“We are on the verge of completing a massive system that has been 10 years in the making,” remarked Dr. Edward Staiano, vice chairman and chief executive officer of Iridium L.L.C. last week at a press conference in Washington, D.C.
Staiano spent about an hour at a National Press Club Morning Newsmaker Forum updating the media on the status of the global wireless communications network his company is developing, which is expected to begin commercial service Sept. 23. The network combines a constellation of 66 low-earth-orbiting satellites with land-based wireless systems to allow global voice and paging communications anywhere in the world using one handset and receiving one bill.
“The new global mobile personal communications system will revolutionize the way people communicate,” he said. “Iridium customers will have one telephone that they can use anywhere in the world. They will have one phone number where they can be reached, whether they’re in Europe, Asia, Africa, South America, here in the United States or somewhere between. And for all the calls they make, they will receive one monthly invoice in their own language and currency.”
Staiano said the company expects to have all satellites launched and deployed in the next week. He also said the company’s Satellite and Network Operations Center in Leesburg Va., is complete, now that the software controlling the satellite and their orbits has been installed. The backup facility for that center in Rome also is complete, he added.
Staiano said the four Telemetry Tracking and Control facilities used to communicate with the satellites are finished, as is the physical construction of all 12 gateway terminals used to switch calls between the satellite network Iridium’s partners’ terrestrial network. All of the necessary equipment is installed in 11 of those, he continued, and is being tested. Of Iridium’s 15 business offices, 13 have all of the necessary hardware and software installed.
Moving on to distributor and roaming agreements, Staiano said Iridium has secured 190 service provider and roaming partner agreements to date, giving Iridium 80 countries in which it has at least 75 percent market access.
“Roaming partners and service providers are a vital part of our distribution strategy,” he said. Service providers will be the national and local retail presence for the Iridium system, while roaming partners will provide access to their networks, in return for access to the entire Iridium system.
“In other words, Iridium will enable its cellular network partners to expand their cellular service coverage to the entire planet,” Staiano said. Iridium also has signed license agreements to operate in 50 markets and expects it will be licensed in 100 markets by the service launch date.
On the financial end, Staiano said the company silenced skeptics by raising more than $5 billion in funding, half from equity investors and half from bank financial and high-yield bonds. On that note, Iridium announced its intention to file this week a registration statement with the Securities and Exchange Commission to offer $350 million series D senior notes due 2005.
Staiano predicted the company would become cash-flow positive after one year of operation.
Iridium’s primary customer target is the international mobile business user; followed by industrial users like oil and mineral extraction companies, cargo shipping and construction; and various governments. The U.S. Department of Defense recently bought a dedicated gateway that can be used by any federal office.
According to Staiano, Iridium’s market research found that the market for global mobile communications users will by 12.5 million in four years. Iridium’s first teaser advertisement appeared April 20 in Japan and received what he called an overwhelming response. The next teaser ad will appear in Brazil.
Although the company can’t be completely sure of the market demand for its product, Staiano said that its initial expected sales numbers based on the expressed interest to date already exceeds Iridium’s internal business plan.
