The resurrection of Iridium came full circle last week with the announcement that the company’s Tempe, Ariz., gateway is fully operational and voice service now will be available via its 66-satellite network to remote customers all over the world.
Iridium Satellite L.L.C. plans to offer voice services to maritime, aviation, mining, oil and other industries with remote workers, as well as government customers, through 13 service providers worldwide. Data services are scheduled to be available June 1 with dial-up speeds of up to 3 kilobits per second.
“Our current operational structure enables the delivery of … voice and data services and ensures a low break-even threshold for Iridium,” said Dan Colussy, chairman and chief executive officer of Iridium.
The Department of Defense has been using the Iridium satellite network since its inception in 1997, and, according to Iridium, has spent approximately $250 million on the system to date, mostly to beef up its security.
This marks the end of a turbulent year that saw the original Iridium file for bankruptcy, and Motorola Inc., the company’s prime investor, lose millions. After several attempts by various organizations to buy Iridium’s assets, Colussy and a group of investors purchased the defunct company for $25 million last November.
The new Iridium is taking a more focused approach to the marketplace by only selling to commercial customers. The original Iridium was marketed as a consumer device, but with handsets costing around $1,500, and per-minute rates of $1-$1.50, the average consumer turned away from the product and rendered the highly expensive satellite network useless.
The new handsets from Motorola, which were shipped to customers beginning Monday, cost around $1,000, and a satellite pager also will be available for around $500, Iridium said. The company is charging a flat rate of $1.50 per minute, with no additional long-distance, roaming or zoning charges, but it is up to the individual service provider to set a final price.
The cost of using the Iridium network may still seem high to the average person, but industry customers are accustomed to paying a lot more for communication devices and services, noted Colussy.
“The companies that we’re talking to will see this as a major cost reduction,” he said.
Iridium itself will see the new equipment and service plans as a major cost reduction. According to Colussy, Motorola was operating and maintaining the satellite network at the expense of about $1 billion per year. The new Iridium expects to pay about $7 million per month, or $84 million per year, to keep the network up and running. Iridium also predicts it will need about 60,000 customers to cover costs, compared to the 1 million subscribers the original Iridium said it needed to break even.
Colussy said the number of orders coming in were very encouraging, and that the company was “capitalized in a way that we can last a couple of years.”
The Boeing Co. is under contract to operate and manage the network, which includes 66 low-earth-orbit satellites and seven in-orbit spares. Iridium said it plans to launch seven additional spares in 2002.
Iridium also said former customers who still own phones can contact a service provider to upgrade for data-readiness, voice enhancements and immediate voice service.
