This worldwide satellite-based communications system went from dream to reality in a decade but quickly failed in the market; its revival took persistence and luck, plus a new customer base.
Iridium’s launch, crash, and nearly burn (literally)
The Iridium communications service was initiated on November 1, 1998, with a call by then-Vice President Al Gore. After several months of working through technical issues, the system actually worked fairly well and met most objectives. Potential users were impressed, and the initially skeptical technology community was impressed that Iridium went from an idea to a fully operational system in a little over a decade.
On the business side, though, things were dismal. Instead of tens of thousands of users willing to pay thousands of dollars for a phone and about $10/minute for a call, the system only signed up a few hundred. Among the reasons is that the anticipated market of world-wide business travelers never materialized, due to the cost and size of the handsets and calls, the fact that most such travelers were in areas that had cellular service, and an Iridium technical weakness that the caller had to be outside to “see” the satellite. In contrast, conventional cell calls could be done from inside most buildings.
Iridium Satellite LLC (the official name) went into Chapter 11 bankruptcy in less than a year. What took a little over a decade to create and implement took just nine months to crash figuratively, and it seemed the literal crash come soon thereafter. Motorola would not tolerate the $200 million/month ongoing operating costs with no prospect of eventual turnaround; simultaneously, the gateway owners demanded make-good on their expected revenue, and the system needed planning for additional satellite launches as spares.
Motorola said the solution to this never-ending financial drain was easy and clear: write off the loss, and kill the system and shut it down, which included de-orbiting the satellites by directing them into lower orbits where they would soon begin reentry and burn up. The picture was both bleak and apparently hopeless.
Over the next few months, Motorola issued several “firm and final deadlines” saying if the system did not find a buyer by a specified, very close date, the satellites would be instructed to de-orbit with 48 hours of that deadline; each time, the deadline was put off due to pleading from a small group of tireless Iridium proponents who sought new investment partners in the $20 to $100 million range around the world, including poor African countries who wanted both the connectivity access and prestige and their portion of the ongoing gateway revenue.
Back from the near-dead
A break came for the unlikeliest of places when a New York Times article on the Iridium situation mentioned that some of the satellites might not burn up completely, and some debris might land on inhabited areas or even hit someone. Suddenly, legal liability became the dominant issue preventing issuing the de-orbit command, with concerns about who would have that liability, who would insure against it, and how that would happen. This potential debris issue – and it was a real but actually quite a minor possibility based on previous satellite burn-ups – became the delaying element which kept Motorola from issuing the formal de-orbit order and bought time for more tries at survival.
Eventually, after countless issued and withdrawn deadlines and hunts for funding, the remaining Iridium team, led by Dan Colussy, a retired CEO of Pan, heard about Motorola’s plans and decided he would buy Iridium. After considerable effort, he was able to pull together financing from private investors and the US Department of Defense (DoD), who became convinced after many meetings and PowerPoint presentations that Iridium was a valuable and irreplaceable resource for the military. Critical to this decision was the reality that the Colussy’s Iridium team – mostly aerospace industry veterans and former DoD insiders – knew the right people to talk to, or at least knew people who could help them get meetings with the key influencers and decision-makers at the Pentagon.
The DoD funding came from a “special fund,” used for special projects and did not require any formal tender or bidding but is instead reserved for projects deemed critical for national security. Potential Iridium competitors such as Globalstar protested, but these were denied under “critical to national security” rules. (Note that Globalstar’s proposed system was technically far less advanced, as it used the satellites only as relay points from earth-satellite-earth connections. This is known in the industry as a “bent pipe” arrangement and may require several “hops” between callers; in contrast, the Iridium system used the satellites as a sophisticated meshed network with far less propagation delay since call routing was done dynamically by the mesh itself.)
The assets of the bankrupt company, Iridium Satellite LLC, were purchased for $35 million (compared to a cost of billions) by the newly created owner, Iridium Communications, Inc., a publicly-traded (NASDAQ) company. All the gateways have been shut down except for a commercial one based in Tempe, Arizona, and a DoD one in Hawaii.
But the story does not end there. Like a fairy tale or the legendary Phoenix bird of many cultures (known for its ability to live for many years before dying in a burst of flames, only to be reborn from the ashes), Iridium was reconstructed, rebuilt, and restarted. As of 2019 company has 782,000 subscribers, with 72,000 of them government subscribers. They have expanded from basic voice service to broadband service for higher-speed data. They are actively working on a full set of 3rd-generation satellites for even higher-speed performance and capacity, at the cost of just under $2 billion. Among the commercial users are oil rigs, ships, desert mining sites, and even Antarctica’s year-round scientific bases.
The next part of this article looks at some of the “big picture” lessons and context of the Iridium project.
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- “Eccentric Orbits: The Iridium Story,” John Bloom, Atlantic Monthly Press, 2016.
- “Iridium Will Host Science Payloads,” IEEE Spectrum, Nov. 30, 2009
- “The Collision of Iridium 33 and Cosmos 2251,”Aerospace, December 10, 2015
- “A guide to useful, useless, official and unofficial Iridium websites”
- “The Rise and Fall and Rise of Iridium,” Air & Space Magazine, September 2004
- “Iridium ends legacy satellite service, switches all traffic to Next fleet,” Space News, February 2019
- “SpaceX completes Iridium Next constellation,” Space News, January 11, 2019
- “Iridium starting to deorbit legacy satellites as Next constellation comes online,” Space News, May 1, 2017
- “Elon Musk’s Ambitious Communication Project to Ring Earth with 40,000 Satellites,” News18, Sept 19, 2020
- Wikipedia, “Starlink”
- “Starlink: SpaceX’s satellite internet project,” com, January 17, 2020
- Thales Group, “Happy Birthday Iridium Next,” January 14, 2020
- PhoneIsMobile, “Iridium Satellite Phone”
- Wikipedia, “Iridium satellite constellation”
- Wikipedia, “Inmarsat”
- Wikipedia, “Thuraya”
- Wikipedia, “Globalstar”