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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission file number 0-23044
MOTIENT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 93-0976127 (State or other
jurisdiction of (I.R.S. Employer incorporation or
organization) Identification No.)
10802 Parkridge Boulevard
Reston, VA 20191-5416
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 758-6000
Securities registered pursuant to Section 12(b) of the
Act: None Securities registered pursuant to Section
12(g) of the Act:
Common Stock, $0.01 per value per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The aggregate market value of shares of Common Stock held by non-affiliates at
March 26, 2001 was approximately $85,766,610.
Number of shares of Common Stock outstanding at March 26, 2001: 49,575,413
DOCUMENTS INCORPORATED BY REFERENCE
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. __
MOTIENT CORPORATION
2000 Annual Report on Form 10-K
PART I
This Annual Report on Form 10-K contains and incorporates forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements regarding our expected financial position and operating results, our
business strategy and our financing plans are forward-looking statements. These
statements can sometimes be identified by our use of forward-looking words such
as "may," "will," "anticipate," "estimate," "expect," "project," or "intend."
These forward-looking statements reflect our plans, expectations and beliefs
and, accordingly, are subject to certain risks and uncertainties. We cannot
guarantee that any of such forward-looking statements will be realized.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements ("Cautionary Statements")
include, among others, those described under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Overview," and elsewhere in this annual report, including in conjunction with
the forward-looking statements included in this annual report. All of our
subsequent written and oral forward-looking statements (or statements that may
be attributed to us) are expressly qualified by the Cautionary Statements. You
should carefully review the risk factors described in our other filings with the
Securities and Exchange Commission (the "SEC") from time to time, including our
registration statement on Form S-3 (File No. 333-42104), and our quarterly
reports on Form 10-Q to be filed after this annual report, as well as our other
reports and filings with the SEC. In addition, you are urged to review carefully
the prospectus (including supplements) included within the registration
statement (File No. 333-47570) of XM Satellite Radio Holdings Inc. ("XM Radio"),
and XM Radio's current report on Form 8-K dated February 21, 2001 (File No.
0-27441), each filed with the SEC, which describe certain risk factors relating
to XM Radio's business, as well as XM Radio's other reports filed from time to
time with the SEC.
Our forward-looking statements are based on information available to us today,
and we will not update these statements. Our actual results may differ
significantly from the results discussed.
Item 1. Business.
Overview
We are a nationwide provider of two-way, wireless mobile data services and
mobile Internet services. Our customers use our network and applications for
email messaging and dispatch and voice communications services, enabling
businesses, mobile workers and consumers to transfer electronic information and
messages and access corporate databases and the Internet. Our network is
designed to offer a broad array of wireless data services such as:
o two-way mobile Internet services, including our eLink(sm) wireless email
service and BlackBerry(TM) by Motient wireless email, that provide users
integrated wireless access to a broad range of corporate and Internet email
and Net-based information;
o telemetry systems that connect remote equipment, such as wireless
point-of-sale terminals, with a central monitoring facility;
o mobile data and call dispatch fleet management systems used by large field
service organizations; and
o point-to-multi-point voice communications systems used by natural resource
companies, utilities, government agencies and other entities with mobile
fleets and field workers.
We have been providing terrestrial wireless services to customers for several
years, using a network which possesses four key design attributes: (1) two-way
communication, (2) deep in-building penetration, (3) user mobility, and (4)
broad nationwide coverage. We offer our customers the nation's largest, most
fully-deployed terrestrial wireless two-way data network, comprising over 2,000
base stations that provide service to 430 of the nation's largest cities and
towns, including virtually all metropolitan areas. In 2000, we significantly
improved terrestrial network performance and coverage, adding approximately 200
new base stations. Our satellite in geosynchronous orbit overlays our
terrestrial network, thereby extending the service area coverage of our network
for certain of our transportation service offerings throughout all 50 states and
the Caribbean. The satellite also provides nationwide voice and dispatch
services. As of December 31, 2000, there were approximately 206,000 end users on
our networks, of which 188,000 were using data services and 18,000 were using
voice services.
We believe that our network's rapid message response time, extensive nationwide
coverage and deep in-building penetration are key competitive advantages. Our
business-to-business customers enjoy the advantages of wireless integrated
network applications and mobile Internet services for mission critical
applications, built on a fully redundant network architecture. We are the only
mobile data network to offer guaranteed message delivery to our customers.
Our Investment in XM Radio
In addition to our core wireless business, we have a significant investment in
XM Satellite Radio Holdings Inc. ("XM Radio"), a development stage company. XM
Radio is seeking to become a nationwide provider of digital quality audio
entertainment and information programming transmitted directly by satellites to
vehicle, home and portable radios. XM Radio owns one of two FCC licenses to
provide a satellite digital audio radio service for the United States. XM Radio
is developing its service, which it will call "XM Radio," to provide a wide
variety of music, news, talk, sports and other programming offering up to 100
distinctive channels. XM Radio completed its initial public offering in October
1999.
Recent Developments
Sale of Transportation Business to Aether Systems, Inc.
On November 29, 2000, we sold our retail transportation business to Aether
Systems, Inc. Aether purchased the assets comprising our wireless communications
business for the transportation market, including our satellite-only and
MobileMAX2(TM) multi-mode mobile messaging business. Aether purchased our
existing inventory in the business, and was granted a perpetual license to use
and modify any intellectual property owned by or licensed to us in connection
with the business. The purchase price for these assets and license was $45
million, plus the book value of the inventory. Of the $45 million, $10 million
was deposited in an escrow account and is not payable to us unless certain
criteria with respect to MobileMAX2 are satisfied. In addition, we have the
opportunity to receive up to an additional $22.5 million as an "earn-out"
payment, subject to the satisfaction of certain operating results for the
acquired business during 2001.
To enable Aether to continue to operate the retail transportation business, we
and Aether signed two long-term network airtime agreements, under which Aether
will purchase airtime on our satellite and terrestrial networks. These
agreements have a total value of $20 million. As part of these agreements,
Aether also became an authorized reseller of Motient's eLink (sm) wireless email
service, as well as BlackBerry(TM) by Motient.
Mobile Satellite Ventures LLC
On January 12, 2001, we entered into a definitive agreement, subject to certain
conditions, to amend in several respects the terms of our June 2000 transaction
involving Mobile Satellite Ventures LLC ("Satellite Ventures"). First, the
investors who currently own 20% of Satellite Ventures, Columbia Capital,
Spectrum Equity Investors LP, and Telcom Ventures, L.L.C. (the "Investors"),
agreed, subject to certain conditions, to invest additional money in Satellite
Ventures and increase their stake in Satellite Ventures, as well as having an
option to invest additional money to increase their stake in the future. The
agreement calls for the Investors to pay $50 million (in addition to the $50
million paid by the Investors in June), to become (in the aggregate) the owners
of 40% of the outstanding interests of Satellite Ventures. The Investors will
also have an option (the "Second Option"), exercisable through June 29, 2002 for
an additional $40 million, to increase their ownership in Satellite Ventures to
50.66% (with each individual Investor's stake being less than 20%).
Second, upon closing of the transaction, TMI Communications & Company Limited
Partnership ("TMI"), the Canadian satellite services provider, will contribute
its satellite communications business assets to Satellite Ventures, along with
our satellite business assets as described below. To satisfy Canadian regulatory
requirements, certain of the Canadian assets will be held through a Canadian
license company. In connection with its contribution of assets to Satellite
Ventures, TMI will become the owner of approximately 27% of the outstanding
equity of Satellite Ventures.
Upon closing of these transactions, we will sell our remaining satellite assets
to Satellite Ventures, and will own approximately 33% of the outstanding
interests and be the largest single shareholder of Satellite Ventures.
The consummation of the transactions is subject to receipt of all necessary
regulatory governmental approvals and consents, including, for example,
approvals under the Hart-Scott-Rodino Antitrust Improvements Act, and FCC
approvals with respect to both the transfer of our FCC licenses and Satellite
Ventures' plans for a new generation integrated satellite-terrestrial system,
approvals by Canadian regulatory authorities with respect to the transfer of
TMI's communications licenses to the new venture, and other customary conditions
relating to due diligence review, third party consents, and similar matters. In
certain circumstances, beginning in January 2002, if certain closing conditions
have not been obtained, we and TMI have certain rights to require the closing to
proceed at such time, and if less than all of the Investors wish to close at
such time, we and TMI may, under certain circumstances, purchase the interests
in Satellite Ventures that would have otherwise been acquired by any such
non-participating Investors.
For further details regarding the Satellite Ventures transaction, please refer
to our Current Report on Form 8-K filed with the SEC on January 16, 2001.
Our Strategy
Our objective is to penetrate aggressively the large and growing markets for
mobile Internet data communications services, and wireless telemetry
applications. To meet this objective we intend to:
Leverage Distribution Resources of Strategic Partners. To penetrate our target
markets, we have signed a number of strategic alliances with industry leaders.
We intend to leverage the marketing and distribution resources and large
existing customer bases of these partners to address significantly more
potential customers than we would be able to address on our own. We have a
roster of industry-leading resellers for our eLink wireless email service,
including SkyTel, Metrocall, Aether Systems, and GoAmerica, and we recently
expanded our existing relationship with Research in Motion Limited ("RIM") to
permit RIM to resell its BlackBerry(TM) brand email service on our terrestrial
wireless network. In the telemetry market, we have partnered with a number of
device manufacturers, resellers, and software vendors to develop a variety of
customer-driven telemetry applications, including HVAC system monitoring, energy
monitoring, office and vending machine automation, and wireless point-of-sale
applications. We will continue to seek strategic distribution channels that will
enable us to more fully penetrate our existing markets and access potential new
markets on an incremental basis. In addition, in vertical markets we intend to
exploit cross-selling opportunities using some of our existing large corporate
customers.
Develop New Wireless Applications. We intend to exploit the market potential of
our wireless network by working with value-added partners and major e-business
solutions providers to develop additional innovative wireless applications and
content-based services, including future enhancements to our eLink wireless
email service. As market acceptance and demand for wireless email grows, we
believe users will demand a wide variety of content-based services and features
currently accessible on the Internet. We currently offer content-based services
for use with our eLink service provided by GoAmerica, OracleMobile, Novarra, and
Neomar. We are continuing to broaden and expand those services, as well as
pursuing other similar agreements. In addition, we have formed an important
strategic alliance with IBM, under which we will jointly develop and market
wireless enterprise-wide email and other e-business solutions to corporate
customers, as well as large email hosting Internet Service Providers, Mail
Service Providers, and Applications Service Providers.
