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Iridium reborn. Globalstar expands

Jan 1, 2003

Sometimes, in the interest of getting a story out while it's fresh, journalists can get a little ahead of themselves. Events then break in a different direction and make the story less than accurate. My recent report on the Iridium satellite system's death ("Iridium's fall," Issue No. 110, Nov./Dec. 2000) appears to have been, to quote Mark Twain, "greatly exaggerated."

Iridium's satellite constellation escaped fiery destruction on Dec. 6, 2000, when the Pentagon announced a $72 million, two-year contract with Iridium Satellite LLC of Arnold, Md., to provide continued Iridium service. According to the Pentagon, there are an estimated 20,000 U.S. government users of Iridium. Boeing Corp. will operate the system, which includes low-earth-orbiting satellites, a control network, and an operations center. Iridium Satellite LLC (www.iridium.com) is taking over the Iridium system for a reported $25 million as per the order of the U.S. Bankruptcy Court of southern N.Y. Iridium Satellite is headed by Dan Colussy, a former president of Pan Am airlines and chairman of United Nuclear Corp.

Motorola Corp., which was the major partner behind Iridium, had announced in late August that it intended to shut down the system and "de-orbit" the satellites. The spacecraft would be slowed, they would lose altitude, and then they would enter the upper atmosphere where they would slow further, lose more altitude, and eventually burn up due to frictional heating. The Clinton Administration reportedly wanted to block the de-orbit plan because it felt public fears would be aroused at the prospect of more than 66 satellites falling from the skies, though a government study found that the plan for de-orbiting the satellites carried a risk to life and property - a 1 in 10,000 chance of someone on the ground being hurt by falling debris - that was acceptable under federal guidelines.

The Iridium system purchase will probably be recorded as one of the biggest corporate fire sales in history. In fact, according to remarks made by Colussy during a conference call on Dec. 12, 2000, the $25 million paid for the system was less than the estimated $30 million expense Motorola would have incurred to de-orbit the satellites.

While civilian users were left without service when Iridium's earth station gateways were shut down in August, the U.S. Department of Defense (DOD), which has its own Iridium gateway in Hawaii, continued to use the system without interruption. With its worldwide operations, DOD finds Iridium a useful communications tool. According to Colussy, an Iridium communications package has even been installed on an F16 fighter aircraft. The DOD has a variety of needs for Iridium phones: small unit operations, special forces, combat search and rescue, and polar communications. According to the Pentagon, Iridium will offer an encryption capability in 2001. This added security will presumably make the system even more attractive for military use.

Beyond the military applications of Iridium, there was a small group of civilian users who were left without service when the non-military side of Iridium shut down. The new Iridium Satellite LLC contacted a sample of these users and learned that many of them found the service valuable and wished to keep using it. Iridium has decided to target niche users rather than acquiring a large base of users in the general population. These markets include aviation, commercial maritime, oil and gas, mining, heavy construction, forestry, emergency services, and yachts. Since Iridium in its new incarnation has much lower monthly costs, it reportedly can be profitable with far fewer subscribers.

In fact, according to Colussy, if the new Iridium can regain the roughly 63,000 users it had when the system was turned off in August, it will break even.

According to statements by Colussy during the December conference call, Iridium is planning to keep prices at less than $1.50 a minute no matter where on the earth the call originates. This will be in marked contrast to the higher prices, sometimes reaching $7 a minute, charged by the first incarnation of Iridium.

The other handheld satellite phone company currently providing service is Globalstar (www.globalstarusa.com). Whereas Iridium's satellite technology allows phone calls to be relayed between satellites, effectively providing worldwide coverage, Globalstar opted for the tried-and-true approach of using the satellites as "bent pipes." The satellites receive signals from a user's phone on the surface and then retransmit the signals down to a gateway earth station where those signals are relayed to the land-based phone network (called the public switched telephone network, or PSTN). The advantage here is using reliable off-the-shelf technology that doesn't cost billions to develop. Of course, the system can only work if an earth station is in view of the Globalstar satellites. Ocean voyagers might be concerned that Globalstar won't provide them coverage offshore since there are obviously no gateways in mid-ocean. And several media sources (including this magazine) have stated that coverage is only out to 200 miles offshore.

However, there are some mitigating factors here that allow ocean coverage to be quite a bit better than that. The Globalstar system is designed to allow multiple satellites to track signals from a user. This "path diversity" approach means that, while one satellite picking up a user's signal may not be in view of a gateway, another satellite could well be and thus provide coverage. Another reason that Globalstar coverage includes the vast majority of the North Atlantic, for example, has to do with the distortions wrought by the Mercator chart projection. If you look at a Mercator chart of the North Atlantic, the ocean looks wide from Greenland to the equator. However, at higher latitudes Mercator projections introduce considerable distortion (this is what makes Greenland look larger than South America on a Mercator map). Since the Canadian maritimes and Britain are closer than they look, gateways in those locations can provide coverage over most of the ocean area (see coverage diagram).

Globalstar is working to fill in those areas of the globe it doesn't already cover. "We opened a gateway at the end of November," said Bill Wright, marketing specialist for Globalstar Caribbean, "giving us coverage of the Caribbean." The gateway at Cabo Rojo in Puerto Rico allows voyagers throughout the Caribbean to use the satellite network's 48 low-earth-orbit (LEO) satellites. For those voyagers in the South Atlantic, Indian, and most of the Pacific Oceans, however, there is only limited Globalstar coverage.

Globalstar offers a range of monthly service packages with combinations of bundled minutes and a price for each minute used over and above that bundle. This gives voyagers flexibility in choosing a package that fits their needs. For example, the Beyond 50 plan includes 50 minutes for $89.95 a month with each additional minute costing $1.49.The third satellite telephone provider will be New ICO. (The original incarnation of ICO filed for bankruptcy in August of 1999. New ICO emerged from that restructuring in May 2000.) The last player to reach the market, New ICO is launching fewer satellites than Iridium or Globalstar and is putting them in higher orbits.

Iridium and Globalstar use spacecraft in low earth orbit (500 to 800 miles up), while New ICO will launch birds to intermediate circular orbit at 6,400 miles high. New ICO plans to offer voice capability when it inaugurates service in 2003, but it is also planning to provide data and fax services and Internet connectivity. Even though New ICO is getting into the game later than Iridium and Globalstar, the company has the advantage of having been spun off from Inmarsat, one of the few organizations that has successfully operated a satellite communications network. Since New ICO identified yachtsmen as one of its market segments, voyagers may well find this system, with its worldwide coverage, to be an attractive option.


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