This series of articles by George Gilder provide some
             interesting technological and cultural background that helps
             prepare readers to better understand and place in proper
             perspective the events relative to the National Data Super
             Highway, which are unfolding almost daily in the national
             press.  I contacted the author and Forbes and as the preface
             below indicates obtained permission to post on the Internet.
             Please note that the preface must be included when cross
             posting or uploading this article.


The following article, ETHERSPHERE, was first published in Forbes ASAP, October 10, 1994. It is a portion of George Gilder's book, Telecosm, which will be published in 1996 by Simon & Schuster, as a sequel to Microcosm, published in 1989 and Life After Television published by Norton in 1992. Subsequent chapters of Telecosm will be serialized in Forbes ASAP.


According to Web-Counter, this article has been accessed times since Nov 3, 1995.





 

ETHERSPHERE



BY



GEORGE GILDER



New low earth orbit satellites mark as decisive
a break in the history of space-based communications
as the PC represented in the history of computing.
Pay attention to much-maligned Teledesic.  Backed
by Craig McCaw and Bill Gates, it is the only LEO
fully focused on serving computers.


"They'll Be Crowding The Skies."



     THUS STEVEN DORFMAN, president of telecommunications and
space operations for GM Hughes_the colossus of the satellite
industry_warned the world of a new peril in the skies.  Planning
to launch 840 satellites in low earth orbits, at an altitude of
some 435 miles, were a gang of cellular phone jocks and computer
hackers from Seattle going under the name of Teledesic.  Led
by Craig McCaw and Bill Gates, they were barging onto his turf
and threatening to ruin the neighborhood.

     You get the image of the heavens darkening and a new Ice Age
looming as more and more of this low-orbit junk_including a total
of some 1,200 satellites from Motorola's Iridium, Loral-Qualcomm's
Globalstar and Teledesic, among other LEO projects_accumulates in
the skies.  Ultimately, from this point of view, you might imagine
the clutter of LEOs eclipsing the geostationary orbit itself, the
so-called Clarke belt, some 21,000 miles farther out.  Named after
science-fiction guru Arthur C. Clarke, the geostationary orbit is
the girdle and firmament of the Hughes empire.

     In an article in Wireless magazine in 1945, Clarke first
predicted that satellites in orbit 22,282 miles (35,860 kilometers)
above the equator, where the period of revolution is 24 hours, could
maintain a constant elevation and angle from any point on Earth.  In
such a fixed orbit, a device could remain for decades, receiving signals
from a transmitter on the earth and radiating them back across
continents.

     The Clarke orbit also posed a problem, however_the reverse
square law for signal power.  Signals in space attenuate in
proportion to the square of the distance they travel.  This means
that communications with satellites 22,000 miles away typically
require large antenna dishes (as much as 10 meters wide) or
megawatts of focused beam power.

     Now, however, a new satellite industry is emerging, based on
gains in computer and microchip technology.  These advances allow
the use of compact handsets with small smart antennas that can
track low earth orbit satellites sweeping across the skies at a
speed of 25,000 kilometers an hour at a variety of altitudes
between 500 and 1,400 kilometers above the earth.  Roughly 60
times nearer than geostationary satellites, LEOs find the inverse
square law working in their favor, allowing them to offer far
more capacity, cheaper and smaller antennas, or some combination
of both.  Breaking out of the Clarke orbit, these systems vastly
expand the total available room for space-based communications
gear.

     It is indeed possible to "crowd" the Clarke belt_a
relatively narrow swath at a single altitude directly above the
equator.  But even this swath does not become physically
congested; collisions are no problem.  The Clarke belt becomes
crowded because the ability of antennas on the ground to
discriminate among satellites is limited by the size of the
antenna.  Spaceway and Teledesic both plan to use the Ka band of
frequencies, between 17 gigahertz and 30 gigahertz, or billions
of cycles per second.  In this band, reasonably sized antennas 66
centimeters wide can distinguish between geostationary satellites
two degrees apart.  That's some 800 miles in the Clarke belt.
Thus no physical crowding.  But it means that there are only a
total of 180 Clarke slots for Ka band devices, including
undesirable space over oceans.

     LEOs, however, can be launched anywhere between the earth's
atmosphere and a layer of intense radiation called the Van Allen
Belt.  The very concept of crowding becomes absurd in this 900
kilometer span of elevations for moving orbits that can be 500
meters apart or less.  Thus the 21 proposed orbital planes of
Teledesic occupy a total of 10 kilometers of altitude.  At this
rate, 70 or more Teledesic systems, comprising some 65,000
satellites, could comfortably fit in low earth orbits.