Work With Vendors to Develop Less Expensive and More Functional User Devices. We
will continue to work with vendors to develop new generations of user devices
and applications that combine improved functionality and convenience at a lower
price. We recently announced the introduction of the new RIM 857 wireless
handheld device for use on our network. We also recently announced an agreement
with Wavenet International Ltd. to develop a wireless accessory that will bring
our network services to other existing popular PDA platforms, such as the
popular palm-held devices. In conjunction with this effort, we will make certain
changes to our switching infrastructure which may allow us to offer a wider
variety of handheld devices and additional applications. We will continue to
incorporate inexpensive, off the shelf software or free software in our
services. We believe that lower price points will accelerate the acceptance and
adoption of our services in our traditional markets, and will also enable us to
better penetrate our targeted new wireless markets. By working with suppliers
and other business partners and by making strategic software and hardware
investments, we have significantly lowered the total cost of ownership of our
products. At the same time, we have improved the functionality of our devices
and made them smaller and more convenient.
Capitalize on, and Enhance, Our Network's Technical Advantages. We have been
providing terrestrial wireless services to customers for several years, using
the nation's largest, most fully deployed terrestrial wireless two-way data
network. Unlike many competitors who are in the process of building limited
city-wide or regional terrestrial networks, or planning to launch satellites, we
have deployed a national network that is well tested and reliable, and our
future network expansion requirements are expected to arise primarily from
increased customer demand. We believe that our terrestrial network provides key
competitive advantages currently unmatched by any competitor: broad nationwide
geographic coverage, guaranteed two-way message delivery, superior
responsiveness, and deep in-building penetration with superior performance
characteristics when compared with cellular-based architectures or
satellite-only alternatives. We also believe that our two-way messaging and
wireless email products are superior to currently available "two-way paging"
services, due to the full, two-way messaging capabilities that our network
enables. We will continue to enhance our terrestrial network's capacity and
coverage by acquiring additional frequency, building more base stations, both in
existing and new geographic markets, and selectively upgrading the technological
capabilities of existing base stations.
Our Wireless Service Offerings
We offer wireless services in two broad categories: terrestrial data services,
including eLink wireless email, and satellite voice and dispatch services. In
addition, through Aether Systems, we also serve the transportation market with
multi-mode and satellite-only wireless data services. We describe each of these
categories below.
Terrestrial Data Services
General. Terrestrial data services are the core of our wireless business. These
services include our eLink wireless email service and BlackBerry(TM) by Motient
email. We target our data applications to both vertical and horizontal markets.
Applications include wireless email, Internet and Intranet access, fax, paging,
peer-to-peer communications, asset tracking, dispatch, point-of-sale, and other
telemetry applications. There are over 30 types of subscriber devices available
from more than 15 manufacturers for use on our terrestrial network. These
devices include RIM handheld devices, ruggedized laptops, handheld digital
assistants, and wireless modems for PC's. We have developed proprietary
software, and we have engaged a variety of other software firms to develop other
"middleware," to minimize our customers' development efforts in connecting their
applications to our network. Also, a number of off-the-shelf software packages
enable popular email software applications on our network.
In the field service market, long-standing customers such as IBM, Sears, Pitney
Bowes, and NCR use our customized terrestrial data applications to enable their
mobile field service technicians to stay connected. These customers value the
broad, nationwide coverage and deep in-building penetration of our terrestrial
data network.
Our largest single terrestrial data application is in the package delivery
market, where UPS has registered for service approximately 43,000 of its third
generation package tracking devices on our network, under a multi-year agreement
with us that calls for UPS to deploy approximately 50,000 devices on our network
by the end of 2001. UPS has recently informed us that it expects to expand the
use of this application on our network over the next several years, and UPS
anticipates that it may eventually deploy up to 70,000 units (in total).
eLink Wireless Email. Our eLink wireless email service provides mobile users
with integrated wireless access to a broad range of corporate and Internet email
and personal information management (PIM) applications. The eLink service uses
wireless handheld devices manufactured by RIM, including the RIM 850 and RIM 857
wireless handhelds. These devices feature a full QWERTY keyboard and a
thumbwheel which functions as a mouse.
We currently offer two versions of eLink, "Agent(sm)," and "Messenger(sm)."
Agent and Messenger may also be combined, offering users the functionality of
both applications on a single handheld device.
Users of our eLink Agent service can send and receive email messages, using
their existing corporate or Internet email address, over our terrestrial
network, as long as the user's email system is compliant with the industry
protocol known as Post Office Protocol 3, or POP 3. We also added an IMAP 4
solution for eLink in 2000, providing greater flexibility to customers by adding
a more robust Internet email application protocol. Outgoing mail sent from the
device appears to have come from the user's desktop PC. eLink synchronizes with
a user's desktop PC so that full calendar, task list, and contact information
can be instantly swapped to and from the device. To address the security needs
of corporate customers, eLink Agent is also offered in a self-contained format
so that the corporate customer can install the network gateway software behind
its firewall on servers located on the customer's site.
Our eLink Messenger service assigns a unique email address (separate from the
user's corporate or Internet email address), allowing users to send and receive
wireless email messages independent of other email systems. In addition, the
Messenger service allows users to send faxes from their device, and the device
also functions as a pager. Messenger also enables the user to synchronize their
device with calendar, task list, and contact information from the user's desktop
PC.
We are actively working on a number of innovative enhancements to our eLink
service that will enhance both security and functionality. Also, in 2000 we
expanded our network's coverage for eLink users by offering roaming services in
Canada through an agreement with the Canadian network operator Bell Mobility.
BlackBerry(TM) by Motient. BlackBerry(TM) by Motient is a wireless solution
specifically designed for corporate environments using Microsoft(r) Exchange.
BlackBerry has substantially the same functionality as our eLink service,
including wireless email, as well as a variety of similar PIM functions and
applications. BlackBerry tightly integrates with Microsoft Exchange email
accounts. During 2001, in concert with our partner Research in Motion, we also
expect to offer a version of BlackBerry that integrates with the Lotus Notes
email platform. The availability of an integrated Lotus Notes email extension
significantly expands the available market for this offering.
The BlackBerry desktop software installs and runs on the user's desktop PC. It
is an integrated suite of applications that provides organizer synchronization,
folder management tools, email filtering capabilities, information backup
utilities, and an application loader.
BlackBerry is designed to provide a high level of security. Encryption occurs
between the handheld and corporate email system to ensure message integrity.
BlackBerry incorporates Triple DES encryption technology to meet stringent
corporate security guidelines for remote email access.
We are authorized to resell BlackBerry(TM) by Motient pursuant to an agreement
with RIM. RIM also resells BlackBerry(TM) by Motient on our network through a
variety of VARs and resellers, and RIM has committed to place 50,000 BlackBerry
units on our network over the next 12 months. We also offer roaming services in
Canada to our BlackBerry(TM) by Motient customers through an agreement with the
Canadian network operator Bell Mobility.
eLink Fortified with Yahoo! eLink Fortified with Yahoo! is a new service that
combines our eLink wireless email service with Yahoo! content and services.
Using the RIM 850 wireless handheld device, this service provides users with
mobile, wireless access to a variety of Yahoo! services. This service is
currently available to the consumer market through a number of retail channels,
including several online channels, and we are working with Yahoo! to expand our
distribution channels for this service.
Telemetry. We have partnered with a variety of resellers, device manufacturers,
and software vendors in the telemetry market. These partners integrate
customer-specific devices and systems with our network to provide a wireless
means of transmitting data from a fixed or mobile site to a central monitoring
facility. Applications include HVAC system monitoring, wireless point-of-sale
systems, energy monitoring, vending and office machine automation, and
security/alarm monitoring.
Pricing of Terrestrial Data Services. Terrestrial data service customers are
charged a monthly access fee. In addition to this access fee, users pay for
usage depending on the number of kilobytes of data transmitted. Our pricing
plans offer a wide variety of volume packaging and discounts, consistent with
customer demand and market conditions. The average monthly bill for our data
customers (other than eLink) range from below $10 for high unit quantity, low
traffic volume, off-peak telemetry users, to over $50 for high-volume, peak
users in the field service market. Our average monthly revenue per data user
(other than eLink) in the fourth quarter of 2000 was approximately $30.00.
Satellite Voice and Dispatch Services
Our satellite telephone service supports two-way circuit-switched voice,
facsimile and data service. We offer a wide range of satellite phone
configurations developed to address the particular communications needs of our
customers. We market telephone service to businesses that have nationwide
coverage requirements, including those operating in geographic areas that lack
significant terrestrial coverage, such as natural resource companies, utilities
and telecommunications companies that require backup and restoral support,
public safety organizations, and maritime users seeking expanded or less costly
coverage for both commercial and recreational vessels. Our significant satellite
telephone customers include the Red Cross, FEMA, Stratos Global, Western Atlas
Logging, and Haliburton.
Our satellite dispatch service provides point-to-multi-point voice
communications among users in a customer-defined group using a push-to-talk
device. This service facilitates team-based contingency-driven operations of
groups operating over wide and/or remote areas. Our targeted customer groups
include oil and gas pipeline companies, utilities and telecommunications
companies with outside maintenance fleets, state and local public safety
organizations, and public service organizations who need to seamlessly link
resources on a nationwide basis. Our significant satellite dispatch customers
include AT&T and MCI WorldCom.
Satellite telephone users are charged both fixed access and variable usage fees.
Our satellite dispatch customers are charged a fixed access fee for virtually
unlimited usage. Monthly bills for satellite voice customers range from over
$100 for high volume users to a low of $35 for certain public safety and
emergency restoral applications. Our average monthly revenue per voice user in
the fourth quarter of 2000 was approximately $46.00.
Multi-Mode and Satellite-Only Wireless Data Services for the Transportation
Market
As discussed above in "Recent Developments," in November 2000 we sold our retail
transportation business to Aether Systems, Inc. Through Aether Systems, we
continue to serve the transportation market with multi-mode and satellite-only
wireless data services. Our multi-mode service uses our terrestrial and
satellite network to provide "least-cost-routing" for customers' two-way data
communications. The multi-mode service does this by actively seeking connections
to the lower cost terrestrial network before automatically switching to our
satellite network. By using both networks, the multi-mode service offers
complete nationwide coverage. Our satellite-only messaging service is an
alternative to the multi-mode service, for customers in the long-haul and
less-than-load trucking segments.
Our Customers
As of December 31, 2000, there were approximately 206,000 user devices in
service on our network and an established customer base of large corporations in
the following market segments:
Percentage of
Market Segments Total Units
--------------- -----------
Transportation and package delivery...... 35%
Field service............................ 22
Telemetry and point of sale.............. 9
eLink and other email .................. 22
Maritime and other....................... 12
Total 100%
----
As of December 31, 2000, our customer base included the following product
segments:
Percentage of
Product Segments Total Units
---------------- -----------
Data:
Terrestrial only:
eLink and other email.................. 22%
Other.................................. 53
Multi-mode and Satellite-only.......... 12
Private network customers.............. 4
Voice:
Telephony and Dispatch................. .. 9
Private network customers............... 0
Total 100%
----
Marketing and Distribution
We market our wireless services through strategic distribution partners,
resellers, our direct sales force, and dealers.
