TerreStar Corporation

TerreStar Corporation was an American telecommunications holding company associated with satellite-based and hybrid satellite-terrestrial communications services. Its corporate lineage included American Mobile Satellite Corporation, which operated under the abbreviation AMSC from 1988 to 2000, and Motient Corporation, which used the MNCP ticker from 2000 to 2007. The company subsequently operated under the TerreStar name and became the controlling shareholder of TerreStar Networks Inc., TerreStar National Services, Inc., and TerreStar Global Ltd. It also held a shareholding in SkyTerra Communications. The group’s principal strategic objective was to combine mobile-satellite service with terrestrial wireless coverage. TerreStar Networks developed a system intended to provide mobile voice, messaging, and data communications across North America, using the same general spectrum ecosystem for satellite and complementary terrestrial service. Its technical concept was based on the GMR standard and was designed to address coverage gaps that conventional cellular networks could not economically serve, particularly in remote or underserved areas. A central asset of the group was TerreStar-1, a large geostationary communications satellite built by Space Systems/Loral. Arianespace launched the satellite on July 1, 2009, from the Guiana Space Center aboard an Ariane 5 rocket. With a launch mass of approximately 6,910 kilograms, it was described at the time as the largest commercial telecommunications satellite launched. TerreStar-1 was intended to support the company’s planned integrated satellite and terrestrial communications services in North America. TerreStar also pursued regulatory approval for a terrestrial wireless network operating on the S-band frequencies used by TerreStar-1. On January 14, 2010, the company announced that the Federal Communications Commission had approved deployment of such a network. The approval represented an important step toward the group’s hybrid-network strategy, although it did not resolve the company’s financial and commercial challenges. The business entered a major restructuring period in 2010. In October of that year, TerreStar filed for prepackaged bankruptcy protection with the support of EchoStar, its largest secured creditor. Under the restructuring arrangement, secured creditors exchanged approximately $940 million of debt for about 97 percent of the reorganized company. The plan also included $75 million in debtor-in-possession financing and received approval in November 2010. TerreStar Corporation later filed for Chapter 11 bankruptcy protection on February 16, 2011. The satellite became the focus of competing post-bankruptcy plans. A nonprofit organization called A Human Right sought to acquire TerreStar-1 and use it to provide basic or free Internet access, including service for communities lacking reliable international connectivity. In the bankruptcy-court auction, Dish Network ultimately submitted the winning bid of $1.375 billion for the satellite. On August 22, 2011, Dish Network asked the Federal Communications Commission for permission to use TerreStar’s wireless spectrum for its own wireless broadband plans. TerreStar Corporation should be distinguished from the later ownership of particular TerreStar assets and subsidiaries. Following the bankruptcy process, Dish Network owned TerreStar Networks and acquired the TerreStar-1 satellite, but that later ownership does not make TerreStar Corporation an active Dish consumer brand. The corporation is therefore best understood as a defunct satellite-communications corporate group whose principal legacy was its attempt to commercialize integrated satellite and terrestrial mobile connectivity.

TerreStar Corporation emerged from a corporate lineage connected to American Mobile Satellite Corporation and Motient Corporation. American Mobile Satellite Corporation operated under the AMSC name from 1988 to 2000, after which the business used the Motient name from 2000 to 2007. The later TerreStar organization became a holding and operating group with control of TerreStar Networks, TerreStar National Services, and TerreStar Global, while also maintaining a shareholding in SkyTerra Communications. American Mobile Satellite Corporation was also the origin of XM Satellite Radio before that business was spun off. The company’s core strategy was to build a mobile communications system combining satellite coverage with terrestrial wireless infrastructure. TerreStar Networks was based in Reston, Virginia, and planned services for North America that would support mobile voice, messaging, and data. The hybrid design was intended to use satellite reach in locations where terrestrial cellular networks were unavailable or uneconomic, while a complementary terrestrial network could improve capacity and service continuity in populated areas. The system was based on the GMR standard. TerreStar-1 was the most visible component of this strategy. Space Systems/Loral built the satellite, which Arianespace launched on July 1, 2009, from the Guiana Space Center in French Guiana using an Ariane 5 rocket. The satellite had a launch mass of approximately 6,910 kilograms and was described as the largest commercial telecommunications satellite launched at that time. Its planned role was to provide mobile satellite communications across North America. In January 2010, TerreStar announced that the Federal Communications Commission had approved deployment of a terrestrial wireless network using the S-band frequencies associated with TerreStar-1. This regulatory decision supported the company’s effort to create an integrated satellite-terrestrial service rather than relying on a satellite-only model. The approval was an important strategic milestone, but the company continued to face substantial financial pressure. The group entered prepackaged bankruptcy restructuring in October 2010. EchoStar, identified as its largest secured creditor, led the restructuring effort with other secured creditors. The plan exchanged approximately $940 million in debt for approximately 97 percent of the company and included $75 million in debtor-in-possession financing. The restructuring plan was approved in November 2010. TerreStar Corporation subsequently filed for Chapter 11 protection on February 16, 2011. The satellite’s future attracted proposals beyond the original commercial plan. In December 2010, the nonprofit organization A Human Right promoted an effort to purchase the satellite and use it to provide basic Internet service in Africa and for countries or communities affected by interruptions to international connectivity. The proposal did not prevail in the eventual bankruptcy sale. Dish Network successfully bid $1.375 billion for TerreStar-1 and, on August 22, 2011, requested FCC authorization to use TerreStar spectrum for its own wireless broadband plans. The post-bankruptcy disposition of the satellite and network assets marked the end of TerreStar Corporation as an independent operating telecommunications group. Its historical significance lies in its attempt to commercialize an integrated mobile-satellite and terrestrial model, its large TerreStar-1 spacecraft, and the transfer of important assets to Dish Network after the bankruptcy process.