     Nonetheless, it was clear that the LEOs, one way or another,
were crowding Hughes.  Hughes commands satellite systems or
projects that compete with every one of the LEOs.  Hughes
responded to the threat of Teledesic by announcing the expansion
of its Spaceway satellite system, then planned for North America
alone, to cover the entire globe.  Then, invoking the absolute
priority currently granted geostationary systems, Hughes asked
the Federal Communications Commission to block Teledesic entirely
by assigning Spaceway the full five gigahertz of spectrum
internationally available in the Ka band.

     On May 27, Dorfman summoned the upstarts, Craig McCaw and
Teledesic President Russell Daggatt, to Hughes headquarters in
Los Angeles for a talk.  Busy with Microsoft_the Redmond, Wash.,
company that in 1993 temporarily surpassed the market value of
General Motors_Teledesic partner Bill Gates did not make the
trip.  But as the epitome of the personal computer industry, his
presence haunted the scene.

     Together with Spaceway chief Kevin McGrath, Dorfman set out
to convince the Seattle venturers to give up their foolhardy
scheme and instead join with Hughes in the nine satellites of
Spaceway.  Not only could Spaceway's nine satellites cover the
entire globe with the same services that Teledesic's 840
satellites would provide, Spaceway could be expanded
incrementally as demand emerged.  Just loft another Hughes
satellite.  Indeed, Spaceway's ultimate system envisaged 17
satellites.  With "every component proprietary to Hughes," as
Dorfman said, the satellites only cost some $ 150 million apiece.
By contrast, most of the $ 9 billion Teledesic system would have
to be launched before global services could begin.

     Nonetheless, the new LEOs marked as decisive a break in the
history of space-based communications as the PC represented in
the history of computing.  Moreover, Teledesic would be the only
LEO fully focused on serving computers_the first truly "global
Internet," as McCaw's vice president Tom Alberg depicted it.  It
brings space communications at last into the age of ubiquitous
microchip intelligence, and it brings the law of the microcosm
into space communications.

     If you enjoyed the New World of Wireless on the ground with
its fierce battles between communications standards, technical
geniuses, giant companies, impetuous entrepreneurs and industrial
politicians on three continents_you will relish the reprise
hundreds and even thousands of miles up.  Launching Teledesic,
McCaw and Gates were extending bandwidth abundance from earth
into space.  Observers, however, often did not like what they
heard.

Bad Press For Two Billionaires

     Every so often, the media is taken by the notion of
technology as a morality tale.  In place of a gripping saga of
unjustly obscure geniuses enriching the world by their heroic
creativity in the teeth of uncomprehending bureaucrats and
politicians, the media treat technology ventures as a school for
scandal.  We have mock exposes of computer hype, monopoly,
vaporware, viruses, infoscams, netporn, securities "fraud" and
deviously undocumented software calls.  Pundits gabble endlessly
about the gap yawning between the information rich and the
information poor, thus consigning themselves undeniably, amid
many yawns, to the latter category.  While American market share
climbs near 70% in computers, networks, software and leading-edge
semiconductors, analysts furrow the brows of the Atlantic Monthly
with tales of farseeing foreign teams, spearheaded by visionary
government officials, capturing the markets of American cowboy
capitalists.  They spiel implausible yams of tough-minded trade
warriors prying open the jaws of Japan for Toys "R" Us, closing
down vicious Korean vendors of low-priced dynamic RAMs, or
blasting through barriers to U.S. telecom gear in the Tokyo-Osaka
corridor, saving the day for Motorola's soon-to-be cobwebbed
factories for analog cellular phones.

     One of these sagas began early this year with two Seattle
billionaires, McCaw and Gates, allegedly boarding McCaw's sleek
yacht and going on an ego trip.  With McCaw pitching in an early
nickel, and the boat, and Gates hoisting his name as a sail, the
two tycoons seemed to sweep away from the shores of rationality,
as the media told it, into a sea of microwaves and arsenic.
Spinning out Teledesic to build an information superhighway in
the sky, they proposed to strew the heavens with 840 satellites,
plus 84 spares.  All would whirl around the world at a height of
700 kilometers (435 miles), using what they told the FCC would be
some 500 million gallium arsenide microchips to issue frequencies
between 20 and 60 gigahertz from some 180,000 phased-array
antennas.  The entire project seemed suffused with gigahertz and
gigabucks.  "We're bandwidth bulls," says Teledesic President
Daggatt.