Strategic Partners. To penetrate new wireless data markets with significant
growth potential, we have signed a variety of strategic alliances with key
industry leaders. We intend to leverage the marketing and distribution resources
and large existing customer bases of these partners to address significantly
more potential customers than we would be able to address on our own. We have a
roster of industry-leading resellers for our eLink wireless email service,
including SkyTel, Metrocall, Aether Systems and GoAmerica, and we recently
expanded our existing relationship with Research in Motion Limited ("RIM") to
permit RIM to resell its BlackBerry(TM) brand email service on our terrestrial
wireless network. We have formed similar distribution alliances with Internet
service providers and with outsourced email providers Navipath and United
Messaging. We have also formed an important strategic partnership with IBM,
under which we will jointly develop and market wireless enterprise-wide email
and other e-business solutions to corporate customers. In the telemetry market,
we have partnered with a number of device manufacturers, resellers, and software
vendors to develop a variety of customer-driven telemetry applications,
including for HVAC system monitoring, utility reading, office and vending
machine automation, and wireless point-of-sale applications. Key partners in the
wireless point-of-sale and vending segments include US Wireless Data, eVendNet,
and C-Star. We are continuing to seek additional strategic distribution channels
that will enable us to more fully penetrate our existing markets and access
potential new markets on an incremental basis.
Resellers. In addition to strategic distribution partners, we also use resellers
to distribute our services and to resell capacity on our network. Typically, we
use resellers in specialized markets. In the maritime voice market, Stratos
Global Corporation is our exclusive reseller, and in the over-the-road
transportation market, Aether Systems is our exclusive reseller. In the
telemetry market, we sell capacity on our network to resellers such as ABB,
Ameritech, Security Link and Detection Systems, who integrate their customers'
equipment and systems with our network to provide a customized application. We
also use several specialized government resellers, one of which has included
certain of our products and services on its General Services Administration
schedule. We also sell bulk satellite capacity to private network customers who
use this capacity to support their own proprietary networks and products.
Direct Sales Force. We have a direct sales force that is experienced in selling
our various wireless services. Historically, our direct sales force has focused
on the requirements of business customers who need customized applications. With
the launch of our eLink wireless email service, we have also built up a
significant sales force concentrated on promoting our eLink (sm) offering to
vertical markets. Our corporate accounts group is focused on promoting our eLink
wireless email service to wirelessly enable enterprise-wide email systems for
Fortune 500 accounts. Sales to corporate account targets generally require a
sustained marketing effort lasting several months. Prior to making a buying
decision, a majority of the accounts exercise a due diligence process where
competitive alternatives are evaluated. Our employees often assist in developing
justification studies, application design support, hardware testing, planning
and training. In the wireless email area, our internal sales force has been key
to our ability to convey crucial customer feedback to our product management
team, enabling us to identify and develop new product and service features.
Dealers. We use dealers to market and sell our satellite voice and dispatch
services. These dealers typically have strong business relationships with
regional public safety entities, as well as with smaller field service fleets.
We believe that opportunities exist to capitalize on the strengths of this
channel by introducing a low-cost terrestrial data device with minimum
integration requirements. Typically these dealers serve as agents for sales and
service and do not provide billing and collection services. These dealers are
generally compensated with a standard activation fee, plus a modest percentage
of the service revenue for which they are responsible.
Our Network
Our wireless network consists of (1) the largest two-way terrestrial data
network in the United States, providing service to 430 of the nation's largest
cities and towns, including virtually all metropolitan areas, and (2) a
satellite in geosynchronous orbit with coverage of the continental United
States, Alaska, Hawaii, Puerto Rico, the U.S. Virgin Islands and U.S. coastal
waters and airspace. The network provides a wide range of mobile data and voice
services. In 2000, we expanded our network coverage for our eLink and
BlackBerry(TM) by Motient customers to include Canada, through a roaming
agreement with the Canadian network operator, Bell Mobility.
Users of our network access it through subscriber units that may be portable,
mobile or stationary devices. Generally, subscriber units enable either data or
voice communications and are designed to operate over either the terrestrial
data-only network or the satellite network, which provides both voice and data
communications.
Subscriber units receive and transmit wireless data or voice messages from
either terrestrial base stations or our satellite. Terrestrial messages are
routed to their destination via data switches that we own, which connect to the
public data network. Satellite messages are routed to their destination via
satellite data and voice switches, located at our headquarters, which connect to
the public data and switched voice networks. A data switch located in
Lincolnshire, Illinois links the terrestrial and satellite networks for the
delivery of our multi-mode data service offered to transportation customers
through Aether Systems, our reseller in that market.
Our terrestrial network delivers superior in-building penetration, completion
rates and response times compared to other wireless data networks through the
use of a patented single frequency reuse technology developed by Motorola.
Single frequency reuse technology enables multiple base stations in a given area
to use the same frequency. As a result, a message sent by a subscriber can be
received by a number of base stations. This technology contrasts with more
commonly used multiple frequency reuse systems, which provide for only one
transmission path for a given message at a particular frequency. In comparison
with multiple frequency reuse systems, our technology provides superior
in-building penetration and response times and enables us to incrementally
deploy additional capacity as required, instead of in larger increments as
required by most wireless networks.
Our satellite has an expected end of service date of 2006 subject to potential
malfunctions and other factors. We have an agreement with TMI, which owns and
operates a technologically identical satellite, for back up restoral capacity if
our satellite fails or we need additional capacity. In return, we have agreed to
provide TMI with similar back-up service on our satellite.
Equipment and Supplier Relationships
We have contracts with a variety of vendors to supply equipment configurations
designed to meet the requirements of specific end-user applications. We continue
to pursue enhancements to these devices that will result in additional desirable
features and reduced cost of ownership. Although many of the components of our
products are available from a number of different suppliers, we rely on a
relatively small number of key suppliers. The devices used with our services
generally are subject to various product certification requirements and
regulatory approvals before they are delivered for use by our customers.
Our eLink wireless email services use handheld devices manufactured by RIM,
including the RIM 850 and RIM 857 wireless handhelds. These devices include a
full QWERTY keyboard and feature a unique thumb wheel that functions similarly
to a PC mouse. RIM also manufactures modems designed to be integrated into
handheld field service terminals, telemetry devices, utility monitoring and
security systems and certain other computing systems. Our supply arrangements
with RIM are not exclusive, and RIM manufactures similar hardware products for
other companies, including Cingular Wireless (formerly BellSouth Wireless Data),
a principal competitor in the two-way wireless email market segment.
In addition to the messaging devices manufactured by RIM, there are currently
over 30 other types of subscriber units available from approximately 15
manufacturers that can operate on our terrestrial network. Examples of portable
subscriber units include ruggedized laptop computers, small external modems,
handheld or palmtop "assistants," and pen based "tablets."
We are also working with other device manufacturers and software developers to
bring our network services to other existing popular PDA and wireless email
platforms, such as palm-held and handheld devices.
Mobile satellite voice telephones are offered in a number of different
configurations that deliver a variety of features and options to meet specific
market needs. The primary suppliers of our voice terminal equipment have been
Audio Intelligence Devices, Inc. ("AID"), the successor to Westinghouse Wireless
Solutions, Inc., and Mitsubishi Electronics America. We have no arrangements
with AID or Mitsubishi for the delivery of any new voice terminal equipment,
and, when our remaining voice inventory is depleted, our customers who need
voice equipment will need to buy such equipment from AID, Mitsubishi or another
manufacturer whose equipment works on our satellite network, through such
vendors' designated distribution channels. Other vendors are exploring putting
new voice terminal equipment on our network and we are committed to working with
such vendors to facilitate their development efforts with a view toward
certifying new equipment on our network. We continue working with AID and
Mitsubishi to provide support and service to our voice customers.
Compaq Computer provides the terrestrial network switching computers under a
multi-year lease that extends through 2003, while AT&T provides network services
including a nationwide wireline data network, and leased sites which house
regional switching equipment for our terrestrial network.
We also have a relationship with AT&T as our vendor for switched inbound and
outbound public switched telephone network services. The satellite system
terminates calls from its telephone product via both the AT&T and Sprint
networks.
We have an agreement with Motorola under which Motorola provides certain
continued support for the terrestrial network infrastructure, and ongoing
maintenance and service of the terrestrial network base stations. An unrelated
third party also provides certain lease administration services for a portion of
the terrestrial network base station site leases.
The platform for our voice products, the communications ground segment, depends
upon products from multiple vendors, most of which are generally commercially
available. Northern Telecom manufactures and supports the core voice switch.
Digital Equipment Corporation supplies the computing platform that runs the
communications ground segment.
We own certain patents, technical data and other intellectual property that has
been developed in connection with our communications network. We jointly own
certain intellectual property with TMI, and we license intellectual property
from other vendors for operation of our network. We believe our ownership of and
rights to intellectual property for our system is sufficient for our business
purposes.
The terrestrial network, and certain of its competitive strengths such as deep
in-building penetration, is based upon single frequency reuse technology.
Motorola holds the patent for the single frequency reuse technology. We have
entered into support agreements with Motorola to provide for certain support of
the operations of the terrestrial network. However, there can be no assurance
that Motorola will not enter into arrangements with our competitors, or that if
it does, such arrangements would not harm our business.
Competition
The wireless communications industry is highly competitive and is characterized
by constant technological innovation. We compete by providing unparalleled
geographic coverage, deep in-building penetration, and guaranteed reliability.
These features distinguish us from the competition. Our wireless solutions are
used by businesses that need critical customer and operational information in a
mobile environment.
We offer multiple business lines and compete with a variety of service
providers, from small startups to Fortune 500 companies. Our competitors include
service providers in several markets - dedicated mobile data, PCS/cellular,
narrowband PCS/enhanced paging, emerging technology platforms, and mobile
satellite services.
Dedicated Mobile Data. Companies using packet data on dedicated mobile networks
provide wireless data services in direct competition with a number of our data
products. In a packet data environment messages are transmitted in short bursts.
