Iridium Satellite Network Emerges From Ashes
By REUTERS
Filed at 2:55 p.m. ET
WASHINGTON (Reuters) - The new owners of a $5.5 billion satellite telephone venture that was nearly junked said on Wednesday they were resuming commercial services halted after the old owners' stunning business disaster.
Starting Friday, ``truly mobile, truly global'' voice services will be available through the 66-satellite Iridium satellite network and its Tempe, Ariz. ``gateway'' to land-based networks, Iridium Satellite LLC said.
Enhanced data links, including dial-up access and direct Internet connectivity at 10 kilobytes per second, slower than most modern modems, will be launched June 1, the Leesburg, Va.-based company said.
Privately held Iridium Satellite LLC bought more than $5 billion worth of the old Iridium's assets, including the low-orbit satellite network, out of a New York bankruptcy court last December for $25 million.
The deal staved off a fiery end to the spacecraft. The old owners, led by electronics giant Motorola Inc. (MOT.N), had been planning to let them burn on reentry into the atmosphere rather than pay the costs of keeping them aloft.
``Iridium is positioned strongly for commercial success'' with a sharply reduced break-even point compared with the bankrupt venture, Chief Executive Dan Colussy told a news conference.
The new company has signed non-exclusive deals with 13 service providers to market its services worldwide at about $1.50 a minute. By contrast, prices as high as $7.00 a minute helped doom Iridium's original owners, whose operating costs were 10 times higher than the new venture's approximately $7 million a month.
REMOTE REACH
Operated by Boeing Co. (BA.N), the Iridium system promises an ability to reach everywhere on earth, including airspace, oceans and underdeveloped regions where land-based communications are unavailable.
The restored service is targeted at industrial users, including maritime, aviation, oil and gas, mining, construction, forestry. Another key market is government.
The original Iridium went into service on Nov. 1, 1998, heralding a new era in global communications, but went dark last March during the bankruptcy proceedings.
The network would be using only 50 percent of its call-routing capacity in the next seven years even under the most ambitious business scenarios, Colussy said.
With so many minutes ``up there going to waste,'' the new company will be able to offer attractive bulk deals on airtime, notably to China, Russia, India and African countries that can resell them to provide telephone service in remote areas, he said.
Talks have already taken place with China for the sale of hundreds of thousands of minutes for domestic use only, and ''they want to do that,'' Colussy said.
Iridium is already providing services to the Pentagon, which agreed in December to a projected two-year, $72 million dollar deal for unlimited air time for up to 20,000 federal government subscribers. The Pentagon uses a secure gateway in Hawaii of its own for the U.S. government downleg.
At least two unnamed governments are discussing deals ``not dissimilar'' from the one with the Pentagon, added Colussy, who was president of Pan American World Airways from 1978 to 1980.
The old company, Iridium LLC, sank under high operating costs, lower-than-expected demand and the quick spread and plunging cost of ground-based wireless services. Another drag was the original handset, which did not work well indoors, cost as much as $3,000 and was often compared to a brick.
DATA-READY HANDSETS
Iridium's service providers will sell data-ready Motorola handsets, some expected to retail for less than $1,000. The service providers will set pricing, with no additional long-distance, roaming or zoning charges. Handset-to-handset calls are expected to cost less than a dollar.
Satellite analysts said with flat-rate pricing and a global reach, Iridium may finally attract enough customers for a viable business.
But Iridium's main competitor, San Jose, Calif.-based Globalstar Telecommunications Ltd. (GSTRF.O), has a more modern architecture and more spectrum, or airwaves necessary to offer services, according to Greg Lucas of McLean, Va., commercial space consultancy FCCFilings.com.
This gives Globalstar ``much greater flexibility to respond to changing market conditions and to offer specialized broadband services,'' he said.
The resellers of Iridium's service include Infosat Telecommunications, O'Gara Satellite Networks Ltd., Incomserv Co. and GloCall Satellite Communications BV.
Copyright 2001 The New York Times Company
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