     In case the hype of the sponsors failed to keep the system
radiant and aloft, fueling it also would be a total of 12,000
batteries fed by thin film solar collectors stretching out behind
the satellite "birds" in some 130 square kilometers of gossamer
wings.  Working at 4% efficiency, these cells would collectively
generate 10 megawatts of power, enough to light a small city,
but, so the critics said, insufficient to reach Seattle at
microwave frequencies in the rain.  (The Teledesic frequencies
are readily absorbed by water in the air).  To manage the
elaborate mesh of fast-packet communications among the satellites
and ground terminals, the constellation would bear some 282,000
Mips, or millions of instructions per second, of radiation-hard
microprocessors and a trillion bytes or so of rad-hard RAM.  In
effect, Teledesic would be launching into space one of the
world's largest and most expensive massively parallel computer
systems.

     At a mere $ 9 billion, to be put up by interested investors,
Teledesic's lawyers told the FCC, the price would be a bargain
for the U.S. and the world.  (By contrast, current plans call for
$ 15 billion just to lay fiber for interactive TV in California).
But former Motorola, now Kodak, chief George Fisher fresh from
pondering numbers for the apparently similar Iridium
projects_suggested that $ 40 billion for Teledesic would be more
like it.  (Teledesic had the improbable result of making
Iridium's 66-satellite plan, greeted in 1990 with much of the
scorn now lavished on Teledesic, seem modest).  Just rocketing
the 840 satellites into orbit was said to entail a successful
launch every week for a year and a half at a time when hoisting
satellites is still a precarious and sometime thing.

     Even if Teledesic succeeded in getting the things up, so
other scientists suggested, the satellites would then be impaled
on some 7,000 pieces of space debris in the chosen orbits.  In
any case, so it was widely reported, 10% would fail every year,
some tumbling out of orbit, others joining the whirl of litter,
where they would fly ready to impale the remainder of the
satellites and the remnants of the two billionaires'
reputations.

     Surely these sages know that by the year 2001, when the
systems would be up and running, the world will be swimming in
the bandwidth of "information superhighways."  Why support this
lavish launch of technology for a communications system that
would be dwarfed by capabilities already demonstrated on the
ground?

     Summing up a near-consensus of critics, John Pike, director
of the Federation of American Scientists' Space Policy Project,
declared to the Wall Street Journal, "God save us.  It's the
stupidest thing I've ever heard of!" Provoking Pike may have been
the origins of the multisatellite architecture in the Star Wars
"brilliant pebbles" program.  Teledesic's most amazing
achievement to date has been to displace the Strategic Defense
Initiative as Pike's peak example of stupidity.

     While McCaw and Gates could be dismissed as tyros in the
satellite field, Hughes is world champion.  Since 1963, the
company has put 107 communications satellites into orbit.  With
19 in 1994, this year should be its biggest ever.  In 1993, well
before the Teledesic announcement, Dorfman announced the first
version of Spaceway_a $ 660 million, two-satellite system
offering voice, data and video services_as a contribution to
"information superhighways."

     In the midst of all the terrestrial uproar surrounding
superhighwaymen Al Gore, John Malone of TCI, Raymond Smith of
Bell Atlantic and scores of other telco and cable magnates,
however, no one paid much attention to Hughes.

     Then came Gates and McCaw with Teledesic and claims of 20
million potential subscribers, two million simultaneous
connections, billion-bit-per-second "gigalinks," bandwidth on
demand and an array of other features, all advertised at a cost
for Spaceway-type services nearly three times lower per bit per
second.  Everyone noticed Teledesic.

     At the end of July, though, Hughes raised the stakes.  With
successful launches under way in China, Brazil and French Guiana
to provide exclamation points, Hughes made a new submission to
the FCC, extending Spaceway into a nine-satellite global system
costing $ 3.2 billion.  McGrath plausibly claimed it could be in
place long before Teledesic and offer nearly all its
functionality at a third of the price.

     Already planned to be in place by 1998, however, were
several other LEO projects, led by Motorola's Iridium and
Loral-Qualcomm's Globalstar.  As mobile phone projects, these systems
could not readily offer service at T-1 data rates.  But their
sponsors promised availability for simple E-mail, faxes and
paging.