Competitors using this technology include Cingular Wireless (formerly BellSouth
Wireless Data) and Metricom. Cingular Wireless operates a terrestrial-only
network that provides data services to customers in field service,
transportation and utility industries, and two-way messaging service to the
horizontal market. We believe that our network provides broader coverage and
superior in-building penetration than the Cingular network. In addition, we
continue to upgrade our network in major metropolitan areas to offer broader
geographic coverage and faster speeds. Metricom's Ricochet service provides
wireless access to the Internet, private intranets, local area networks, and
email. The Metricom modem's bulk and limited hands-off capability between
transmitter sites limits the mobility of the user. Metricom's service is
currently available in parts of 14 metropolitan areas. Coverage within a
metropolitan area is often limited to the dense urban portions of a given market
as well as airports. The company recently announced postponement of additional
deployments outside of its most significant existing markets.
RIM offers BlackBerry(TM), a wireless email service, that runs on the Motient
and Cingular networks. BlackBerry(TM) offers wireless email and Personal
Information Management (PIM) functionality. Until now, BlackBerry(TM) has only
served users in a Microsoft Exchange environment; however, RIM recently
announced a Lotus Notes version that will soon be available. Because RIM offers
BlackBerry on the Motient and Cingular networks, RIM is both a reseller and a
competitor. With eLink, BlackBerry(TM) by Motient, and eLink service Fortified
with Yahoo!, as well as our arrangements with other resellers and content
providers, we believe that we offer the most complete array of wireless internet
and wireless email services currently available.
PCS/Cellular. PCS and cellular services presently serve the majority of mobile
communications users in the United States, with more than 95 million subscribers
at the end of 2000. There are a large number of cellular and PCS systems
providing voice service throughout most of the United States, with no single
competitor providing the seamless, national footprint that is available through
our network. As the average voice revenue per subscriber declines, wireless
voice carriers are beginning to focus on delivering wireless data services in an
effort to differentiate their voice products and to retain customers. The first
of these services is the Sprint PCS Wireless Web. Sprint allows circuit switched
wireless web access to several content services using the phone's numeric
keypad. Other voice carriers are also beginning to offer wireless data services
through mobile phones, but we believe the limitations of today's PCS and
cellular features and networks will limit competition in our target markets.
Users must have a digital phone and service, and must type messages using the
awkward numeric keypad. They do not have access to data services while roaming
onto analog networks, which detracts from the user experience. Pricing today is
based on per-minute charges that can accrue quickly as users are required to log
on to the Sprint web browser and use Yahoo! to send or receive email, or access
content services.
Cellular digital packet data (CDPD), the cellular industry's only packet data
service, is available in fewer geographic markets than our service, and covers
approximately 55% of the U.S. population. Expansion of the CDPD networks has
slowed considerably as carriers such as AT&T and Verizon Wireless look to other
means to provide data services to their voice customers. Some cellular and PCS
carriers offer short message capabilities, depending on the protocol they use,
and expect to offer larger capacity packet data services in the next few years.
Narrowband PCS/Enhanced Paging. Most traditional paging companies, such as
SkyTel, Arch and Metrocall, are expanding beyond their traditional alpha/numeric
paging into two-way wireless messaging services using narrowband PCS. Typical
applications include wireless email, near-real time delivery of stock quotes and
other time sensitive information, and mobile workforce communications. Although
some paging companies have begun to offer limited two-way messaging services,
initial challenges in coverage, responsiveness and throughput, as well as the
high cost of service, currently limit their adoption by our targeted customers.
These services primarily compete with our eLink wireless email services. We have
signed reseller agreements with SkyTel and Metrocall under which these parties
market our eLink services to their customers. We have similar reseller
agreements with additional national distribution partners.
Emerging technology platforms. A variety of new technologies, devices and
services will result in new types of competition for us in the near future. The
emergence of new protocols such as WAP (Wireless Access Protocol) and Bluetooth
is expected to enable the use of the Internet as a platform to exchange
information among people with different devices running on different networks.
WAP defines a protocol for altering Internet sites to make their content more
readily accessible to mobile user devices, where bandwidth is limited. Mobile
telephone users have adopted this protocol, as WAP provides Internet content
access in a similar manner to our products. Bluetooth is a wireless networking
technology that will enable communications between disparate devices in a home
or office setting. Manufacturers such as Nokia, Ericsson and Qualcomm are
developing mobile phones and devices to work with the WAP and Bluetooth
protocols. Within the next few years, it is expected that new, so-called "2.5G"
and "3G" technologies, new forms of CDMA, TDMA and GSM, will increase the data
capabilities of voice and data services and may have a competitive impact on
portions of our business.
The growth in wireless data opportunities has led traditional hardware
manufacturers and software developers to invest in technologies that will allow
the migration of core products and services to a mobile environment. Companies
like IBM, Oracle, Siebel, Sun and Lucent have made significant investments in
the area of mobility to guarantee their place in both the desktop and
mobile/handheld computing environments.
Although the emergence of new technologies and new players expands our
competitive environment, we believe it provides more of an opportunity than a
threat. For example, in the case of WAP, we have incorporated the protocol into
our Yahoo! offering and our Internet and Intranet browser applications for use
with our eLink service. We have also formed a strategic partnership with IBM to
develop mobile services that will be sold into IBM's enterprise customers and
users of Lotus Notes. Through IBM and other partners, we intend to be able to
offer a full range of services - from simple wireless email to customized
wireless data solutions - to our target customers in the enterprise market.
Mobile Satellite Services. A number of companies are selling or developing
mobile satellite services that compete with our satellite voice and data
services. We do not view these mobile satellite services as competitors to the
terrestrial component of our network because they lack the extensive urban and
in-building coverage we provide.
We face competition in the limited satellite voice and data services market from
several companies that utilize a variety of satellite technologies. TMI received
permission in November 1999 from the FCC to offer mobile messaging services in
the United States using its Canadian-licensed satellite. Its offerings are
similar to many of our satellite voice and data services. As described above in
"Recent Developments," we have agreed to combine our satellite communications
business with TMI's in Satellite Ventures. This transaction is subject to
various conditions, and is not expected to close for at least six to nine
months. During the period prior to closing of this transaction, we expect to
face competition from TMI in the United States in the mobile satellite services
segment. Globalstar launched its satellite communications service in 2000,
providing voice and data services in limited areas of the world, including the
areas covered by our satellite. Globalstar's system consists of a constellation
of forty-eight low earth orbiting satellites that covers more than eighty
percent of the globe. Although Globalstar offers or plans to offer global voice,
fax, and data services, we do not foresee Globalstar providing a nationwide
dispatch service such as ours or a data service in excess of 9600 bps. The
Globalstar system is a more complex and expensive system than the satellite
component of our network, and offers some advantages over our voice services
such as smaller handheld telephones, global coverage, and in certain
circumstances, reduced transmission delay. Globalstar's subscriber growth, as
publicly reported, has been slower than originally projected.
In addition to complex non-geosynchronous systems designed to provide mobile
voice services, there are relatively simple "little" low earth orbit systems
that would provide only low-speed packet data services. These systems, including
ORBCOMM Global, L.P., and LEO One USA, have access to comparatively limited
spectrum and are expected to compete for customers who require specialty
applications such as asset tracking services for untethered trailers.
Employees
At February 28, 2001, we had 482 employees. None of our employees is represented
by a labor union. We consider our relations with our employees to be good.
Our Investment in XM Radio
In addition to our core wireless business, we have a significant investment in
XM Satellite Radio Holdings Inc., a development stage company. XM Radio is
seeking to become a nationwide provider of digital quality audio entertainment
and information programming transmitted directly by satellites to vehicle, home
and portable radios. XM Radio owns one of two FCC licenses to provide a
satellite digital audio radio service for the United States. XM Radio is
developing its service, which it will call "XM Radio," to provide a wide variety
of music, news, talk, sports and other programming offering up to 100
distinctive channels.
XM Radio has a separate management team and a business plan that is distinct
from our core wireless business. To date, XM Radio has received substantially
all of its required funding from independent sources in exchange for debt and
equity interests in XM Radio. We are not required to provide any additional
funding to XM Radio, and we currently expect that XM Radio will continue to
obtain substantially all of its required funding from other sources.
Accordingly, we do not expect that development of the XM Radio business will
have a material effect on our consolidated liquidity, capital resources or cash
flows.
For more details about XM Radio, its business and a discussion of certain risk
factors related to its business plan, readers are urged to review carefully the
prospectus (including supplements) included within XM Radio's registration
statement (File No. 333-47570) and current report on Form 8-K dated February 21,
2001 (File No. 0-27441), as well as XM Radio's other reports filed with the SEC
from time to time.
Regulation
The satellite network and terrestrial two-way wireless data network used in our
core wireless business are regulated to varying degrees at the federal, state,
and local levels. Various legislative and regulatory proposals under
consideration from time to time by Congress and the FCC have in the past
materially affected and may in the future materially affect the
telecommunications industry in general, and our wireless business in particular.
The following is a summary of significant laws, regulations and policies
affecting the operation of our core wireless business. In addition, many aspects
of regulation at the federal, state and local level currently are subject to
judicial review or are the subject of administrative or legislative proposals to
modify, repeal, or adopt new laws and administrative regulations and policies.
Neither the outcome of these proceedings nor their impact on our operations can
be predicted at this time.
General Regulatory Matters Applicable to Our Wireless Business
The ownership and operation of our satellite and terrestrial networks are
subject to the rules and regulations of the FCC, which acts under authority
established by the Communications Act and related federal laws. Among other
things, the FCC allocates portions of the radio frequency spectrum to certain
services and grants licenses to and regulates individual entities using that
spectrum. We operate pursuant to various licenses granted by the FCC.
We are a Commercial Mobile Radio Service provider and therefore are regulated as
a common carrier. We must offer service at just and reasonable rates on a
first-come, first-served basis, without any unjust or unreasonable
discrimination, and we are subject to the FCC's complaint processes. The FCC has
forborne from applying numerous common carrier provisions of the Communications
Act to Commercial Mobile Radio Service providers. In particular, we are not
subject to traditional public utility rate-of-return regulation, and we are not
required to file tariffs with the FCC for our domestic services.
As a provider of interstate telecommunications services, we are required to
contribute to the FCC's universal service fund, which supports the provision of
affordable telecommunications to high-cost areas, and the provision of advanced
telecommunications services to schools, libraries, and rural health care
providers. Under the FCC's current rules, we are required to contribute a
percentage of the end-user telecommunications revenues we derive from the retail
sale of interstate telecommunications services. Currently excluded from a
carrier's universal service contribution base are end-user revenues derived from
the sale of information and other non-telecommunications services and wholesale
revenues derived from the sale of telecommunications. A significant portion of
the terrestrial network revenue falls within the excluded categories, thereby
reducing our universal service assessments. Current rules also do not require
that we impute to our contribution base retail revenues derived when we use our
own transmission facilities to provide a service that includes both information
service and telecommunications components. There can be no assurances that the
FCC will retain the exclusions described herein or its current policy regarding
the scope of a carrier's contribution base. We may also be required to
contribute to state universal service programs. The requirement to make these
state universal service payments, the amount of which in some cases may be
subject to change and is not yet determined, may have a material adverse impact
on the conduct of our business.
