When TechRepublic editors David Bard and Mike Jackman began their trek up a mountain near Mt. Everest, they packed several high-tech items to use during their high-altitude adventure—but an Iridium phone was not on their supply list.
Here’s why. As the world’s first low-earth-orbit (LEO) satellite communications service, Iridium LLC is perhaps the most elegant and defunct network and now the biggest technology blow-up story of the century. It was a company that bet $5 billion that 4 to 5 million people would want a limitless lifeline to the outside world. But when Iridium went belly up in March 2000, they had less than 55,000 customers.
With no Iridium phone for our guys to lug up the mountain, MVS , an Inmarsat service provider, loaned TechRepublic a MiniSat data/voice satellite phone for our editors to take with them on their Nepal climb. The MiniSat weighs less than 5 pounds and can place a phone call from anywhere in the world. It also has computer, fax, and e-mail capabilities.
Despite its failure, Iridium’s idea was nothing short of brilliant. Motorola —the original parent company—said, “from a technology standpoint, [it was] an extraordinary achievement.” Starting in 1998, Iridium launched 66 satellites (plus 20 backups) to combine the worldwide reach of these LEO satellites with land-based wireless phone systems.
Some called the system elegant. Except for a few things. The phones were bulky and expensive. The service was costly. And then there was the advancing army of cellular companies around the globe, continually providing services in new locations.
Iridium targeted traveling business professionals who needed constant communication with their customers and offices, as well as residents of remote areas and disaster-recovery teams. But there weren’t enough of these customers who were willing to pay the high prices Iridium charged.
What will happen to the Iridium network?
Motorola, which now owns only 18 percent of Iridium, will provide maintenance service for Iridium’s satellite constellation until it can be “de-orbited” or “de-commissioned.” The bankruptcy papers call for the satellite network to be destroyed. And although Motorola hasn’t revealed its plan for the final disposition of the Iridium satellites, they will likely be forced out of their orbit to burn up in the earth’s atmosphere.
What should Iridium customers do? According to Scott Wyman, director of media relations at Motorola, “It depends on where they purchased the service and equipment and if the equipment is in good shape. If they bought it from Motorola or the Iridium North America gateway company,” he says, “we will give a refund or a credit. If they bought it through one of the independently owned gateways, they need to go back to that gateway or service provider.”An “urgent customer message” on Iridium’s Web site advises customers to contact the dealer who sold them the satellite phone and service, or go to Motorola’s Web site to get a list of gateways and service providers who can provide an alternative service, often with a small rebate or sales promotion.
Who are the players now?
Now that Iridium is gone, there’s only one satellite service in operation, although several others are moving up quickly in the wings.
Why do these companies think they can succeed where Iridium failed? Ultimately, they believe their success lies in different technology, a different marketing approach, and lower costs to the consumer. Also, the services they offer will be more varied. Whereas Iridium had costly equipment (as much as $3,000 for a phone) and $2- to $5-a-minute fees, these companies are shooting for lower costs. For instance, Globalstar is looking at $1,500 for the phone and $1.50 a minute.
So the network has to be economical. Iridium had switched their calls in space, but Globalstart, Teledesic , and ICO Global all use ground-based networks for switching, rather than switching via satellite. Satellites are used only when cellular coverage is unavailable or inadequate. Satellites are less costly to build and maintain, and the transmission is cheaper.
Globalstar launched its first satellite in February 2000, a few weeks before an already-bankrupt Iridium closed its doors. Globalstar, which has been deployed in 25 countries to date, is backed by Loral Space & Communications Ltd. and Vodafone AirTouch. Its Qualcomm-built phones offer the ability to switch back and forth among three modes of service: CDMA, analog, and satellite network.
London-based Inmarsat reported having more than 183,000 customers for mobile satcoms units (MSU) at the end of 1999. Besides voice service, Inmarsat phones also offer high bandwidth data through remote LAN access, e-commerce, e-mail, and fax. Inmarsat has four satellites in fixed-position orbit around the equator (in Geostationary Orbit—GEO). Unlike the low-orbit satellites, the high-flying GEOs are 22,223 miles above the earth, so fewer are needed to view the entire surface of the planet—although it does cause a slight delay in signals.
Teledesic LLC is a satellite system that is backed by Craig McCaw and Microsoft’s Bill Gates. It plans to have 840 satellites flying in a LEO system at 435 miles above the earth’s surface to provide lightning fast Internet connections anywhere on the globe. Motorola is also a 26 percent owner of Teledesic and its primary equipment contractor. Teledesic isn’t interested in providing remote telephone service. Instead, it is prepared to provide high-speed computer-based Internet and videoconferencing from remote areas at a per-minute charge. The company expects to have a full-fledged, high-speed satellite Internet network by 2004.
Inmarsat had been an IGO (intergovernmental organization) in England but broke off and became a private limited company in 1999. In the process, it essentially set loose an offshoot company called ICO Global Communications, in which it had been a major investor. This bankrupt venture was salvaged by Craig McCaw, who had also briefly considered investing the money to save Iridium. With McGaw’s purse strings, ICO Global Communications will now become part of McGaw’s “Internet in the sky” dream. Ironically, ICO launched its first satellite on March 12, 2000, just days before Iridium’s demise. The company is expected to be providing full services by 2002.
Lessons for IT managers
What can IT managers learn from the satellite phone company saga? TechRepublic associate publisher Bob Artner described some key considerations in a recent article “The fall of Iridium: A cautionary tale for ‘big ticket’ IT projects.”
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