Globalstar

Globalstar is a Low Earth orbit Satellite constellation for telephone and low-speed data communications, similar to (and competing with) the Iridium satellite system.

Telecommunications system

System architecture

Globalstar differs from Iridium in several important ways:

Globalstar satellites are simple bent pipe repeaters; there is no inter-satellite linking. A network of ground Gateway stations provides connectivity from the 48 satellites to the Public Switched Telephone Network; users are assigned numbers on the North American Numbering Plan. Because there is no inter-satellite linking, a satellite must have a gateway station in view to provide service to any users it may see. Because no gateway stations cover certain remote areas (such as oceans far from land), no service can be provided in those areas even though the satellites fly over them.

Globalstar orbits have an Inclination of 52 degrees, compared to the near-polar 86.4-degree orbits used by Iridium. Globalstar also does not cover polar areas due to the lower orbital inclination.

The Globalstar system uses the Qualcomm CDMA air interface; however, handsets use standard GSM SIMs.

Despite (or because of) these limitations, Globalstar’s operational costs were significantly cheaper and can support somewhat higher data rates than Iridium. However, such cost differences later proved meaningless when both companies shed their multi-billion dollar debts through Bankruptcy.

System deployment

Like Iridium, Globalstar received its U.S. spectrum allocation from the FCC in January 1995, and continued to negotiate with various other sovereign nations for rights to use the same radio frequencies in their countries.

The first satellites were launched in February 1998, but system deployment was delayed through a series of embarrassing and costly launch failures, notably the September 1998 loss of 12 satellites in a launch by the Russian Space Agency. In February 2000, it launched the last of 52 satellites: 48 satellites and four spares (reduced from the original plan of eight spares).

The first call on the Globalstar system was placed on November 1, 1998, from Irwin Jacobs (chairman of Qualcomm) in San Diego to Bernard Schwartz (CEO and chairman of Loral Space and Communications) in New York.

In the Fall of 1999, the system began limited commercial service with 36 of 48 planned satellites. In March 2000, it began full commercial service in North America, Europe and Brazil. Initial prices were $1.79/minute vs. $9/minute for Iridium.

Business operations

Corporate structure and financing

The Globalstar project was launched in 1991 as a joint venture of Loral Corp. and Qualcomm. On March 24, 1994, the two sponsors announced formation of Globalstar L.P. (a Limited partnership incorporated in the U.S.) with financial particpation from eight other companies, including Alcatel, AirTouch, Deutsche Aerospace, Hyundai and Vodafone. At that time, the company predicted the system would launch in 1998 based on an investment of $1.8 billion.

In February 1995, Globalstar Telecommunications Ltd. raised $200 million from its Initial public offering in the NASDAQ market. The IPO price of $20 per share was equivalent to $5 per share after two stock splits. The stock price peaked at (post split) $50 per share in January 2000, but institutional investors began predicting bankruptcy as early as June 2000. The stock price eventually fell below $1 per share, and the stock was delisted by NASDAQ in June 2001.

After the IPO, the publicly traded Globalstar Telecommunications (NASDAQ symbol GSTRF) owned part of system operator Globalstar LP. From that point on, the primary financing for Globastar LP was vendor financing from its suppliers (including Loral and Qualcomm), supplemented by junk bonds.

After a total debt and equity investment of $4.3 billion, on February 15, 2002 Globalstar Telecommunications filed for Chapter 11 bankruptcy, listing assets of $570 million and liabilities of $3.3 billion. The assets were later bought for $43 million by Thermo Capital Partners LLC. When the new Globalstar emerged from bankruptcy in April 2004, it was owned by Thermo Capital Partners (81.25%) and the original creditors of Globalstar L.P. (18.75%).

Employees

The first five employees of Globalstar were transferred from the founding companies in 1991. Although few figures were publicly disclosed, the company apparently reached a peak of about 350 employees until layoffs in March 2001. However, this figure was misleading as most of the development, operations and sales employees were employed by the company’s strategic partners.

Loral’s chairman Bernard Schwartz served as Globalstar’s chairman and CEO until May 2001.

The company then appointed satellite telecommunications veteran Olof Lundberg to lead a turnaround at the company to serve as chairman and CEO. After beginning his career with Swedish Telecom, Lundberg had been founding Director General (later CEO) of Inmarsat from 1979–1995. He served as founding CEO and later CEO and Chairman ICO Global Communications from 1995–1999.

Lundberg resigned from the company (then in bankruptcy) as of June 30, 2003.