We are subject to the Communications Assistance for Law Enforcement Act
("CALEA"). Under CALEA, we must ensure that law enforcement agencies can
intercept certain communications transmitted over our networks. We must also
ensure that law enforcement agencies are able to access certain call-identifying
information relating to communications over our networks. The deadline for
complying with the CALEA requirements and any rules subsequently promulgated was
June 30, 2000. We have pending with the FCC a petition for an extension of the
deadline with respect to certain of our equipment, facilities, and services and
we have been working with law enforcement to arrive at an agreement on a further
extension of this deadline and on an extension of the deadline for other Motient
equipment, facilities, and services. Possible sanctions for noncompliance
include substantial fines and possible imprisonment of company officials. It is
possible that we may not be able to comply with all of CALEA's requirements or
do so in a timely manner. Where compliance with any requirement is deemed by the
FCC to be not "reasonably achievable," we may be exempted from such requirement.
In addition, CALEA establishes a federal fund to compensate telecommunications
carriers for all reasonable costs directly associated with modifications
performed by carriers in connection with equipment, facilities, and services
installed or deployed on or before January 1, 1995. For equipment, facilities,
and services deployed after January 1, 1995, the CALEA fund is supposed to
compensate carriers for any reasonable costs associated with modifications
required to make compliance "reasonably achievable." It is possible that all
necessary modifications will not qualify for this compensation and that the
available funds will not be sufficient to reimburse us. The requirement to
comply with CALEA could have a material adverse effect on the conduct of our
business.
As a matter of general regulation by the FCC, we are subject to, among other
things, payment of regulatory fees and restrictions on the level of radio
frequency emissions of our systems' mobile terminals and base stations. Any of
these regulations may have an adverse impact on the conduct of our business.
Our FCC licenses are subject to restrictions in the Communications Act that (1)
certain FCC licenses may not be held by a corporation of which more than 20% of
its capital stock is directly owned of record or voted by non-U.S. citizens or
entities or their representatives and (2) that no such FCC license may be held
by a corporation controlled by another corporation ("indirect ownership") if
more than 25% of the controlling corporation's capital stock is owned of record
or voted by non-U.S. citizens or entities or their representatives, if the FCC
finds that the public interest is served by the refusal or revocation of such
license. However, with the implementation of the Basic Telecommunications
Agreement, negotiated under the auspices of the World Trade Organization ("WTO")
and to which the United States is a party, the FCC will presume that indirect
ownership interests in our FCC licenses in excess of 25% by non-U.S. citizens or
entities will be permissible to the extent that the ownership interests are from
WTO-member countries. The Basic Telecommunications Agreement and this
presumption regarding indirect ownership by non-U.S. citizens or entities do not
apply to XM Radio's satellite radio license. If the 25% foreign ownership limit
is exceeded, the FCC could potentially take a range of actions which could harm
our business.
Our Terrestrial Network
Our terrestrial network consists of base stations licensed in the 800 MHz
Business Radio and Specialized Mobile Radio ("SMR") services. The terrestrial
network is interconnected with the public switched telephone network.
The FCC's licensing regime in effect when the majority of authorizations used in
the terrestrial network were issued provided for individual, site-specific
licenses. The FCC has since modified the licensing process applicable to SMR
licenses in the band. SMR licenses are now issued by auction in wide-area,
multi-channel blocks. The geographic area and number of channels within a block
vary depending on whether the frequencies are in the so-called "Upper 200" SMR
channels, the "General Category," or the "Lower 80." In addition, wide-area
auction winners in the Upper 200 have the right to relocate incumbent licensees
to other "comparable" spectrum. Auction winners in the General Category and
Lower 80 do not have these same relocation rights and must afford protection to
incumbent stations. Incumbent stations may not, however, expand their service
areas.
Wide-area auction winners have substantial flexibility to install any number of
base stations including, in the case of the General Category and Lower 80
channels, base stations that operate on the same channels as incumbent
licensees. We were an incumbent in the Upper 200 and remain an incumbent on
certain General Category channels. We are also a General Category and Lower 80
auction winner. Although the FCC requires General Category and Lower 80
geographic licensees to protect incumbents from interference, there is some
concern that such interference may occur and that practical application of the
interference-protection rules may be uncertain.
We believe that we have licenses for a sufficient number of channels to meet our
current capacity needs on the terrestrial network. We recently received
authorizations for 33 wide-area licenses won in the General Category auction. We
were also the high bidder on two Lower 80 licenses. To the extent that
additional capacity is required, we may participate in other upcoming auctions
or acquire channels from other licensees. As part of its new licensing regime,
the FCC permits wide-area geographic licensees, with prior FCC approval, to
assign a portion of their spectrum ("spectrum disaggregation") or a portion of
their geographic service area ("geographic partitioning"), or a combination of
the two, to another entity. While this authority may increase our flexibility to
acquire additional base stations, the practical utility of these options is
uncertain at this time.
We operate the terrestrial network under a number of waivers involving the FCC's
technical rules, including rules on station identification, for-profit use of
excess capacity, system loading, and multiple station ownership. Several of
these waivers were first obtained individually by IBM and Motorola, which
operated separate wireless data systems until forming the ARDIS joint venture in
1990. The FCC incorporated a number of these waivers into its regulations when
it implemented Congress's statutory provision creating the Commercial Mobile
Radio Service classification, and we no longer require those waivers. As of
March 3, 1999, we completed our planned construction of base stations for which
extended implementation was granted by the FCC in 1996.
Our Satellite Network
We are licensed by the FCC to provide a broad range of mobile voice, data and
dispatch services via satellite to land, air and sea-based customers in a
service area consisting of the continental United States, Alaska, Hawaii, Puerto
Rico, the U.S. Virgin Islands and U.S. coastal waters and airspace. We are also
authorized to provide fixed site voice and data services via satellite to
locations within this service area, so long as such services remain incidental
to our mobile communications services. We are authorized to build, launch and
operate three geosynchronous satellites in accordance with a specified schedule.
We are not in compliance with the schedule for commencement and construction of
our second and third satellites and we have petitioned the FCC for changes to
the schedule. Certain of these extension requests have been opposed by third
parties. The FCC has not acted on our requests. The FCC has the authority to
revoke the authorizations for the second and third satellites and, in connection
with such a revocation, could exercise its authority to rescind our license. We
believe that the exercise of such authority to rescind the license is unlikely.
The term of the license for each of our three authorized satellites is ten
years, beginning when we certify that the respective satellite is operating in
compliance with the license. The ten-year term of the license for MSAT-2 began
August 21, 1995. Although we anticipate that the authorizations are likely to be
extended in due course to correspond to the useful lives of the satellites and
that new licenses will be granted for replacement satellites, there is no
assurance of such extension or grant.
On January 16, 2001, we amended our pending application with the FCC to launch
and operate a second-generation mobile satellite system in numerous respects to
seek FCC approval for the transactions involving Mobile Satellite Ventures LLC,
including the combination of our satellite communications business with TMI
Communications and Company, Limited Partnership ("TMI"). See "Recent
Developments - Mobile Satellite Ventures LLC." First, we applied to assign our
existing FCC licenses and authorizations and pending applications to a new
company, Mobile Satellite Ventures Subsidiary LLC ("MSV Sub"), that will be a
wholly owned subsidiary of a company jointly owned by us; TMI, the operator of
the Canadian-licensed MSS system; and a group of new investors. Because the
indirect foreign ownership of MSV Sub will exceed 25%, we have also asked the
FCC for a declaratory ruling that indirect foreign ownership in MSV Sub in
excess of 25% is in the public interest. We also proposed to modify our existing
FCC licenses and authorizations and pending applications to allow us and MSV Sub
to operate with MSAT-1 (the satellite licensed to TMI) as well as MSAT-2.
Finally, we sought FCC authority to launch and operate a next-generation mobile
satellite system, which will include the deployment of satellites and
terrestrial base stations operating in the same frequencies as an integrated
network. In addition to our application, TMI has applied to assign its FCC
licenses to MSV Sub. There is no guarantee that the FCC will grant these
applications. In addition, Mobile Satellite Ventures (Canada) Inc., in which
Motient will have a minority interest, has applied to the Canadian government to
operate the replacement satellite for MSAT-1. There is no guarantee that the
Canadian government will approve this application.
MSAT-2 is designed to operate over the 1530-1559/1631.5-1660.5 MHz bands (the
"L-band"). We are currently licensed to operate in the 1544-1559/1645-1660.5 MHz
bands (the "upper L-band"). The FCC has designated us as the licensee for both
MSS and Aeronautical Mobile Satellite (Route) Service ("AMS(R)S"). AMS(R)S
includes satellite communications related to air traffic control, as well as
aeronautical safety-related operational and administrative functions. As a
condition to its authorization, we are required by the FCC to be capable of
providing priority and preemptive access for AMS(R)S traffic in the upper L-band
and to be interoperable with and capable of transferring AMS(R)S traffic to
international and foreign systems providing such service. We currently
anticipate we will be able to meet these requirements without any material
adverse effect on our business. If we are unable to meet these requirements, the
FCC may authorize and give priority spectrum access to one or more additional
satellite systems that meet the specified requirements.
We have applied for authorization to operate in the 1530-1544/1631.5-1645.5 MHz
band (the "lower L-band"). If we are assigned spectrum in the lower L-band, we
will be required by the FCC to provide similar priority and preemptive access in
that spectrum to maritime distress and safety communications. With respect to
our mobile voice terminals, we currently anticipate we will be able to meet this
requirement without any material adverse effect on our business. The Federal
Aviation Administration filed comments, however, in connection with our
application to operate up to 30,000 mobile data terminals that were transitioned
from leased space segment to MSAT-2 in late 1995, stating its concern that the
mobile data terminals cannot be operated in compliance with our obligation to
provide priority and preemptive access in the upper L-band. The FAA has proposed
that we operate the mobile data terminals in the lower L-band. We have received
successive six-month grants of special temporary authority, under a two-year
waiver of the FCC's rules on priority and preemptive access, to operate up to
15,100 mobile data terminals in the lower L-band. This number was increased to
33,100 terminals pursuant to our acquisition of the mobile data equipment and
services previously licensed to Rockwell. The two-year waiver expired on August
1, 1997, but remains in effect while our request for a two-year extension of
that waiver is pending at the FCC. We will need additional authority to increase
the number of mobile data terminals that we are authorized to operate in order
to achieve planned growth in our data services, and on July 27, 1999, we applied
for authority to operate an additional 36,900 mobile terminals in the lower
L-band. We will also need the FCC to grant us or another entity authority to
operate over our space segment to operate mobile data terminals with a different
transmission design than those operated under our current lower L-band
authorization. Transmissions from these terminals require a wider bandwidth than
do transmissions from our existing terminals. We were granted a six-month
special temporary authority to operate up to 10,000 of these mobile data
terminals on February 12, 1999. We have since assigned this STA to VISTAR
Telecommunications, Inc. ("VISTAR"), the manufacturer of these wider-bandwidth
mobile data terminals. VISTAR has applied for a blanket license to operate up to
100,000 of these terminals using our satellite. There can be no assurance that
we or others will continue to receive authority to operate these mobile data
terminals or other mobile terminals in the lower L-band over our space segment.
