satellite empire with a bailout of Bermuda-based Iridium LLC, the bankrupt operator of a space-based mobile phone network.

The sudden setback in Iridium's quest to regain credibility with potential subscribers came just hours before a Friday court hearing on a new proposal to sell off Iridium's satellites and other assets in an auction that McCaw was expected to win.

Last month, McCaw partnered with lead Iridium investor Motorola Inc. to provide $5 million in operating cash for Iridium while McCaw's company, Eagle River Investments LLC, weighed a bid to take control of Iridium.

Analysts had speculated McCaw would use Iridium to build a customer base for his two future satellite ventures. The first is ICO Global Communications Ltd., a would-be Iridium rival that McCaw has already agreed to rescue from bankruptcy. The second is Teledesic LLC, a company he co-founded with Microsoft Corp. billionaire Bill Gates to build a satellite-based "Internet in the sky.'' But in a statement issued last Friday, Eagle River said it has determined that Iridium wouldn't make such a good fit with the other ventures after all.

The statement emphasised that 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.

"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,'' said Dennis Weibling, president of Eagle River, which is based in Bellevue, Washington.

Notably, both ICO and Teledesic have yet to launch any satellites, and Eagle River has yet to declare whether it will actually join the two enterprises.

ICO is slated to begin service first, perhaps in 2002, while Teledesic isn't expected to go live until 2004.