US entrepreneurs plan highway to heaven: Telecoms pioneers say dollars 9bn satellite system would link every corner of world to information network

CRAIG McCaw and Bill Gates, America's best-known high-tech entrepreneurs, are joining forces to promote a dollars 9bn communications satellite system that would link remote corners of the globe to the information superhighway.

The scheme, which would entail encircling the earth with 840 small satellites, would make possible the wireless transmission of information that can now only be sent over fibre-optic cables. The Teledesic Network, as they are calling their venture, would provide universal access to everything from routine phone calls and on-line data, to high-resolution medical images and interactive video.

Unlike existing telecoms satellites, which bounce inter-continental calls from fixed positions high over the world's oceans, Teledesic's web of satellites would revolve in a low orbit over the earth's surface, relaying a wide band of information between ground stations and portable transceivers.

The new system, which is scheduled to begin service in 2001, would be a 'global Internet' of the world's telecoms services, say Mr McCaw, 44, who created America's largest cellular-phone company, and Mr Gates, 38, whose Microsoft Corporation has come to dominate the computer industry.

Rather than challenge existing satellite and cable services - many of them backed by national governments or public monopolies - Teledesic offers an open network that would 'bring the information revolution to people who could not be served economically through existing technologies'.

The partners, among the most ardent prophets of the digital multi- media age, argue that Teledesic will help local telephone utilities in host countries to modernise existing communications systems and bring affordable access to poorly served regions.

As far-fetched as the plan appears, few are willing to bet against either Mr McCaw, who is about to complete the sale of his start-up company to AT&T for dollars 12.6bn, or Mr Gates, the world's richest man under 40, with a net worth of some dollars 8bn. Associates say the two, whose offices are less than a mile apart in suburban Seattle, have been discussing some form of common project for years.

But the proposal, filed with the US Federal Communications Commission yesterday, faces daunting obstacles despite the fact that it is being led by two of the world's wealthiest and most capable entrepreneurs and backed by telecoms giant AT&T and Edward Tuck, the Los Angeles entrepreneur who developed the Magellan global-positioning satellite.

Messrs McCaw and Gates will each hold 30 per cent of Teledesic and AT&T will own a similar-sized stake when its proposed acquisition of McCaw Cellular from British Telecommunications takes place.

The most immediate problem is existing competition, from international telecoms consortiums such as Intelsat and InMarSat, and from Iridium, the dollars 3.3bn cellphone satellite system being built by Motorola.

Despite initial scepticism, Motorola has already raised 30 per cent of the financing it requires and signed up a range of national telecoms partners - whose support, both political and financial, will be crucial to the success of Teledesic. Iridium, which is scheduled to enter service in 1998, involves 66 low-orbit satellites and would offer narrower-band but more mobile communications for devices such as pocket telephones and notebook computers.

'Iridium is flattered that our idea has now received the endorsement of two such big players,' said spokesman John Windolph. But Teledesic has a long way to go to match its head-start in lining up financing, partners and regulatory approvals, he added.

Then there is the problem of winning the approval of almost every country, not only for the right to broadcast into its territory but also for the right to monopolise a band of radio-spectrum frequencies.

Finally, the technology promoted by Mr McCaw and Mr Gates, based on the satellite weapons of the Reagan-era Star Wars initiative, is vulnerable to poor weather.