Our mobile terminal authorizations are subject to compliance with certain
requirements regarding interference protection to the Global Positioning System
("GPS"). With the consent of the FAA, the FCC granted our application subject to
certain conditions, including that the grant may be modified after the
interference issue is studied. The FCC is now proposing to impose more stringent
limits on the out-of-band emissions from certain mobile terminals, including
those used in connection with our system, in order to protect GPS and the
Russian Global Navigation Satellite System. Some of our existing mobile
terminals may not comply with this proposed standard. Under the FCC's proposal,
all mobile terminals commissioned after January 1, 2002 must comply with this
new limit, and any terminals not meeting the new specifications must be retired
or retrofitted by 2005. While we believe that we will be able to comply with the
proposed 2002 deadline for newly commissioned terminals, we have opposed the
2005 deadline for the retirement or retrofitting of existing, non-compliant
terminals. If adopted by the FCC, this policy could have a material adverse
effect on our business.
Our license authorizes MSAT-2 to operate using certain telemetry, transfer and
control frequencies in the Ku-band. We operate MSAT-2 at the 101 degrees W.L.
orbital location. GE American Communications, Inc. also operates a satellite at
the 101 degrees W.L. orbital location. We and GE American have an agreement
covering MSAT-2 that may require us to modify our operations or make certain
payments to GE American if our operations cause interference to those of GE
American. While there can be no assurances, we do not anticipate any
interference in the operations of MSAT-2 and those of GE American.
Our subscriber equipment will operate in L-band frequencies that are limited in
available bandwidth. The feeder-link earth stations and the network
communications controller of the communications ground segment operate in the
more plentiful fixed satellite service Ku-band frequencies. Of the 30 MHz in the
upper L-band frequencies, we are currently licensed to operate in the
1544-1559/1645.5-1660.5 MHz bands. Of the 30 MHz assigned to us by the FCC, one
MHz is limited to AMS(R)S and one-way paging and two MHz are limited to distress
and safety communications. We do not plan to operate on these three MHz of
bandwidth.
In June 1996, the FCC issued a notice of proposed rulemaking proposing to assign
to us the first 28 MHz of internationally coordinated L-band spectrum from
either the upper or lower portion of the MSS L-band. Under the FCC's proposal,
we would have first priority access to use the lower L-band spectrum as
necessary to compensate for spectrum unavailable for coordination in the upper
L-band. In the event the United States is able to coordinate more than 28 MHz of
L-band spectrum, the FCC has proposed allowing other applicants to apply for
assignment of those frequencies. Certain entities have filed with the FCC
petitions to deny our application and comments opposing the assignment of
additional frequencies to us. While there can be no assurances, we believe the
FCC is likely to grant our application.
In the Ku-band frequencies, we are currently licensed to operate MSAT-2 using
200 MHz within the 10.75-10.95 GHz band for downlink transmissions and 200 MHz
within the 13.0-13.15 GHz and 13.2-13.25 GHz bands for uplink transmissions. On
November 29, 2000, Globalstar, L.P. ("Globalstar") filed an application to
operate a satellite at 101 degrees W.L. using 250 MHz within the 10.75 - 10.95
GHz and 11.2 - 11.45 GHz bands for downlink transmissions and 250 MHz within the
12.75 - 13.25 GHz band for uplink transmissions. We have opposed Globalstar's
application because its proposed frequencies could conflict with our current
operations. In addition, on December 14, 2000, we applied for authority to
operate using an additional 250 MHz of spectrum within the 11.2-11.45 GHz band
for downlink transmissions and an additional 250 MHz within the 12.75-13.00 GHz
band for uplink transmissions. We also opposed Globalstar's application because
its proposed frequencies could conflict with our proposed operations pursuant to
this application.
Spectrum availability, particularly in the L-band, is a function not only of how
much spectrum is assigned to us by the FCC, but also the extent to which the
same frequencies are used by other systems in the North American region, and the
manner of such use. All spectrum use must be coordinated with other parties that
are providing or plan to provide mobile satellite-based communications in the
same geographical region using the same spectrum. At this time, the other
parties with which spectrum use must be coordinated include Canada, Mexico, the
Russian Federation and Inmarsat. In addition, a new Japanese system proposes to
operate in a manner that would interfere with our system and other systems in
this region, and this Japanese system's spectrum use will have to be coordinated
with these regional operators.
Use of the spectrum is determined through a series of negotiations between the
United States government and the other user agencies, pursuant to the rules and
regulations of the International Telecommunication Union. For the past several
years, each of the countries and international organizations that have used or
will use L-band frequencies within the North American region have met regularly
to negotiate and coordinate their current and future use of that spectrum. This
international coordination process is not yet complete and there has been no
spectrum sharing arrangement since the end of 1999. In the absence of a
coordination agreement, we must operate our system on a non-interference basis.
We estimate that international coordination will make approximately 20 MHz of
L-band spectrum available to the United States for MSAT-2. Since the
coordination process involves many parties and there is uncertainty about the
total outcome, the actual amount of spectrum available may be less than that
estimated. The operation of the new Japanese system may have the effect of
further reducing our access to spectrum. Some of the spectrum that may be
available to us may include a portion of the 28 MHz lower L-band spectrum
adjacent to the frequencies already assigned to us by the FCC.
The International Telecommunications Union Radio Regulations include a table of
frequency allocations that prescribe the permitted uses of the radio spectrum.
As a result of the International Telecommunications Union satellite plan for
parts of the Ku-band, there also may be restrictions on our ability to deploy
feederlink earth stations in Alaska, Hawaii, Puerto Rico, and the U.S. Virgin
Islands.
During the course of our FCC licensing process and several times since, the FCC
has stated that there is only enough spectrum in the MSS L-band for the FCC to
authorize a single mobile satellite services system to provide service in the
United States. On November 30, 1999, however, the FCC granted two applications
to use TMI's Canadian-licensed system to provide service in the United States to
up to 125,000 mobile terminals. TMI's system operates in the MSS L-band and has
a satellite footprint that covers the United States. We appealed the FCC's grant
of these applications to the United States Court of Appeals for the D.C.
Circuit, but the court upheld the FCC's grant. TMI's entry into the domestic
U.S. marketplace may increase TMI's demand for spectrum in the international
coordination process and otherwise make it more difficult for us to secure
access to 20 MHz of spectrum. Since the initial grant to use TMI's system, the
FCC has granted an additional application to use TMI's system and may grant
others.
The FCC may authorize other foreign-licensed L-band systems to provide service
to domestic U.S. customers. There are a number of applications pending before
the Commission to access Inmarsat Ltd. ("Inmarsat"), licensed by the United
Kingdom, to provide service in the U.S. We have opposed these applications on a
number of grounds, including Inmarsat's failure to comply with the Open-Market
Reorganization for the Betterment of International Telecommunications Act (ORBIT
Act), which sets certain criteria which Inmarsat must meet before entering the
U.S. domestic market. There is no assurance that our opposition to these
applications will be successful. Inmarsat's entry into the domestic U.S.
marketplace may increase Inmarsat's demand for spectrum in the international
coordination process and otherwise make it more difficult for us to secure
access to 20 MHz of spectrum.
We are operating under waivers of certain FCC rules. In 1996, the FCC issued an
order requiring all Commercial Mobile Radio Service providers to offer what are
known as "enhanced 9-1-1 services" including the ability to automatically locate
the position of all transmitting mobile terminals. We would not have been able
to offer this automatic location information without adding substantially to the
cost of our mobile equipment and reconfiguring our communications ground segment
software. The FCC decided not to impose specific new requirements on mobile
satellite services providers, including Motient, at that time. The FCC did state
its expectation that such providers eventually would be required to provide
"appropriate access to emergency services." In December 2000, the FCC initiated
a proceeding seeking comment on whether to eliminate the exception allowed
mobile satellite services providers from the requirement to provide "enhanced
9-1-1 services." A decision to impose this requirement on mobile satellite
services providers could have a material adverse effect on our business.
The FCC enacted "rate integration" regulations pursuant to Section 254(g) of the
Communications Act which requires that providers of interstate interexchange
telecommunications services charge the same rates for these services in every
state, including Puerto Rico and the U.S. Virgin Islands. We have opposed the
imposition of this rate integration requirement on our mobile satellite services
system, so that we may preserve the flexibility to charge more for service in
areas covered by satellite beams that require more satellite power. The FCC has
denied our request for a permanent exemption from its rate integration
requirement, but has not yet ruled on our request for a temporary waiver of a
year or more. The FCC has granted us an interim waiver from its rate integration
requirement until its decision on our temporary waiver request. In July 2000,
the United States Court of Appeals for the District of Columbia Circuit vacated
the FCC's decision that the "rate integration" provision of the Communications
Act applies to CMRS providers. The FCC has not yet acted in response to the
court's ruling.
Item 2. Properties.
We lease approximately 94,000 square feet at our headquarters office space and
network operations center in Reston, Virginia. The lease has a term which runs
through August 3, 2003 (which may be extended at our election for an additional
five years). In addition, we lease a back-up Ku-band radio frequency facility in
Alexandria, Virginia. We also lease approximately 86,000 square feet of space
for office space and an operations center in Lincolnshire, Illinois, the lease
for which expires December 31, 2005 (which may be extended at our election for
an additional five years). We also lease site space for nearly 2,000 base
stations and antennas across the country for the terrestrial network under one-
to five-year lease contracts with renewal provisions. We anticipate that we will
be able to gain access to additional base station sites when necessary on
acceptable terms.
Item 3. Legal Proceedings.
There are no material pending legal proceedings that are required to be
disclosed.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the Company's Stockholders during the
fourth quarter of fiscal 2000.
PART II
Items 5, 6, 7 and 8.