     By mid-1994, Motorola seemed to command the financial
momentum.  The company succeeded in raising some $ 800 million in
equity investments from companies around the globe, including
Lockheed and Raytheon (which would build the satellites), Great
Wall of China and Khrunichev Enterprises of Russia (which
together would launch a third of them), the Mawarid Group of
Saudi Arabia (which pitched in $ 120 million) and Kyocera, Mitsui
and DDI, which together put up another $ 120 million (Kyocera
will build the dual mode handsets for Japan and DDI will sell and
service them).  On August 10, an Indian consortium purchased a 5%
stake and a seat on the board for $ 38 million.  Motorola claimed
its share of the equity was dropping to 28.5%, well on the way to
the company's final target of 15%.  Motorola estimates that much
of the additional $ 2 billion in the plan could come from  debt
securities and loans.

     Iridium's attractions are impressive.  It provides
ubiquitous global phone service at a premium price with little or
no dependence on local terrestrial facilities.  In times of
disaster or political crisis, or in places with sparse or
unreliable local service, the system can route calls among the 66
satellites in space bypassing all infrastructure on the ground.
For an elite of government officials and corporate figures
operating in remote areas, the availability of Iridium should be
worth the money.  A bold and visionary concept when it emerged in
1987 from a team in the company's satellite systems engineering
group, it endows many regions of the earth with voice and limited
data communications for the first time.  For example, it actually
focuses on polar domains, such as parts of Siberia, poorly served
by other satellite systems.  Kazuo Inamori, the venerable
chairman of Kyocera, also believes that Iridium will be popular
in the 60% of territorial Japan not currently covered by
cellular.

"Give Us Spectrum, Let Others Fight"

     None-the-less, beyond the bold and ingenious concept
(Daggatt calls Iridium "the real pioneer of LEOs"), the system
suffers from technical flaws.  Were it not for Globalstar,
perhaps these flaws would not have become evident until alter the
66 birds were aloft.  A far simpler and cheaper solution,
Globalstar uses 48 satellites with no links between them.  Each
functions as a "bent pipe" transponder, receiving signals from a
phone on the ground and passing them back to any gateway within
the satellite's 1,500-mile-wide footprint, linked to locally
available telephone networks.  Because Globalstar uses local
phone systems rather than bypassing them, the system has been
able to raise a total of some $ 300 million in support from
Alcatel, France Telecom, Vodafone (serving the United Kingdom,
Australia and Hong Kong), Airtouch-U S West, Hyundai and DACOM in
Korea, Deutsche Aerospace and Alenia.

     This amount may seem small beside the billion raised by
Iridium.  But Globalstar has capital costs (at $ 1.8 billion)
one-half Iridium's, circuit costs one-third Iridium's, and terminal
costs (at $ 750 each) one-fourth Iridium's.  With no intelligence
in space, Globalstar relies entirely on the advance of
intelligent phones and portable computer devices on the ground;
it is the Ethernet of satellite architectures.  Costing one-half
as much as Iridium, it will handle nearly 20 times more calls.

     The advantages of Globalstar stem only partly from its
avoidance of complex intersatellite connections and use of
infrastructure already in place on the ground.  More important is
its avoidance of exclusive spectrum assignments.  Originating
several years before spread-spectrum technology was thoroughly
tested for cellular phones, Iridium employs time division
multiple access, an obsolescent system that requires exclusive
command of spectrum but offers far less capacity than code
division multiple access.

     Like conventional cellular or radio transmissions that
differentiate signals by time slot or frequency, TDMA sharply
restricts the reuse of spectrum in nearby cells.  By contrast,
CDMA is a form of spread-spectrum communications that
differentiates signals by a spreading code and allows the use of
the same frequencies all the time, everywhere.  Just as you can
reduplicate wireline spectrum merely by laying another fiber, you
can now manufacture new spectrum in the air merely by breaking
large cells into smaller ones.

     Among some six companies seeking low earth orbit satellite
approval from the FCC in 1993, only Iridium used TDMA, requiring
national and international bodies to pick it as a winner from the
outset and assign it exclusive spectrum.  By contrast, in a
majority report issued to the FCC on April 6, 1993, CDMA
companies in the U.S., including TRW, Loral-Qualcomm, Celsat and
American Mobile Satellite, could all agree to share spectrum and
let the market choose winners.  A Motorola lawyer explained to
Space News, "Give us the spectrum and let the others fight for
whatever's left."  In the face of alternatives with no need for
exclusive spectrum allocations, Iridium could fly only if it
offered radically superior performance or capacity.  But TDMA
dooms it to generally inferior performance and capacity.

