The State Department is pursuing "all available options," including administrative penalties, to compel Thales Alenia Space to disclose any U.S.-made parts in eight communications satellites it sold to China, Assistant Secretary for Legislative Affairs David Adams told Congress. The department's options include withholding licenses the company needs as prime contractor on a $3 billion program to build 81 satellites for Iridium Communications Inc. (IRDM), according to Marco Caceres, a military and civilian space analyst. He said that could postpone Iridium's plans to launch the first of the new satellites in 36 months and possibly force the company to find a U.S. contractor to take over the program. "If they delay it by six months, Iridium needs to do it sooner rather than later," Caceres of the Fairfax, Virginia- based Teal Group, said in an interview.

Now the issue is what to do with the existing satellites in orbit. This will involve an additional expense to bring them down in a controlled way so that they burn up in the atmosphere away from populated areas, says Marco Caceres, senior space analyst with the Teal Group consultancy in Fairfax, Va. – the one person who will speak for the record about Iridium. Iridium officials have been exploring the alternative of selling off the crippled satellites, including offers to the U.S. military and even a Middle Eastern group that would use them for distributing Muslim religious messages. Caceres, however, says he doubts these efforts will succeed. U.S. military forces increasingly rely on commercial communications services, as demonstrated in the peacekeeping missions in Bosnia and Kosovo, he notes. The exorbitant operational costs are likely to frighten away other potential buyers.

The company filed for bankruptcy protection last August. Wireless pioneer Craig McCaw recently said he wouldn’t bail out Iridium, dashing hopes that the $5 billion satellite phone venture would rebound. Now, Iridium’s satellites will be left to disintegrate in the atmosphere as they fall from space. That process could take months, said Marco Caceres, a senior space analyst with consultant Teal Group in Fairfax, Va. “This is unprecedented. No one has ever brought down this number of satellites at the peak of their performance times,” he noted. Mr. Caceres said the satellites will have to be maneuvered into lower orbits in small groups so they can burn in the atmosphere. “It will be a gradual process, that’s what adds to the cost,” he said.

But if the plan fails, Teledesic may be financially out of luck. “Everything depends on Iridium,” said Marco Caceres, senior space analyst with the Teal Group. “It’s clear in the investment community that if, on 23 September, they turn on the switch and it [doesn't] work, it would be bad for Celestri,” he added. “They won’t be able to raise US$15 billion or whatever it will cost if their $5 billion system isn’t working,” noted Caceres, who pores over satellite system proposals and papers to advise investors.