The information called for by Items 5 through 8 of Part II is presented in a
separate section of this Annual Report on Form 10-K commencing on the page
numbers specified below:
Form 10-K Item Page
Item 5 - Market for the Registrant's Common Equity and Related Matters F-59
Item 6 - Selected Financial Data F-60
Item 7- Management's Discussion and Analysis of Financial Condition
and Results of Operations F- 2
Item 8 - Financial Statements and Supplementary Data F-18
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Items 10, 11, 12 and 13.
The information called for by Part III (Items 10, 11, 12 and 13) is incorporated
herein by reference from the material included under the captions "Nominees,"
"Board Committees, Meetings, and Compensation," "Executive Officers,"
"Performance Graph," "Summary Compensation Table," "Option/SAR Grants in Last
Fiscal Year," "Aggregated Option/SAR Exercises in Last Fiscal Year and Year-End
Option/SAR Values," "Audit Committee Report," "Compensation and Stock Option
Committee Report," "Security Ownership of Certain Beneficial Owners and
Management," "Agreements Among Stockholders," "Compensation and Stock Option
Committee Interlocks and Insider Participation" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's definitive proxy statement (to
be filed) for its Annual Meeting of Stockholders to be held May 22, 2001 (the
"Proxy Statement"). The Proxy Statement is being prepared and will be filed with
the Securities and Exchange Commission pursuant to Regulation 14A, and furnished
to the Company's Stockholders, on or about April 23, 2001.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(1) 1. Financial Statements.
The following consolidated financial statements of the Company and its
subsidiaries are included in a separate section of this Annual Report on Form
10-K commencing on the page numbers specified below:
INDEX........................................................................F-1
Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................F-2
Report of Arthur Andersen LLP, Independent Public Accountants
to Motient Corporation.....................................................F-18
Report of KPMG LLP, Independent Auditors to XM Satellite
Radio Holdings Inc.........................................................F-19
Consolidated Statements of Operations of Motient ...........................F-20
Consolidated Balance Sheets of Motient .....................................F-21
Consolidated Statements of Stockholders' Equity (Deficit) of Motient .......F-23
Consolidated Statements of Cash Flows of Motient ...........................F-24
Notes to Consolidated Financial Statements of Motient ......................F-25
Quarterly Financial Data of Motient .......................................F-59
Selected Financial Data of Motient .........................................F-60
2. Financial Statement Schedules.
Financial Statement Schedules not included with the one listed below have been
omitted because they are not required or not applicable, or because the required
information is shown in the financial statements or notes thereto.
1. Condensed Financial
Information of Registrant.................................Page S-1
2. Schedule II - Valuation and Qualifying Accounts................Page S-16
3. Exhibits
3.1 - Restated Certificate of Incorporation of the Company (as restated
effective May 23, 2000) (Incorporated by reference to Exhibit 3.1
to the Company's Registration Statement on Form S-3 (File No.
333-42104)
3.2 - Amended and Restated Bylaws of the Company (as amended and
restated effective May 23, 2000)(incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on Form S-3
(File No. 333-42104))
9.1 - Amended and Restated Stockholders' Agreement dated as of December
1, 1993, between the Company and certain holders of its capital
stock (Incorporated by reference to Exhibit 9.1 to the Company's
Registration Statement on Form S-1 (Reg. No. 33- 70468))
10.1 - Contract for an MSAT Spacecraft, dated December 7, 1990 between
the Company and Hughes Aircraft Company, amended June 15, 1993
(Amendment Nos. 1 through 4) and further amended November 11,
1993 (Amendment No. 5), Motient Services Inc., as assignee of the
Company, and Hughes Aircraft Company (Incorporated by reference
to Exhibit 10.3 to the Company's Registration Statement on Form
S-1 (Reg. No. 33-70468))
10.1a - Amendment No. 6 to the MSAT Spacecraft Contract, dated
October 11, 1994, between Motient Services Inc., as assignee
to the Company, and Hughes Aircraft Company (Incorporated by
reference to Exhibit 10.3a to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 (File
No. 0-23044))
10.1b - Mutual Final Release, dated October 11, 1994, between
Motient Services Inc., Hughes Aircraft, Spar Aerospace
Limited and Lockheed Missiles & Space Company, Inc.
(Incorporated by reference to Exhibit 10.3b to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 0-23044))
10.1c - Amendment No. 7 to the MSAT Spacecraft Contract, dated
October 11, 1994, between Motient Services Inc., as assignee
to the Company, and Hughes Aircraft Company (Incorporated by
reference to Exhibit 10.3c previously filed with the Report
on Form 10-K for the period ending December 31, 1997 (File
No. 0-23044)))
10.2 - Memorandum of Agreement for Satellite Capacity, dated February
17, 1992, between Motient Services Inc. and Telesat Mobile Inc.,
as amended by Amending Agreement dated October 18, 1993 among the
Company, Motient Services Inc. and TMI Communications and
Company, Limited Partnership, as successor in interest to Telesat
Mobile Inc., and as further amended by letter agreement dated
October 18, 1993 (Incorporated by reference to Exhibit 10.7 to
the Company's Registration Statement on Form S-1 (Reg. No.
33-70468))
10.3 - Agreement for Cooperation in Joint Procurement of MSS Systems,
dated September 19, 1988, between American Mobile Satellite
Consortium Inc. and Telesat Mobile Inc. (Incorporated by
reference to Exhibit 10.32 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-70468))
10.4 - Joint Operating Agreement, dated April 25, 1990, between the
Company and Telesat Mobile Inc. as amended by Amending Agreement
dated October 18, 1993 among the Company, Motient Services Inc.
and TMI Communications and Company, Limited Partnership, as
successor in interest to Telesat Mobile Inc. (Incorporated by
reference to Exhibit 10.33 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-70468))
10.5 - Right of First Offer Agreement dated as of November 30, 1993
among the Company, Hughes Communications Satellite Services,
Inc., Singapore Telecommunications Ltd., Satellite Communications
Investments Corporation, Space Technologies Investments, Inc.,
Satellite Mobile Telephone Company L.P., Transit Communications,
Inc., MTel Space Technologies, L.P. and MTel Space Technologies
Corporation (Incorporated by reference to Exhibit 10.11 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-70468))
10.5a - Amendment No. 1 dated June 28, 1996, to Right of First Offer
Agreement among the Company, Hughes Communications Satellite
Services, Inc., Singapore Telecommunications Ltd., Satellite
Communications Investments Corporation, Space Technologies
Investments, Inc., and Transit Communications, Inc.
(Incorporated by reference to Exhibit XI to the Amended and
Restated Schedule 13D dated July 1, 1996, filed by Hughes
Communications Satellite Services, Inc., Hughes
Communications, Inc., Hughes Aircraft Company, Hughes
Electronics Corporation and General Motors Corporation with
respect to shares of Common Stock, $.01 par value, of the
Company)
10.6* - Motient Corporation Stock Award Plan (as amended and restated
effective May 23, 2000) (Incorporated by reference to Exhibit 4.2
to the Company's Registration Statement on Form S-8 (Reg. No.
333-40566)
10.6a* - Form of Nonstatutory Stock Option Agreement under the Stock
Award Plan (Incorporated by reference to Exhibit 10.6a to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1999)
10.7* - Employee Stock Purchase Plan, as amended May 23, 2000
(Incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-8 (Reg. No. 333-40566)
10.8* - Form of Directors and Officers Indemnification Agreement
(Incorporated by reference to Exhibit 10.41 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (File No. 0-23044))
10.9* - 1994 Stock Option Plan for Non-Employee Directors (Incorporated
by reference to Exhibit 10.53 to the Company's Annual Report on
Form 10-K filed for the period ended December 31, 1996 (File No.
0-23044))
10.10*- Form of Executive Agreements (Incorporated by reference to
Exhibit 10.54 to the Company's Annual Report on Form 10-K filed
for the period ending December 31, 1996 (File No. 0-23044))
10.11*- Form of Restricted Stock Agreement (Incorporated by reference to
Exhibit 10.13b to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 (File No. 0-23044))
10.12 - Mobile Terminal Production Agreement, dated October 6, 1992,
between Motient Services Inc. and Westinghouse Electric
Corporation acting through Westinghouse Electronic Systems
Company (Incorporated by reference to Exhibit 10.17 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-70468))
10.12a - Amendment No. 1 to Mobile Terminal Production Agreement,
dated November 21, 1994, between Motient Services Inc. and
Westinghouse Electric Corporation acting through
Westinghouse Electronic Systems Company (Incorporated by
reference to Exhibit 10.17a to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994
(File No. 0-23044))
10.12b - Amendment No. 2 to Mobile Terminal Production Agreement,
dated January 23, 1995, between Motient Services Inc. and
Westinghouse Electric Corporation acting through
Westinghouse Electronic Systems Company (Incorporated by
reference to Exhibit 10.17b to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994
(File No. 0-23044))
10.12c - Amendment No. 3 to Mobile Terminal Production Agreement,
dated March 21, 1995, between Motient Services Inc. and
Westinghouse Electric Corporation acting through
Westinghouse Electronic Systems Company (Incorporated by
reference to Exhibit 10.17c the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 (File
No. 0-23044))
10.13 - Mobile Termination Production Contract, dated November 30, 1992,
between Motient Services Inc. and Mitsubishi Electric Corporation
(Incorporated by reference to Exhibit 10.18 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-70468))
10.14 - Deed of Lease at Reston, Virginia, dated February 4, 1993 and
amended June 21, 1993, between Motient Services Inc. and Trust
Company of the West as Trustee (Incorporated by reference to
Exhibit 10.20 to the Company's Registration Statement on Form S-1
(Reg. No. 33-70468))
10.14a - Amendment No. 4 to Deed of Lease, dated October 7, 1994,
between Motient Services Inc. and Trust Company of the West
as Trustee (Incorporated by reference to Exhibit 10.20a to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (File No. 0-23044))
10.15 - Master Lease Agreement, dated June 23, 1993, between Motient
Services Inc. and Digital Equipment Corporation and Amendment to
Master Lease Agreement between Motient Services Inc. and Digital
Equipment Corporation dated August 2, 1993 (Incorporated by
reference to Exhibit 10.25 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-70468))
10.16 - Telemetry, Tracking and Control Satellite Service Agreement,
dated as of August 5, 1993, between Motient Services Inc. and
Hughes Communications Satellite Services, Inc. (Incorporated by
reference to Exhibit 10.27 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-70468))
10.17 - Agreement dated as of December 14, 1992 between Motient Services
Inc. and GTE Spacenet Corporation (Incorporated by reference to
Exhibit 10.35 to the Company's Registration Statement on Form S-1
(Reg. No. 33-70468))
10.17a - Amendment No. 1 dated as of November 7, 1997 to the
Agreement dated as of December 14, 1992, by GTE Spacenet
Corporation and Motient Services Inc. (Incorporated by
reference to Exhibit 10.65 previously filed with the Report
on Form 10-K for the period ending December 31, 1997 (File
No. 0-23044))
10.18 - Master Agreement dated March 30, 1994, between Washington
International Teleport, Inc., and the Company (Incorporated by
reference to Exhibit 10.36a to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 (File No.
