Iridium Satellite re-launches service

Re-created after a financially dismal attempt at a global satellite communications network in 1998, the new Iridium Satellite LLC launched its worldwide telecommunications network for industrial users in remote locations Wednesday.

Voice communications are now available to users through the company’s 66-satellite, space-based network, and data services will be available by June, the Arnold, Md.-based company said in an announcement.

Just three months ago, the original Reston, Va.-based Iridium LLC was mired in bankruptcy and was about to undergo the decommissioning of its satellite network, which was built by Motorola Inc. and others. But at the last minute the network was purchased. The buyers paid US$25 million for the dormant satellite system that cost $5 billion when it was built in 1998.

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

Now, the new company has refocused itself to provide remote telecommunications for industrial users, including oil drilling, construction, mining and maritime businesses, where normal telecommunications links are impossible.

“Through a focused approach to fully understanding the needs of our customers, Iridium is positioned strongly for commercial success,” said Dan Colussy, chairman and CEO of Iridium, in a statement. “Our current operational structure enables the delivery of cost-effective, user-friendly voice and data services, and ensures a low break-even threshold for Iridium.”

The company has signed agreements with 13 service providers around the globe to sell its services and provide support. The companies will sell data-ready Motorola handsets for use with the system. 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 who own phones can upgrade them for use with the new system.

The company will 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,” Scannell 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 service because of its cost and bulky first-generation phones. The consumer market was an original sales goal that was “doomed to fail,” he said.

That has changed under the new company.

“I think it has a successful 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 Seattle-based The Boeing Co. to operate and manage the 66-satellite network and its seven spare units circling the globe.

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