“A few years ago, I realized (Teledesic officials) don’t even have a clue, and this just confirms it,” said Marco Caceres, an analyst with Fairfax, Va.-based aerospace analysts the Teal Group. “You’d expect more from a visionary, who knows the market’s not there but says, ‘We’re going to go out there and develop it.’ You go out and you have enough confidence in your marketing and your concept” to make it work, he said. Teledesic, which is backed in part by Microsoft Corp. co-founder Bill Gates and The Boeing Co., says it hasn’t given up on its vision of a constellation of satellites giving government, business and consumers access to portable Internet connections that are from 10 to 100 times faster than DSL and cable modems. The company, which has received more than $500 million in private investments and much of McCaw’s own money, said it remains solvent. But Caceres’ take is that Teledesic is in trouble, because it has been on the wrong course since the outset. Skepticism so far has been muted only because of McCaw’s reputation as a telecommunications wizard, he said.

Industry observers say there could be more deals in the offing. All eyes are on Globalstar, a $3-billion, 52-satellite system that has reportedly run into trouble obtaining handsets from suppliers. Whether Globalstar is in financial trouble will not be known for sure until next year, when it must report to lenders, but it is being closely watched by the industry. “Globalstar is a test of whether there’s really a market for satellite phones and how big it is,” says Marco Caceres, space analyst at Fairfax, Va.-based Teal Group, “or whether the whole industry is just a mistake.”

Mr. McCaw “is not going to have an easy time raising nine, 10, 20 billion if he focuses on going it alone,” Marco Caceres, senior space analyst with the Teal Group, Fairfax, Va., said. There has been speculation for weeks that Mr. McCaw might take a role in Iridium, because Motorola is the prime contractor and an investor in both projects. But any restructuring of Iridium would be complicated, requiring approval from banks, bondholders and the bankruptcy court. A Motorola spokesman said he knew of no discussions with Teledesic about Iridium and declined to comment further. Mr. Caceres said a partnership between Mr. McCaw and Hughes “seems very rational and makes more economic sense than messing with Iridium.” Hughes is an investor and contractor for ICO, and also plans its own satellite-Internet project, dubbed Spaceway, that is expected to launch in 2002. But it isn’t clear what Hughes would gain from such a deal, since Spaceway is ahead of most competitors. A partnership also could face regulatory hurdles.

Today’s rocket failures and capital flight may subside in time for other projects now being planned. Teledesic, a 288-satellite “Internet in the sky” backed by cell-phone pioneer Craig O. McCaw and Microsoft Corp.’s William H. Gates III, has already raised $1 billion from Motorola Inc., Boeing Co., and other sources to help with its 2003 launch. “Our investors have a long-term perspective,” says a spokesman. But higher launch and insurance costs are throwing Teledesic’s $9 billion budget into doubt. “A more reasonable figure is $15 billion, but they’re not willing to say that yet for fear of scaring off Wall Street,” says Marco Caceres of researcher Teal Group. Teledesic plans eventually to go public.

Teledesic President Russell Daggatt insists he can limit the costs to $9 billion. Maybe. “Teledesic will probably cost closer to $15 billion, and I’m being conservative,” predicts satellite expert Marco Caceres of Fairfax, Va.-based aerospace consultants Teal Group.