0-23044))
10.18a - Contract Amendment No. A001, dated July 1, 1994, between
Washington International Teleport, Inc., and the Company
(Incorporated by reference to Exhibit 10.36b to the
Company's Quarterly Report on Form 10-Q filed for the period
ending September 30, 1994 (File No. 0-23044))
10.18b - Contract Amendment No. A002, dated July 1, 1994, between
Washington International Teleport, Inc., and the Company
(Incorporated by reference to Exhibit 10.36c to the
Company's Quarterly Report on Form 10-Q filed for the period
ending September 30, 1994 (File No. 0-23044))
10.19 - Asset Sale Agreement dated as of November 22, 1996, by and among
Rockwell Collins, Inc., the Company and Motient Services Inc.
(Incorporated by reference to Exhibit 10.61 to the Company's
Current Report on Form 8-K dated November 22, 1996, and filed on
December 9, 1996 (File No. 0-23044))
10.20 - Stock Purchase Agreement for the Acquisition of Motorola ARDIS
Acquisition, Inc. and Motorola ARDIS, Inc. by Motient Holdings
Inc., a Wholly-Owned Subsidiary of the Company, dated as of
December 31, 1997 (Incorporated by reference to Exhibit 10.65
previously filed with the Company's Report on Form 10-K for the
period ending December 31, 1997 (File No. 0-23044)).
10.20a - Amendment No. 1 dated March 31, 1998 to the Stock Purchase
Agreement for the Acquisition of Motorola ARDIS Acquisition,
Inc. and Motorola ARDIS, Inc. by Motient Holdings Inc., a
Wholly-Owned Subsidiary of the Company (Incorporated by
reference to Exhibit 4.2 to the Schedule 13D dated March 31,
1998, filed by Motorola, Inc.).
10.21 - Participation Rights Agreement by and among Motorola, Inc., the
Company, and the parties listed on Schedule A, dated as of
December 31, 1997 (Incorporated by reference to Exhibit 10.65
previously filed with the Report on Form 10-K for the period
ending December 31, 1997 (File No. 0-23044)).
10.21a - Registration Rights Agreement by and among Motorola, Inc.
and the Company dated as of March 31, 1998 (Incorporated by
reference to Exhibit 4.4 to the Schedule 13D dated March 31,
1998, filed by Motorola, Inc.)
10.22 - Credit Agreement by and between Motorola Inc. and ARDIS Company
dated June 17, 1998 (Incorporated by reference to Exhibit 10.61
to the Company's Current Report on Form 10-Q dated June 30, 1998
(File No. 0-23044)).
10.22a - Amendment No. 2, dated September 1, 2000, to the Credit
Agreement, dated as of June 17, 1998, by and between
Motorola, Inc. and Motient Communications Company (formerly
known as ARDIS Company) (Incorporated by reference to
Exhibit 10.22a to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2000 (File No.
0-23044)).
10.22b - Assumption, Release, Amendment and Waiver Agreement by and
among Motorola, Inc., Motient Communications Inc. and
Motient Communications Company, dated as of December 29,
2000 (filed herewith).
10.23 - Indenture of Motient Holdings Inc., Series A and Series B, 12
1/4% Senior Notes Due 2008, dated March 31, 1998 (Incorporated by
reference to Registration Statement on Form S-4 filed on May 15,
1998 (File No. 333-52777)).
10.24 - Debt Registration Rights Agreement dated March 31, 1998 by and
among Motient Holdings Inc., Bear, Stearns & Co. Inc., J.P.
Morgan Securities Inc., TD Securities (USA) Inc. and BancAmerica
Robertson Stephens, and guarantors party thereto (Incorporated by
reference to Registration Statement on Form S-4 filed on May 15,
1998 (File No. 333-52777)).
10.25 - Unit Agreement Among Motient Corporation, Motient Holdings Inc.
and State Street Bank and Trust Company as Unit Agent, dated
March 31, 1998 (Incorporated by reference to Registration
Statement on Form S-4 filed on May 15, 1998 (File No.
333-52777)).
10.26 - Warrant Agreement between Motient Corporation as Issuer and State
Street Bank and Trust Company as Warrant Agent dated March 31,
1998 (Incorporated by reference to Registration Statement on Form
S-4 filed on May 15, 1998 (File No. 333-52777)).
10.27 - Warrant Registration Rights Agreement dated March 31, 1998 By and
Among Motient Corporation and Bear, Stearns & Co. Inc., J.P.
Morgan Securities Inc., T.D. Securities (USA) Inc., BancAmerica
Robertson Stephens (Incorporated by reference to Registration
Statement on Form S-4 filed on May 15, 1998 (File No.
333-52777)).
10.28 - Pledge and Security Agreement by and among Motient Holdings Inc.,
State Street Bank and Trust Company, as Trustee and State Street
Bank and Trust Company, as Collateral Agent dated March 31, 1998
(Incorporated by reference to Registration Statement on Form S-4
filed on May 15, 1998 (File No. 333-52777)).
10.29 - Guaranty Issuance Agreement, dated as of March 31, 1998, among
Hughes Electronics Corporation, Singapore Telecommunications
Ltd., and Baron Capital Partners, L.P. and the Company and
Motient Holdings Inc. (Incorporated by reference to Exhibit 1 to
the Schedule 13D dated March 31, 1998, filed by Hughes
Communications Satellite Services, Inc.)
10.29a - Amendment No. 1 to the Guaranty Issuance Agreement, dated as
of January 15, 1999, among Hughes Electronics Corporation,
Singapore Telecommunications Ltd., and Baron Capital
Partners, L.P. and the Company and Motient Holdings Inc.
(Incorporated by reference to Exhibit 10.29a to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 0-23044))
10.29b - Amendment No. 2 to the Guaranty Issuance Agreement, dated as
of March 29, 1999, among Hughes Electronics Corporation,
Singapore Telecommunications Ltd., and Baron Capital
Partners, L.P. and the Company and Motient Holdings Inc.
(incorporated by reference to Exhibit 10.29b to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 0-23044))
10.30 - Warrant No. 1 for the Purchase of 3,750,000 Shares (subject to
adjustment) of Common Stock of the Company issued to Hughes
Electronics Corporation, dated June 28, 1996 (Incorporated by
reference to Exhibit XIII to the Amended and Restated Schedule
13D dated July 1, 1996, filed by Hughes Communications Satellite
Services, Inc., Hughes Communications, Inc., Hughes Aircraft
Company, Hughes Electronics Corporation and General Motors
Corporation with respect to shares of Common Stock, $.01 par
value, of the Company).
10.30a - Amendment No. 1 to the Warrant Certificate, dated as of
March 27, 1997, by and among the Company and Hughes
Electronics Corporation, Singapore Telecommunications Ltd.,
and Baron Capital Partners, L.P. (Incorporated by reference
to Exhibit 4 to the Schedule 13D dated March 31, 1997, filed
by Hughes Communications Satellite Services, Inc.)
10.30b - Amendment No. 2 to the Warrant Certificate, dated as of
March 31, 1998, by and among the Company and Hughes
Electronics Corporation, Singapore Telecommunications Ltd.,
and Baron Capital Partners, L.P. (Incorporated by reference
to Exhibit 4 to the Schedule 13D dated March 31, 1998, filed
by Hughes Communications Satellite Services, Inc.)
10.30c - Amendment No. 3 to the Warrant Certificates for the Purchase
of Shares of Common Stock of the Company, dated as of April
1, 1999, by and among the Company and Hughes Electronics
Corporation, Singapore Telecommunications Ltd., and Baron
Capital Partners, L.P. (incorporated by reference to Exhibit
10.29b to the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (File No. 0-23044))
10.30d - Amendment No. 4 to Warrant Certificates for the purchase of
shares of common stock of Motient Corporation dated as of
June 29, 2000 issued to each of Hughes Electronics
Corporation and Baron Capital Partners, L.P. (Incorporated
by reference to Exhibit 10.30d to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000
(File No. 0-23044)).
10.31 - Registration Rights Agreement dated as of June 28, 1996, among
the Company, Hughes Electronics Corporation, Singapore
Telecommunications Ltd., and Baron Capital Partners, L.P.
(Incorporated by reference to Exhibit XIV to the Amended and
Restated Schedule 13D dated July 1, 1996, filed by Hughes
Communications Satellite Services, Inc., Hughes Communications,
Inc., Hughes Aircraft Company, Hughes Electronics Corporation and
General Motors Corporation with respect to shares of Common
Stock, $.01 par value, of the Company). (Incorporated by
reference to Exhibit 10.57 to the Company's Quarterly Report on
Form 10-Q filed for the period ended June 30, 1996 (File No.
0-23044))
10.32 - Warrant for the Purchase of Shares of Common Stock of the
Company, dated as of March 31, 1998 (Incorporated by reference to
Exhibit 2 to the Schedule 13D dated March 31, 1998, filed by
Hughes Communications Satellite Services, Inc.)
10.32a - Amendment No. 1 to Warrant Certificates for the Purchase of
Shares of Common Stock of the Company, dated as of April 1,
1999 by and among Hughes Electronics Corporation, Singapore
Telecommunications Ltd. and Baron Capital Partners, L.P.
(incorporated by reference to Exhibit 10.29b to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 0-23044))
10.32b - Amendment No. 2 to Warrant Certificates for the purchase of
common stock of Motient Corporation dated as of June 29,
2000 issued to each of Hughes Electronics Corporation and
Baron Capital Partners, L.P. (Incorporated by reference to
Exhibit 10.32b to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2000 (File No.
0-23044)).
10.33 - Amended and Restated Registration Rights Agreement, dated as of
March 31, 1998, among the Company and Hughes Electronics
Corporation, Singapore Telecommunications Ltd., and Baron Capital
Partners, L.P. (Incorporated by reference to Exhibit 3 to the
Schedule 13D dated March 31, 1998, filed by Hughes Communications
Satellite Services, Inc.)
10.33a - Amendment No. 1, dated as of May 10, 1999, to Amended and
Restated Registration Rights Agreement among the Company,
Hughes Electronics, Singapore Telecommunications Ltd., and
Baron Capital Partners, L.P. (incorporated by reference to
Exhibit 10.33a to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1999 (File No.
0-23044))
10.34 - Term Credit Agreement dated as of March 31, 1998 among the
Company, Morgan Guaranty Trust Company of New York, Toronto
Dominion (Texas), Inc. and other banks party thereto
(Incorporated by reference to Exhibit 10.61 to