[2/7/07] Globalstar’s customers may lose their two-way voice and data service as early as next year, the company has announced.

Many of the company’s 40 satellites are suffering from degraded performance in their S-band antennas, and the rate of degradation has accelerated, Globalstar said in a Feb. 5 filing to the U.S. Securities and Exchange Commission. "Sometime in 2008 this will have a significant adverse impact on the company’s ability to provide uninterrupted two-way voice and data services on a continuous basis in any given location,” Globalstar said. "Subscriber service will continue to be available, but at certain times at any given location it may take substantially longer to establish calls and the average duration of calls may be impacted adversely.”
Globalstar has not been able to correct the problem and warned it may not be able to.

Assuming that customers start looking for alternative services, “the Globalstar revenue stream is likely to begin to drop almost immediately,” said Roger Rusch, president of TelAstra. “By the time the constellation fails completely most of the users will be gone.”

Shares in Globalstar went for $17 when the company went public in November. Following Tuesday’s announcement,  stock prices in the company dropped by more than 28 percent – closing as Nasdaq’s “Most Declined” for the day – and finished at $10.40.

Rusch said the “Achilles heel” of the spacecraft is their orbit at an altitude of about 1,280 kilometers, which puts them at risk for radiation. "It was a fundamental flaw,” he said. “At this altitude the radiation belts are extremely hazardous. Globalstar orbits experience radiation in the South Atlantic Anomaly where the Van Allen Belts nearly touch the atmosphere. Very few satellites are orbited in this region because of the radiation,” which can irreparably damage satellite transistors.

The constellation, built by Alcatel Alenia Space, was launched in the late 1990s, and the satellites have outlasted their design life of 7.5 years. Even without the anomaly, "I don’t think they would have survived very long anyway,” said Rusch. “They are struggling with the difficulties of old age. If you heard a similar announcement from Iridium, you might not be surprised, except they haven’t tried to go as high in altitude.”
 
Space Systems/Loral was the prime contractor for the first constellation, while Alcatel Alenia Space was responsible for the satellite payloads and structures. The spacecraft were launched beginning in February 1998 and have outlasted their design life of 7.5 years. Even without the anomaly, "I don’t think they would have survived very long anyway,” said Rusch. “They are struggling with the difficulties of old age. If you heard a similar announcement from Iridium, you might not be surprised, except they haven’t tried to go as high in altitude.”
 
Globalstar has eight ground spares scheduled to be placed into orbit by a pair of Soyuz rockets in March and May, respectively.

In December, Globalstar awarded a contract to Alcatel Alenia Space for a second-generation constellation of 48 satellites, with the first spacecraft expected to be available in late 2009.

A gap in satellite coverage also would cast doubt on whether Globalstar would be able to meet the U.S. Federal Communications Commission’s standard for ancillary terrestrial component (ATC) services. ATC systems allow satellite operators to use their authorized satellite radio frequencies to integrate into their satellite service offerings a terrestrial wireless service similar to cellular or PCS . In January 2006, Globalstar announced it would use its planned system of terrestrial repeaters to boost the availability of its Mobile Satellite Service in urban areas and within buildings, with multiple business possibilities growing out of the system.