Teledesic Terminates Satellite Contract With Motorola

Teledesic LLC has ended its agreement with Motorola Inc. to provide it with satellites. The two companies issued a joint statement that said they had a reached a "mutual decision" to terminate an agreement that had made Motorola the prime contractor for the Teledesic satellite system. No reason for the termination was given other than to allow Teledesic "the flexibility to pursue alternative approaches for building its global, broadband satellite communications network."

Motorola has invested US$150 million into Teledesic while receiving US$250 million from the venture when the contract was signed as down payment for engineering work Motorola had done prior to the contact. At the time Motorola joined the Teledesic project, it abandoned Celestri, its own project to develop a satellite constellation for high-speed communications. During the past year, Motorola had reassigned some of its employees and stopped subcontractor work on Teledesic, not wanting to incur additional costs without a final contract. Planned reviews of the Motorola-Teledesic system had been delayed for months as Teledesic reviewed investments in other satellite ventures. Motorola retains its investment in Teledesic.

Teledesic may downsize its constellation further, although no indication has been given of when it plans to unveil its new plans for the Teledesic satellite system. It is unclear how changes to the constellation will be received by regulatory authorities. 

Earlier this year Teledesic merged with ICO. ICO's satellites are being modified to support higher data rates that might allow them to do some high-speed data communications, in addition to the telephony applications originally planned for the satellites. ICO's prime contractor has been Hughes Electronics Corp.'s, now Boeing Satellite Systems. 
  

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