Iridium Refocuses on B2B

After a failed attempt to attract consumers when it launched in 1998, a repositioned Iridium Satellite LLC last week went live with a worldwide telecommunications network for industrial users in remote locations.

Voice communications are now available to users through the Arnold, Md.-based company's 66-satellite network, and data services will be available by June, Iridium announced last week.

Just three months ago, the original Iridium LLC in Reston, Va., was mired in bankruptcy proceedings and was about to undergo the decommissioning of its satellite network, which was built by Schaumburg, Ill.-based Motorola Inc. and others. It was purchased by a consortium of buyers that includes Dan Colussy, an aviation industry veteran; Syndicated Communications Inc. in Silver Spring, Md.; and other private investors whose names haven't been disclosed. The consortium paid $25 million for the dormant satellite system, which cost $5 billion when it was built in 1998.

The first major user signed on in December, when the U.S. Department of Defense agreed to a two-year, $72 million contract to obtain secure wireless communications for about 20,000 government employees.

Back to Work

Iridium's satellite network, which is going back in use:

Was built in 1998 for $5 billion by Motorola and others

Consists of 66 orbiting satellites and seven spares

Was bought last year out of bankruptcy for $25 miliion

Iridium has repositioned itself to provide remote telecommunications for industrial users, including oil drilling, construction, mining and maritime businesses, where normal telecommunications links are often impossible.

"Through a focused approach to fully understanding the needs of our customers, Iridium is positioned strongly for commercial success," said Colussy, the firm's chairman and CEO, in a statement.

Iridium has signed agreements with 13 service providers around the globe to sell its services and provide support. The service providers will sell data-ready Motorola handsets for use with the system. Prices for the phones begin at less than $1,000, and airtime rates are less than $1.50 per minute, with no additional long-distance, roaming or zoning charges.

Former Iridium customers can upgrade their old phones for use with the new system. The company plans to launch data services, including dial-up access and direct Internet connectivity, in June.

Tim Scannell, an analyst at Mobile Insights Inc. in Mountain View, Calif., said the reborn Iridium may have found its niche. "It's a fire sale," he said. "They got a great buy by getting a $5 billion project for $25 million, and they don't have any debt going into it."

A key for the new venture is that it isn't targeting consumer users, who rejected the original Iridum service because of its cost and bulky first-generation phones. The consumer market was an original sales goal that was "doomed to fail," Scannell said.

That has changed under the new company.

"I think it has a successsful shot at doing something," Scannell said. "But what might work against it is the [slowing] economy" as companies look for places to cut spending.

Iridium hired The Boeing Co. in Seattle for an undisclosed fee to operate and manage the 66-satellite network and its seven spare units circling the globe.


Copyright © 2001 IDG Communications, Inc.

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