If all goes as planned, Iridium L.L.C.’s vision of a global wireless phone network-based on a constellation of 66 low-earth-orbit satellites interconnected to several terrestrial-based networks-will begin commercial service on 23 September.
While the company continues to put the finishing touches on the satellite network, which has experienced a few failed satellites that are being replaced, the primary effort now is to secure distribution and roaming agreements with service providers in every country possible, and to market the service to potential customers.
According to Craig Bond, Iridium vice president of market development, Iridium went about this by dividing the world into 15 regions, each overseen by a franchise partner that owns or shares one of the 12 Iridium earth-station gateways, which connect the satellite constellation to terrestrial-based networks. Some regions are small enough that they can share a gateway. All are investors in Iridium with the right to distribute the Iridium phones and service by recruiting local service providers and others.
There are two types of agreements-distribution and roaming. Distribution partners agree to market Iridium’s portfolio of products and services. These partners don’t have to be service providers. For instance, some distribution partners sell various types of equipment and supplies to the mining, natural gas, oil and shipping industries, of which the Iridium communications program would be one.
Roaming partners are service providers that allow Iridium customers access to their network and in return, their customers can roam on any other Iridium roaming partner’s network in the world. Some roaming partners also are distribution partners.
At press time, Bond said the company had secured 250 contracts in 113 countries for both roaming and distribution. It is signing five to six new contracts a week and adding one or two new countries in the fold. Most countries have contracts with several providers. For instance, Iridium signed 23 such contracts in Russia alone.
Sufficient agreements have been reached to cover North America, South America, Europe and Eastern Europe and parts of Southeast Asia, Bond said. However the company is still working on extending partnerships in Africa, the Middle East and other areas of Asia.
“The reason we have some delays, or have taken longer in some areas, is because the global mobile satellite service we’re offering is the first of its kind out there,” Bond said, and not everyone understands what exactly the company is offering.
Iridium will offer two kinds of service: satellite or cellular. Planned satellite users will be people who expect to be outside of any type of cellular coverage for an extended time, such as remote mining operations, and they would use a satellite-only phone.
The cellular service will be for global business travelers, using a phone with a slot for cartridges that will allow it to roam on any cellular network with which it has agreements. The phone also defaults to satellite mode if no such network is available.
Iridium places a universal translator throughout its roaming networks. This allows an Iridium subscriber with a CDMA (Code Division Multiple Access) home network roaming on a GSM (Global System for Mobile communications) network to be verified with Iridium’s aid. The GSM network sends a query to the roamer’s home network to verify the customer’s right to roam there. Usually, this query is not understood by the CDMA network because it is in GSM language. Iridium takes that query from the GSM network and translates it for the CDMA network, then translates the CDMA network reply into language the GSM network can understand.
This rather confusing system gave some potential partners the wrong idea.
“Some cellular operators in other countries viewed us at first as a competitive threat,” Bond said. “It took time to explain who we are and what we are.” These operators had to be shown “that through one contract agreement, Iridium will provide for inbound roaming onto their network from anywhere in the world and outbound an unlimited extension to the rest of the world … They instantly have coverage everywhere and instantly become a global competitor in one contract.”
The hurdles didn’t end there.
“Not only did we have the technical challenges of building the infrastructure and marketing challenge of getting distributors signed up, but we also had educational challenges with governments. That’s where we’ve had some of our biggest complexities.”
Many were confused about how to tax and monitor a service that has no physical presence within their borders, essentially using a switching center in space. “We provide complete coverage in a country without any infrastructure there,” Bond said. “They had to figure out how to regulate us.”
Iridium also had to contend with disinformation from other sources.
“Let’s just say it’s in some companies’ interest for us not to be understood,” Bond said.
One area of particular concern was China. For a time, Iridium thought it might be prohibited from operating in the world’s largest wireless market. Bond said the biggest challenge in China was that a competitor, Globalstar L.P., had strong Chinese partners that were well-connected to the Chinese government, which had considered only allowing one satellite provider access in the country. Iridium had to convince the government otherwise, then faced a long regulatory process.
He said the experience in China is indicative of what the company faced in each region.
“As soon as we’ve gotten the chance to talk and get through to them, we’ve had almost complete success,” he said.
Finding the right marketing partners is crucial. Even Iridium’s most ardent supporters say the company must generate a substantial number of paying subscribers quickly in order to pay off the US$3.4 billion start-up price tag, as well as to prepare for the network upgrades expected in the next five to seven years.
“They really need to get a large audience and get a lot of money,” commented Larry Swasey, analyst at U.S.-based Allied Business Intelligence Inc.
And while Iridium has a strong global brand and marketing presence in Motorola Inc., the consortium leader, and recently kicked off a US$140 million advertising campaign, it will rely heavily on the efforts of its local service provider distribution partners to acquire customers.
“Anytime you do a global marketing campaign, you have a very hard road ahead of you,” Swasey said. “It all depends on your local marketers getting it to people they know.”
