Eagle River Investments, Craig McCaw’s investment management firm, has confirmed it will not pursue an investment in Iridium. Instead Eagle River said it will focus its satellite communications investments on data-centric companies, such as London-based ICO Global Communications and Teledesic, in which McCaw and Bill Gates have significant investment stakes.

Dennis Weibling, Eagle River’s president, said: “With the powerful influence of the Internet on global communications, we’ve made a strategic decision to focus our resources and attention on the satellite-based data services that ICO and Teledesic can provide. After careful examination of Iridium’s technologies, we determined that there are closer synergies between ICO and Teledesic and the services they will provide customers worldwide.”

This suggests the end may be near for Iridium. Motorola was bankrolling Iridium up until last Monday (March 6), and according to reports Eagle River completed its own due diligence examination of Iridium’s status and prospects last week. Its decision to pull out of Iridium, itself still in Chapter 11 bankruptcy, allows Iridium to seek other potential buyers that have shown an interest in bidding, and Iridium said it will proceed with the auction strategy.

“Much attention has been afforded the potential McCaw bid. Now that he has clarified his intentions, we believe that the quality of our system and the value of our assets should attract additional qualified proposals,” said Randall Brouckman, Iridium’s chief operating officer.

Last Friday Eagle River said it had determined that Iridium wouldn’t make such a good fit with the other ventures after all. Iridium’s constellation of 66 satellites was designed primarily for voice service, while the networks envisioned for ICO and Teledesic would place greater emphasis on high-speed transmission of Internet traffic and other data. Notably, both ICO and Teledesic have yet to launch any satellites.

Motorola, which owns 18 per cent of Iridium, quickly reverted to its prior stance now that Eagle River is stepping away. It will not provide fresh funding without a substantial contribution by other key investors. “We were disappointed to learn of Craig McCaw’s decision not to bid on Iridium’s assets,” said Motorola spokesman

Scott Wyman. “From our perspective, the future of Iridium now rests with the bankruptcy court.”

Iridium filed for bankruptcy court protection last August, unable to make payments on debts totalling about $4.4 billion. At last count, Iridium claimed 50,000 subscribers, more than triple its customer count last summer, but still below the levels needed to keep the business alive.

Meanwhile, following the successful conclusion of an agreement with Craig McCaw’s group of investors and the go-ahead of the US bankruptcy court in Delaware for McCaw’s takeover of the company, ICO Global Communications has confirmed a date for the launch of its first satellite — March 12.

The ICO F-1 satellite, built by Hughes Space & Communications, will take off on board a Sea Launch rocket about 200 nautical miles east of Christmas Island in the Pacific. The 2,750kg satellite is destined for medium Earth orbit, about 10,390km above the Equator.

However, it seems that the satellite will effectively be a test satellite. It has been discovered that there could be interference between its transmissions and those of eastern European radar, primarily Russian. So the satellite is being sent up to find out how serious the problem is. The first satellite will be unshielded; later flight units — which probably won’t launched within the next 12 months — could be shielded if this is found necessary.

McCaw representatives as well as ICO confirm that carrying traffic at rates up to 144kbps requires only ground station modifications. For higher rates (up to 384kbps), both satellites and handsets could need adaptation. The likely cost could be another $1 billion, on top of the $3.1 billion already spent on the system and the $1.2 billion shortfall to be paid by McCaw and his associates.

McCaw has now initiated his second tranche ($273 million) of emergency funding, and has indicated his intention of definitely acquiring the company, which will cost another $700 million. The ICO reorganisation plan is due for a bankruptcy court review on March 21.