     Unlike TDMA systems, which can "see" only one satellite
signal at a time, CDMA handsets have "path" diversity, using
"rake receivers" that can combine a number of weak signals into
an intelligible stream.  Iridium and other TDMA systems
compensate by using more power.  But no practical amount of power
can propel a satellite signal through a tin roof.  And excess
power means larger handsets or heavier satellites.  Iridium
satellites together use 80% more power than Globalstar's, yet
employ antennas nearly twice as large and offer 18.2 times less
capacity per unit area.

     Teledesic also suffers from the use of TDMA.  But
Teledesic's T-1 capabilities would compensate with 100,000 times
more bandwidth and with a bit error rate that can accommodate the
new fiber standards such as SONET-ATM (synchronous optical
network/asynchronous transfer mode), which send packets without
retransmission.  The issue is whether these features can justify
the political, financial, and performance costs of using a
modulation scheme_TDMA_that severely limits spectrum sharing and
path diversity.

     So what is this, another saga of hubris on the information
super-highway_to go with the Raymond Smith-John Malone follies?
Perhaps good new ideas are harder to come by as company revenues
grow into the billions, and Gates and McCaw disinvest and
diversify as fast as they can from their increasingly cumbrous
vessels of wealth.  Having recently passed the billion-dollar
mark in his systematic process of disinvestment from Microsoft_he
retains $ 8 billion or so_Gates at times seemed embarrassed by
his link to this gigantic project.  He told us it was too early
to write about Teledesic.

     No, the story is in fact more interesting.  Impelled by the
onrushing rise in the cost-effectiveness of individual chips
compared to multichip systems, the Law of the Microcosm dictates
decentralization of all information architectures.  During the
1980s, this centrifuge struck the mainframe computer
establishment of IBM.  During the 1990s, the personal teleputer,
summoning and shaping films and files of images from around the
world, will collide with the centralized establishments of TV
broadcasting.  At the end of the century, Teledesic and the other
LEOs will usher in the age of decentralization in space.

     From this point of view, Gates' participation becomes more
readily intelligible.  Gates seems always to follow the microcosm
wherever it leads.  A vision of software for decentralized
systems of personal computers informs everything Microsoft
does.

     In 1994, for example, Microsoft made an investment in
Metricom, a wireless terrestrial system that supplies links of up
to 56 kilobits per second to portable computers or personal
digital assistants.  Within cells, the devices can communicate
directly with one another; outside the cell, Metricom routes its
calls through an expandable mesh of nodes each the size of a
shoebox and costing less than $ 1,000.  Based on spread-spectrum
technology, the system operates at power levels low enough to
avoid the need for FCC licenses.  Yet it can be expanded to
metropolitan-area dimensions.

     In many respects, Teledesic is Metricom in the sky.  It is
focused on computer communications.  It routes packets by the
most convenient path through a mesh of nodes.  It is based on
microprocessor technology.  (Both Teledesic and Metricom plan to
employ devices from Motorola's 68000 family).  As Gates explains
the system: "Some functions are most efficiently performed by
large numbers of small processors working together, rather than a
few large ones."  The entire new generation of low earth orbit
satellite systems relies on this centrifugal force of the
microcosm.

     It was not supposed to happen this way.  Just as Grosch's
Law of the computer industry implied that computer power rose by
the square of the cost, there was a similar law of the satellite
industry that held satellite efficiency to be proportional to
see.  In a popular text, "Communications Satellite Systems,"
published in 1978, James Martin cited an AT&T study showing that
just six satellites could carry all the long-distance traffic
from the American continent; no fiber optics would be necessary.
"The next major thrust in the space segment should capitalize on
the economies of scale which today's technology offers," wrote
Martin, urging creation of "massive hardware" as heavy as several
tons and "immensely powerful satellites with large antennas
beaming as much information as we are capable of using to our
rooftops."  Many satellite advocates, led by Arthur C. Clarke,
viewed with impatient scorn the expensive terrestrial systems
that somehow forestalled the manifest destiny of big birds to
rule the world of communications.