1. 2011Chapter 11 filing and asset sale

   TerreStar Corporation filed for Chapter 11 protection, after which Dish Network won the bankruptcy auction for TerreStar-1.

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2. 2010FCC approves terrestrial network deployment

   TerreStar announced FCC approval for a terrestrial wireless network using the S-band frequencies associated with TerreStar-1.

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3. 2010Prepackaged bankruptcy restructuring is approved

   A restructuring supported by EchoStar and other secured creditors received approval after debt was exchanged for equity and debtor-in-possession financing was arranged.

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4. 2009TerreStar-1 is launched

   Arianespace launched TerreStar-1 on July 1 from French Guiana aboard an Ariane 5 rocket.

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5. 2007TerreStar corporate name period begins

   The company’s corporate identity changed from Motient to TerreStar Corporation.

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6. 2000Motient Corporation name period begins

   The business operated as Motient Corporation from 2000 until 2007 and was associated with the MNCP ticker.

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7. 1988American Mobile Satellite Corporation begins the corporate lineage

   The organization’s stated corporate history traces back to American Mobile Satellite Corporation, which operated under the AMSC name before later changes in corporate identity.

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TerreStar positioned itself as a provider of integrated satellite and terrestrial mobile communications, intended to extend voice, messaging, and data coverage beyond the practical reach of conventional cellular networks.

• TerreStar-1Communications satellite2009

  TerreStar-1 was a large commercial telecommunications satellite built by Space Systems/Loral and launched by Arianespace in 2009. The spacecraft was intended to form the space segment of TerreStar’s North American mobile communications system, supporting voice, messaging, and data services. Its design was linked to a broader hybrid architecture in which satellite coverage would be supplemented by terrestrial wireless infrastructure.

• TerreStar integrated satellite-terrestrial serviceMobile satellite communications

  TerreStar planned a North American communications service combining mobile-satellite coverage with a terrestrial wireless network. The intended offering included mobile voice, messaging, and data communications, with satellite reach designed to extend connectivity beyond conventional cellular coverage. The planned terrestrial component was to use the S-band frequencies associated with TerreStar-1.

• 2011Sale of TerreStar-1 to Dish NetworkM&A

  TerreStar-1 was placed in a bankruptcy-court auction after TerreStar’s Chapter 11 filing.

  What changed. Dish Network submitted the successful bid for the satellite and later sought FCC authorization to use TerreStar wireless spectrum for broadband service.

  Aftermath. The transaction transferred a central TerreStar asset to Dish Network and contributed to the end of TerreStar’s independent operating role.

  Bankruptcy-auction bid. $1.375 billion winning bid (2011)

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• 2010Pursuit of an integrated terrestrial wireless networkStrategy

  TerreStar sought to supplement its satellite service with terrestrial wireless coverage using the same S-band spectrum associated with TerreStar-1.

  What changed. The company announced FCC approval to deploy the terrestrial portion of its hybrid communications network.

  Aftermath. The approval supported the hybrid-network strategy, but the company subsequently entered bankruptcy restructuring and did not establish a lasting independent service.

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• 2010Prepackaged debt restructuringStrategy

  TerreStar faced financial pressure while developing its satellite and terrestrial communications system.

  What changed. With EchoStar and other secured creditors, the company pursued a prepackaged bankruptcy plan involving debt-for-equity exchanges and debtor-in-possession financing.

  Aftermath. Secured creditors received approximately 97 percent of the reorganized company after an exchange involving approximately $940 million of debt; the plan was approved in November 2010.

  Debt exchanged for equity. $940 million of debt → Approximately 97 percent ownership for secured creditors (2010 restructuring)

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• 2011TerreStar Corporation files for Chapter 11 protection

  TerreStar Corporation filed for Chapter 11 bankruptcy protection during the group’s continuing financial reorganization.

  Bankruptcy
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• 2011Dish Network wins TerreStar-1 bankruptcy auction

  Dish Network won the bankruptcy-court auction for TerreStar-1 and later sought FCC approval to use TerreStar wireless spectrum for a broadband service.

  M&AOther
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• 2010FCC approves TerreStar terrestrial wireless deployment

  The company announced that the Federal Communications Commission had approved deployment of a terrestrial network using the S-band frequencies associated with TerreStar-1.

  Regulation
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• 2010TerreStar begins prepackaged bankruptcy restructuring

  TerreStar entered a restructuring supported by EchoStar, under which secured creditors exchanged approximately $940 million of debt for about 97 percent of the company and provided debtor-in-possession financing.

  Bankruptcy
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• 2009Arianespace launches TerreStar-1 satellite

  TerreStar-1 was launched from French Guiana aboard an Ariane 5 rocket to support planned mobile voice, messaging, and data services across North America.

  Product launch
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1. TerreStar Corporation