Iridium L.L.C.-the Motorola Inc.-led consortium expected to offer global voice, paging and fax services via a constellation of 66 low-earth-orbit satellites by September-announced it has secured the U.S. Department of Defense as its first customer.
According to the consortium, the military will buy a gateway ground station that connects to the Iridium satellite network for $14.5 million. That gateway will be used exclusively by the military and other branches of the government, said Michelle Lyle, Iridium’s senior manager of corporate communications. Communications traffic comprised of customers subscribing to the Iridium service through other carriers will travel through a separate gateway. Both gateways are in Arizona.
While some critics have doubted the viability of Iridium’s proposed system, its acceptance by the U.S. government serves as a significant plug for the company, which may inspire other governments to follow suit. “This is one big customer and a big endorsement of the quality and viability of our system,” Lyle said.
According to Col. Robert Weber, program manager for the Defense Information Systems Network-a unit of the DOD-the military chose the Iridium system because of its vast coverage and a belief that it will be the first such service to market.
“It meets a need for us in that it has global coverage,” he said. “We have our own military satellite systems, but they don’t meet all our needs. We have more requirements than they provide. It’s pretty saturated.”
He said a congressional mandate led the military to pursue agreements with commercial communications companies as a cost-saving measure, because subscribing to a commercial service is much cheaper than building a global satellite system of its own.
The military signed the customer contract with Motorola’s Satellite Communications Division, one of the companies offering the Iridium satellite service. The agreement differs from those expected to develop with commercial providers in that the gateway purchased by the military will not tie in to any terrestrial-based networks, thus the network will remain purely a satellite-based system. This potentially could translate to a gushing revenue stream for Iridium, as satellite-only communications is about 25 percent more expensive than normal international calls through the system.
The military also will buy a number of handsets from Iridium to access the system, but Weber said he does not yet know how many he will buy, nor has Iridium given him a price yet.
There has been speculation that the Iridium network may not meet all customers’ needs. Weber acknowledges this, but said he feels the military made a prudent decision in selecting the service.
“We recognize no system is perfect, but I don’t know of anything else that’s available … We feel there’s enough benefit out there to warrant” using the service.
Weber said the military also is looking at securing a possible deployable gateway concept with Globalstar Telecommunications Ltd., a mobile satellite service provider expected to begin launching satellites this year.
The military has several uses in mind for the global satellite services, Weber said. One such use would be to connect Navy personnel with their families while on missions at sea. The communications system also is expected to aid in the military’s vast administrative duties. “Not all our needs are war-fighter needs,” he said.
Iridium also announced several developments that it said are positive indications the company will reach its September service start-up date. The company planned to launch an additional five satellites Jan. 31, on a Delta II rocket from the Vandenberg Air Force Base in California. If the launch is successful, Iridium will have 49 orbiting operational satellites.
Ten of the planned 12 system gateway facilities around the world are complete, the company said. It has received authorization to begin construction of its Middle East gateway, scheduled for completion by mid February, but has yet to secure system authorization in China.
Its U.S. distributor, Iridium North America, based in Tempe, Ariz., successfully conducted the first test calls transmitted from a test Iridium telephone to an orbiting satellite and through to the gateway located in Arizona. The company also continued testing the satellite alphanumeric paging capabilities.
Iridium awarded Sprint Telecenters the contract to manage its three Global Customer Care Center. The call centers are planned to supplement the customer care centers of Iridium’s service providers and roaming partners.
Preliminary and final L-band licenses have been granted to the company and its partners in 35 countries, Iridium said, and the company has negotiated more than 100 service provider and roaming partner agreements in markets across the globe. The company, together with these partners, is negotiating with more than 500 more.
Iridium also released its fourth-quarter earnings. Total net loss for the quarter ended Dec. 31 was $125 million, bringing the net loss for the year to $293 million.
