Alcatel has halted development of its $6 billion, 80-satellite Skybridge internet-in-the-sky project because of a lack of demand for the broadband service.

Although the French telecommunications and internet specialist says the project is being postponed not abandoned, industry sources suggest that it will never go ahead due to unfavourable market conditions, the need for more capital and the fact that broadband requirements are being met by leased capacity on existing satellites.

Alcatel holds a 49.9% stake in the Low Earth Orbit (LEO) satellite project with other partners including Boeing, Thomson Multimedia and Toshiba. Alcatel's interest in the expensive programme has been waning for some time, with the manufacturer last year suggesting that rather than launching its own LEO satellites, Skybridge could lease capacity on other geostationary orbiting satellites.

The programme was established in 1997 in response to the launch of Bill Gates's Teledesic system, when the future of LEO systems looked bright. Initially expected to cost $3.5 billion, Alcatel predicted the system would have 15 million customers by 2006. The project has hit numerous delays, while costs have ballooned. Originally due for a 2002 service start, the first satellite launch slipped to 2004, while the number of planned satellites rose from 64 to 80.

The Skybridge move comes as Alcatel makes cuts across its business to reduce operating costs, and may shed a third of its workforce worldwide, including 450 space staff.

The loss of Skybridge is a blow to Boeing and the Euro-Russian Starsem company. Starsem was booked to launch 32 Skybridge satellites on 11 launches of the Soyuz Fregat, starting this year, while Boeing was assigned the launches of at least 40 satellites, on two Delta III and four Delta IV Medium launches.

Source: Flight International