Details emerge as Iridium's transfer of power wraps up
BY STEPHEN CLARK
Posted: December 18, 2000
Iridium Satellite announced last week that it had completed acquisition of the orbiting Iridium system.
The previous owner of the pioneering satellite network -- Iridium LLC -- filed for bankruptcy in 1999 and terminated its telephone services earlier this year. Since then, Iridium had been seeking out investors in its venture. If sufficient funding had not been found, the 88-satellite constellation was on the verge of deliberate deorbiting into the Earth's atmosphere to burn up, bringing an estimated $5 billion down with it.
A bankruptcy court in New York approved the acquisition by Virginia-based Iridium Satellite in November. The completion of the transfer of power between the two companies was announced completed last week, officially placing the Iridium system back in the game.
Iridium Satellite made the purchase for around $25 million. The new satellite operator says that the entire system, including the constellation, ground systems, personnel and property, will cost less that $7 million to operate per month. They also say that they expect that the rejuvenated system "will be able to deliver extremely competitive satellite communications services to the market," according to a company statement.
The Iridium constellation is currently serving the U.S. Department of Defense under a contract awarded recently to provide unlimited airtime for up to 20,000 government users. The DoD says that the contract is worth $72 million over a period of two years, with options that include services through December 2007 with a value of $252 million.
Services for specific groups of commercial customers will begin before the end of the first quarter of 2001.
The Iridium system is also expected to have a classified capability by that time, enhancing their service to the DoD.
"Our commercial service will start towards the end of the first quarter, because we do have to restart our North American gateway and we want to be very sure that everything is working properly before we resume commercial service," said Dan Colussy, chairman of the Iridium Satellite company.
In contrast to other satellite operators in the mobile satellite telephone business, Iridium Satellite will not target the average person.
"We do not see Iridium as a mass consumer service," Colussy said last week. "It is a communications service that addresses the very specific needs of the industrial markets and other specialized segments. Because of our significantly reduced cost structure and Iridium's unique system capabilities, we will be able to serve these markets more effectively than any other existing service. I want to emphasize that; it's organizations and people that need service to and from remote areas, so it's not a cell phone system."
Services will begin with mere voice and data communications, but will incrementally grow throughout 2001 to include better data communications and Internet access. By this time next year, the services are planned to include short burst messaging.
"Iridium Satellite will begin service with both voice and data capabilities at 2.4 kilobits per second on the data. That will be dial-up service. We expect to offer, however, enhanced data at ten kilobits per second, with a direct Internet connection within six months of the service launch, and by the end of the year, we will have introduced a short burst messaging service, which will add to our data capability," said Colussy.
Iridium Satellite hopes to limit the airtime prices to under $1.50 a minute, much lower than the original price of $7. Chairman Colussy also said that studies have shown that their subscriber base is still in the "30,000's". When Iridium shut down, 63,000 subscribers used the service.
One satellite reentered the atmosphere on November 29. A spare satellite began transitioning last week from its stand-by position to fill the primary slot in the constellation.
Analysis shows adding seven more spares will guarantee a minimum lifetime of seven years for the system with at least two spare satellites in each of the six planes of the constellation, engineers believe.
The first of two replenishment launches is scheduled for June of 2001 and will use a Boeing Delta 2 rocket to loft five spare satellites from Vandenberg Air Force Base in California. The second launch is targeted for March of 2002 using an unspecified Russian rocket carrying a pair of spacecraft.
Iridium Satellite has contracted with Boeing to operate its satellite constellation, while Motorola has stayed with the venture to provide subscriber equipment.