In previous posts questioning the business model behind the satellite radio companies, we've pointed out that just the process of sending satellites into space and maintaining them is no simple matter. It's quite costly and complicated, and adds a lot of risk to any company whose business is based around satellite communications. The past several days has seen further confirmation of this point. Last week, a commercial satellite launch resulted in a major explosion. The resulting damage to its launchpad could hamper plans at DirecTV to launch more satellites later this year. Adding to the industry's woes, satellite communications company Globalstar has announced that it's encountering major technical problems with many of its satellites currently in the sky. Not only is it not sure what's causing the problems, but it's not sure whether it'll be able to fix them. So far, it's only found temporary workarounds, and it warned, in a filing to the SEC that "...if the Company is unsuccessful in developing additional technical solutions, the quality of two-way communications services will decline, and by some time in 2008 substantially all of the Company's currently in-orbit satellites will cease to be able to support two-way communications services." The company may in fact find a fix before then, but in light of all these costs and technical problems, it's easy to understand why the history of satellite based businesses has been littered with so many failures.
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