Bringing The Microcosm To Space

     In 1994, the big bird dream still flourishes in Spaceway,
the international consortium Inmarsat, and the new launch this
summer of direct broadcast satellite technology by Hughes's
DirecTV, Hubbard's USSB, TCI's Primestar, and Rupert Murdoch's
imperial systems in Europe and Asia.  Using centralized
satellites in geosynchronous orbits, DBS is the ultimate
broadcast medium, reaching billions of potential customers at the
cost of reaching hundreds of thousands through cable-TV systems.
But these geostationary satellite systems suffer from the same
flaws as mainframes: sclerosis by centralization.  At a time when
customers want the choice, control, convenience and interactivity
of computers, the big birds offer one-size-fits-all programming
at specified times, with little ability to control the flow or
interact with it.

     The real showstopper in the long run, though, is a nagging
half-second time delay for Clarke orbit signals.  Bad enough for
voice, a half-second is near eternity for computer communications;
for the living-room and desktop supercomputers of 2001, a
half-second delay would mean gigabytes of information to be stored
in buffers.  While companies across the country, from Intel to
Digital Equipment, are rushing to market with cable modems to
allow computer connections to CATV coax, geosatellites remain
mostly computer-hostile.  Even with the new digital cosmetics
of DBS, geosynchronous satellites are a last vestige of
centralization in a centrifugal world.

     By contrast, Teledesic brings the microcosm to space.
Rather than gaming economies of scale from using a few huge
satellites, Teledesic gains economies of scale by launching as
many small birds as possible.  Based on Peter Huber's concept of
a geodesic network_a mesh of peers equally spaced apart like the
nodes in a geodesic dome_Teledesic is not a hierarchy but a
heterarchy.  Distributing the system responsibilities among 840
autonomous satellites diminishes the requirements, such as
message throughput and power usage, for each one.  Building
redundancy into the entire constellation, rather than within each
satellite, yields higher overall reliability, while reducing the
complexity and price of each unit.

     As Craig McCaw explains, "At a certain point, redundant
systems create more complexity and weight than they are worth.
Rather than having each satellite a 747 in the sky with triply
redundant systems, we have hundreds of satellites that offer
self-redundancy."  Eschewing the Hughes philosophy of "every
component proprietary to Hughes,"  Teledesic will manufacture and
launch a large number of satellite peers, using off-the-shelf parts
whenever possible.  This approach also provides economies of scale
that, according to a study by brilliant pebbles contractor
Martin Marietta, could lower unit costs by a factor of one
hundred or more.

     Just as microcosmic technology uses infinitesimal low-powered
transistors and puts them so close together that they work faster
than large high-powered transistors, Teledesic satellites follow
the rules of low and slow.  Rather than one big powerful bird
spraying signals across continents, Teledesic offers 840,
programmably targetable at small localities.  Just 435 miles out,
the delay is measured in milliseconds rather than half-seconds.

     The total computing power and wattage of the constellation
seems large, as is needed to sustain a volume of some two million
connections at a time, four times Spaceway's capacity.  But with
other link features equal, between 1,226 and 3,545 times more
power is needed to communicate with a geostationary satellite
than with a LEO.

     Perhaps most important, unlike Iridium, TRW's Odyssey, and
Globalstar, Teledesic from the outset has targeted the fastest-
growing market of the future: communications for the world's 125
million PCs, now growing some 20% a year.  And Teledesic has
correctly chosen the technology needed to extend computer
networks globally_broadband low earth orbit satellites.  The real
issue is not the future of Teledesic but the future of Iridium.

     In the short run Iridium's voice services cannot compete
with Globalstar's cheaper and more robust CDMA system.  But in
the long run Iridium could be trumped by Teledesic.  Although
Teledesic has no such plans, the incremental cost of
incorporating an "L" band transceiver in Teledesic, to perform
the Iridium functions for voice, would be just 10% of Teledesic's
total outlays, or less than $ 1 billion (compared with the $3.4
billion initial capital costs of Iridium).  But 840 linked
satellites could offer far more cost-effective service than
Iridium's 66.

     Iridium's dilemma is that the complexities and costs of its
ingenious mesh of intersatellite links and switches can be
justified only by offering broadband computer services.  Yet
Iridium is a doggedly narrowband system focused on voice.

     Iridium eventually will have to adopt Teledesic's broadband
logic and architecture.  To protect its global lead in wireless
communications and equipment, Motorola should join with Teledesic
now, rather than later.  Working with Lockheed, Motorola is
making impressive gains in satellite-manufacturing technology.
Supplying both handsets and space gear for computer networks,
Motorola could turn its huge investment of time, money and
prestige in Iridium into a dramatic global coup in wireless
computer services.  As part of a broadband system, Iridium could
still become a superb brand name for Motorola.  But persisting in
a narrowband strategy in the name of avoiding Teledesic's larger
initial costs, Motorola's executives will end up inflicting
serious strategic costs on the company.

