id notices were due Dec. 3 for a U.S. government radio-frequency auction that likely will be a make-or-break event for mobile satellite operators hoping the multibillion-dollar contest will set a high price tag on their own spectrum.

For several of these companies, the auction represents one last hope that a large Internet portal like Google, or a telecommunications operator like Verizon Wireless, will agree to bail them out before they face bankruptcy.

“After the auction we should find out if these guys have been living in fantasyland, waiting for a knight in shining armor who doesn’t exist,” said one industry official whose company is involved in mobile satellite services.

The companies in question – ICO Global, TerreStar Corp., SkyTerra’s Mobile Satellite Ventures (MSV), Globalstar Inc., Iridium Satellites and Inmarsat – are not all approaching distress-sale conditions. Iridium Satellites says its current low-orbiting constellation will remain healthy for at least another five years, and that it is in no rush to replace it.

of London, which has a profitable existing business and does not carry a large debt load, already has built its new-generation satellites and has no immediate need of a partner.

But the other four companies – all publicly traded – are running through their cash too fast to survive much beyond 2008 without a major new lifeline.

That is where the U.S. Federal Communications Commission (FCC) auction, to begin in late January and end in March, comes into the mobile satellite picture.

The so-called 700-MHz auction is only for terrestrial wireless links. But the mobile-satellite companies hope at least one disappointed auction loser will

turn to

one of them for added spectrum.

U.S. regulations permit mobile satellite operators to use their satellite spectrum to build out a network of ground repeaters even though these companies did not pay for the spectrum.

“This is rare in this world of spectrum auctions,” TerreStar Chief Financial Officer Neil A. Hazard said during a Dec. 3 investor conference organized by Bank of America. “We got it free. But we have to build and launch a satellite.”

first satellite is scheduled for launch in September. The company will need an additional $300 million by then to continue deployment, TerreStar Chief Financial Officer Robert Siegel said.

The company wants to cash in on its 20 MHz of S-band spectrum by attracting partners willing to invest in deploying TerreStar’s ground-repeater network of what are called Ancillary Terrestrial Components, which permit the signal to reach where a satellite cannot go.

“We’ll talk to anybody who will talk to us,” Siegel said. “You put in the capital and build out the network, we’ll provide the spectrum and the telephone. Where it all ends up, we’ll see.”

An earlier FCC auction of what is called Advanced Wireless Spectrum ended with several companies dropping out because prices got too high. But none of them seized the occasion to strike a deal with a mobile satellite company as an alternate route to spectrum access.

It is

the last major spectrum sale in the near future

and if the 700 MHz auction fails to trigger a deal in the mobile satellite sector, perhaps nothing will.

Tim Farrar of TMF Associates, a telecommunications consultancy in Menlo Park, Calif., said in a November report: “It is not clear how many possible credible partners will remain after the auction.”

The bet-the-farm environment in which mobile satellite providers have been operating – each spending hundreds of millions of dollars or more on new satellite systems financed in part by cheap debt no longer available – has produced unusual investor pitches.

J. Timothy Bryan, chief executive of ICO Global, whose satellite is scheduled for launch in March, points to his company’s $1.5 billion in enterprise value – its market capitalization plus its debt – and offers investors two possibilities.

“If the value of everything we own – our satellite, our non-U.S. spectrum assets, everything – is worth nothing, then our spectrum is worth $1.5 billion,” Bryan said Dec. 3 at a UBS investor conference. “If the value of our spectrum is nothing, then our existing assets are worth $1.5 billion.”

Bryan said Google’s bid alone for 24 MHz of spectrum at the upcoming auction could be $4.6 billion. ICO, like TerreStar, has 20 MHz of spectrum over the United States. “This spectrum is as good as it gets” for those wanting to deploy nationwide mobile frequencies, he said.

Bryan said ICO has enough cash to continue operations through the launch of the satellite and to begin trials of the service, which is designed to provide interactive television and other media to automobiles. ICO still has no second satellite on order, despite the fact that FCC rules say a ground spare satellite must be built within a year of the start of service using Ancillary Terrestrial Components.

MSV, which like TerreStar is planning a two-way voice and data service, said it will need up to $150 million to continue operations through the end of 2008.

Inc., which operates a constellation of low-orbiting satellites, is facing a difficult year as some of its biggest revenue-generating customers leave because service from the existing constellation is degrading. That makes it more difficult for Globalstar to finance its second-generation constellation, scheduled to enter service starting in 2009.