An artist's concept of an Iridium satellite orbiting the Earth. Photo: Iridium

The U.S. Department of Defense awarded a two-year, $72 million contract Dec. 6 to a Maryland firm for unlimited use of its global, satellite-based, secure telephone network.

The contract was awarded through the Defense Information Systems Agency to Iridium Satellite LLC (IS) of Arnold, Md., which will contract with the Boeing Co. to operate and maintain the system's 73 satellites.

According to Dave Oliver, principal deputy undersecretary of defense for acquisition, technology and logistics, the contract will give DoD increased communications ability around the globe and a conduit to private-sector innovation.

Under the contract, DoD will pay a $3 million monthly service fee for unlimited airtime for 20,000 government users over the Iridium satellite network. Contract options, if exercised, could increase the contract value to $252 million and extend the contract period to 2007.

"Iridium will not only add to our existing capability, it will provide a commercial alternative to our purely military systems," he said. "This may enable real civil-military dual use, keep us closer to the leading edge of technologically, and provide a real alternative for the future."

The system offers state-of-the-art satellite communications service to any open area in the world. It provides mobile, cryptographically secure telephone services to small handsets anywhere in the world, North Pole to South Pole, 24 hours a day, officials said. They noted the system and its DoD-specified enhancements will provide handheld phone service not currently available.

Officials said the system can improve the capabilities of special forces operations, combat search and rescue activities, and polar communications. It also can enhance DoD's mobile satellite communications requirements, they added.

Motorola designed, built and operated the $5.5 billion Iridium system. The system went into operation in November 1998, and DoD used some 800 of its first-generation phones. The Motorola-owned unit, Iridium LLC, was charging some of its 60,000 customers up to $5 a minute for calls when it went bankrupt in August 1999. Iridium Satellite LLC recently bought the bankrupt company's assets.

Oliver remarked that subsequent advances in technology, an expanded customer base, and savings in start-up costs enables the new owner to provide commercial service for about 80 cents a minute, while the Pentagon will pay 10 to 30 cents a minute. He said company officials estimate they will "break even" with 40,000 more customers and expect to service 250,000 within five years.

The original Iridium handset is boxy and bulky, Oliver said. An improved model by Motorola, he continued, is about twice the size of a typical cell phone and has a call-reliability rate of 95 percent. Its special encryption sleeve ensures secure communications, he added.

Motorola will continue to supply DoD with handsets and parts for the time being.

The U.S. military will use its Enhanced Mobile Satellite Services Gateway system at Wahiawa, Hawaii, to provide DoD Iridium users with direct-dial connection to the Defense Information Services Network and to public-switched telephone networks, officials said.