     Most of the famous objections to Teledesic are based on
ignorance or misinformation.  Launch anxieties spring chiefly
from the GEO experience.  LEOs are 60 times nearer and between a
tenth and a third the weight.  Teledesic satellites are designed
to be hoisted in groups of eight or more.  From Great Wall in
China to Khrunichev in Russia, companies around the world will
soon be competing to supply low-cost launching facilities for the
system.  Orbital Sciences, an entrepreneurial dervish near
Washington's Dulles Airport with some $ 190 million in revenues,
has developed a low-cost method for lofting groups of LEOs from
an adapted Lockheed 1011 Tristar.

     Other fears are similarly fallacious.  Teledesic will work
fine in the rain because the high minimum vertical angle (40
degrees) of its satellite links from the ground reduces the
portion of the path exposed to water to a manageable level.  By
contrast, geostationary satellites must operate at eight degrees,
passing the signal through a long span of atmosphere.  Made of
tough new composite materials, Teledesic satellites will endure
the kind of debris found in space mostly unscathed.  The solar
arrays can accept holes without significantly damaging overall
performance.  All in all, Teledesic's designers expect the birds
to remain in orbit for an average of ten years.  With most of its
key technologies plummeting in price along with the rest of
electronic components, the system may well cost even less and
perform better than its business plan promises or George Fisher
speculates.

     Indeed, widely charged with reckless technological
presumption, the designers of Teledesic in fact seem recklessly
cautious in their assumptions about the rate of microchip
progress.  For example, their dismissal of CDMA assumes that the
high speed of the spreading code functions_requiring digital
signal processors that race at least 100 times the data
rate_pushes cheap T-1 performance far into the future.  Yet in
early 1995, Texas Instruments will ship its multimedia video
processor, a marvel that combines four 64-bit DSPs, a 32-bit RISC
CPU, 50 kilobytes of on-chip memory, a floating-point unit and a
64bit direct memory access controller all on one chip.  This
device now performs two billion operations per second and, with
an upgrade from 35 megahertz to 50 megahertz clock rate, soon
will perform three billion.  The estimated cost in 1995 is around
$ 400, or a stunning $ 133 per bop (current Pentiums charge three
times as much for 100 mips).  Five years from now, when Teledesic
gets serious, that kind of one-chip computing power can implement
CDMA for broadband data without any cost penalty.  Future
generations of CDMA systems may be able to offer, at a dramatically
lower price, the same broadband services in mobile applications
that Teledesic now promises for fixed services only.

     Assuming that Teledesic meets the CDMA challenge, the other
fear is that terrestrial systems will capture enough of the
market to render Teledesic unprofitable.  This fear, however, can
come true only if governments delay this supremely beneficial
system well into the next century.

     Unlike the competition, satellite systems can provide global
coverage at once.  Whether for $ 9 billion or $ 90 billion, no
terrestrial system will cover the entire world, or even the
entire U.S., within decades of Teledesic.  As soon as it is
deployed, it will profoundly change the geography and topography
of the globe.  Suddenly the most remote rural redoubt, beach, or
mountain will command computer communications comparable to urban
corporations today.  The system can make teleconferencing,
telecommuting, telemedicine, and teleschooling possible anywhere.
Gone will be the differences among regions in access to cultural
and information resources.  People will be able to live and work
where they want rather than where corporations locate them.

     This change transforms the dimensions of the world as
decisively as trains, planes, automobiles, phones and TVs changed
them in previous eras.  It will extend "universal service" more
dramatically than any new law can.

     Moreover, Teledesic can eliminate the need to cross-subsidize
rural customers.  Determining the cost of wire-line services are
the parameters of population density and distance from the central
office.  Rural customers now cost between 10 and 30 times as much
to serve with wires as urban customers do.  Teledesic will bring
near-broadband capabilities to everyone in the world at the same
price.

     Most important, this expansion of the communications
frontier will foster the very economic development that will fuel
the demand for the service.  Today, it does not pay to bring
telecommunications to poor countries that might benefit most.
Teledesic and other satellite services break the bottleneck of
development.  Simultaneously opening the entire world, it
enriches every nation with new capital exceeding the fruits of
all the foreign aid programs of the era.

