by Microsoft's Bill Gates and wireless pioneer Craig McCaw. The deal also called for Motorola to combine its own proposed broadband satellite system--a nearly $13 billion network dubbed Celestri--with Teledesic.

SkyBridge said it will expand its satellite constellation from 64 satellites to 80 in order to meet market demand. Service is set to begin in the year 2001.

"Our market forecasts...convinced us that the demand for bandwidth will be far higher than we had originally anticipated," said SkyBridge chief executive Pascale Sourisse. "By making the decision to expand the constellation now, we are minimizing the impact on system cost, keeping it under $4.2 million. A 20-percent increase in system cost results in a 50-percent increase in capacity, [so] the resulting configuration boosts predicted revenue streams dramatically and makes SkyBridge even more compelling."

A team of more than 400 engineers now is working to design and develop SkyBridge. Alcatel is the general partner of the venture, and its other partners include Loral Space & Communications, Toshiba, Mitsubishi, Sharp, Spar Aerospace, Aerospatiale, and SRIW.

Despite their potential, such projects are risky, largely because of the intense competition to provide high-speed data communications, the multibillion capital outlays that are required, and the uncertainty of market demand, analysts said.

But SkyBridge remains bullish. In commenting on the Teledesic-Celestri merger announcement on May 21, a SkyBridge lawyer said: "It unfortunate development for the consumer that there will be only two...providers of broadband multimedia services. Studies commissioned by SkyBridge show that there is a huge demand for these kinds of services."