     Teledesic is a venture worthy of McCaw and Gates.  In its
impact on the world, it may even rival the Herculean
contributions of its sponsors in cellular and software.  The
issue is not the technology or the commitment of the principals.
The issue is the readiness of the U.S. government to accommodate
this venture.  Before Teledesic can be approved internationally,
it will have to attain a license from the FCC in the U.S.  It has
taken four years to approve Iridium.  It took 30 years to approve
cellular.  How long will it take to approve Teledesic?

     Currently Teledesic, Iridium and Globalstar face several
political obstacles.  The International Telecommunications
Union's Radio Regulation 2613 gives GEOs absolute priority over
LEOs.  For Spaceway, Hughes is now demanding an exclusive license
for the full five gigahertz available in the Ka-band worldwide,
leaving no room for Teledesic or any other Ka-band LEO.  Under
current law, Hughes or other GEO systems could usurp any LEO that
was launched.

     LEOs are a major American innovation.  The U.S. government
should take the lead now in spearheading a change in the
regulations to accommodate LEOs.  This is no minor matter.  As
the dimensions and promise of Teledesic loom more starkly, the
Japanese or Europeans are certain to make similar proposals.
"When they do," Craig McCaw predicts, "they will immediately have
their government on board.  They will be able to go to the ITU
right away.  My greatest fear is that we will have the technology
all ready, and foreign companies will beat us out because they
can get their governments in line."

     The U.S. government was on board for Apollo 25 years ago and
the U.S. won the first space race.  This space race is just as
important, but the government is treating it as some sleepy-time
infrastructure project.  In fact, it is the information
superhighway going global and ubiquitous.  It is the ultimate
promise of the information age, says McCaw.

Sustaining The U.S. Lead In Technology

     McCaw explains: "It'll mean ecological disaster if China
mimics what we did_building more and more urban towers and
filling them up with people who queue up every day on turnpikes
into the city, emitting fumes into the air, and then building new
towers and new highways when you want to move the company, and
then digging up the highways to install new wires."

     McCaw waves toward the window, out at Lake Washington.
"Look at that floating bridge.  It took $ 1.5 billion to cross
Lake Washington, then it got busted in a storm.  Cross this lake,
any lake, any ocean in the world with broadband wireless.  That's
the promise of Teledesic.  All you do is to reconfigure the
communications in software at zero incremental cost.  No wires
for the final connections.  It's what we do in Hong Kong and
Shanghai, where everyone uses a cellular phone."

     President Clinton, Vice President Gore and other members of
the administration continually ask what they can do for
technology.  One thing they can do is vastly streamline the
process for approval of communications projects.  At the moment,
Congress is determined to retain bureaucratic dominance over the
most dynamic enterprise and technology in the world economy_what
they like to term the information superhighway.  They see it as a
possible source of congressional power, campaign finance,
employment and pelf, like the Baby Bells today or like existing
construction projects.  Rather than turn telecom into a vast
porkbellied poverty program, however, the administration should
deregulate the field.  Communications companies must be permitted
to compete and collaborate wherever the technology leads.

     Whether the administration knows it or not, these
technologies are its greatest political asset.  The high-tech
industries unleashed in the 1980s by venture capital and junk
bonds are now the prime fuel of the economy of the 1990s.
Comprising perhaps 60% of incremental GDP and 48% of exports, the
momentous upsurge of computers and communications is even
compensating for the mistakes of the Bush and Clinton regimes and
making plausible Clinton's continuing claims of economic success.
But now Clinton, Gore and FCC Chairman Reed Hundt must make a
choice.  If they want to maintain this redemptive U.S. lead in
technology, they must be willing to forge new alliances in
Congress to get the politicians and bureaucrats out of the way of
the future.  A good start would be to open the floodgates for the
global onrush of low earth orbit satellites dedicated to computer
communications.  If they do, they can help make the world, as
McCaw's Alberg puts it, "a truly global Internet in an ever-expanding
ethersphere."

And The Winner Is...

     Globalstar is the easy winner for current offering of mobile
phone services under a CDMA regime of spectrum sharing.  But
Teledesic can add phone services to its broadband computer
system.  Over time, Teledesic's 840 satellites will outperform
Globalstar's 48.  Big question: When will microchip technology
advance enough to allow broadband applications over CDMA?  When
that happens, Globalstar has a shot at the grand prize.

     Iridium is both too expensive to compete in mobile phones
and too narrowband for data.  Today's champ Spaceway is maturing.
Big winner for the next decade is... Teledesic.


#####