Most of us remember Iridium as the Motorola-backed, multi-billion dollar commercial satellite phone flop. The expensive, bulky phones, the $2 per minute airtime charge, and the inability to use the phone inside buildings doomed the project, which came online when the cell phone market was taking off. Despite all these problems, the US military found the low-bandwidth satellites and phones very useful. So the Pentagon backed an effort for the constellation to be acquired by investors at a fraction of the original $5 billion development cost, and became the revived satellite company’s largest customer.
Iridium Communications Inc. has been steadily picking up customers beyond the Pentagon. They now have almost 360,000 subscribers, and in 2007, they began planing a second-generation satellite constellation called Iridium NEXT. Expected to be ready in 2014, Iridium NEXT will offer higher data speeds, flexible bandwidth allocation, and IP-based routing. In the meantime, militaries have found innovative ways to use Iridium’s services, making Iridium NEXT a privately-held but significant space resource for future military operations.
Iridium’s 2010 constellation has 66 satellites in orbit, which includes 7 spares. Since the original Iridium owners began commercial service in 1998, the constellation has lost 7 satellites: 6 to onboard failures, some of which are radiation-induced, and one in a February 2009 collision with a defunct Russian satellite. All of these satellites are long past their 7-year design life, but they are expected to continue to provide the current range of voice and data communications through 2014.
Iridium competitor Globalstar in Milpitas, CA took a serious revenue hit from satellite failures, which are a larger risk thanks to their higher and more radiation-exposed orbits. Iridium wants to avoid that, and also wants to transcend the bandwidth limitations of its current satellite fleet.
From 2015 through 2017, Iridium plans to replace its current low-earth-orbit satellite constellation with a total of 72 new satellites and on-orbit spares, which will provide more features, more flexibility, and more bandwidth. Iridium NEXT’s improvements will include data rates up to 1 Mbps, Ka-band service, private network gateways, and broadcast and netted services.
The existing constellation is already being used in some innovative ways. The USMC’s Netted Iridium Program is using it as an over-the horizon command and control link from ships to inland Marines. Boeing’s HI/i-GPS is far more significant, however, leveraging the Iridum constellation to supplement and improve the critical NAVSTAR GPS system.
Iridium NEXT aims to take that kind of flexibility one step further, in line with commercial practices by companies like Intelsat. In addition to providing voice and data communications, the NEXT constellation will be able to host payloads that will allow partners to add capabilities, using Iridium satellite cross-links and eearthside control centers to deliver sensor and other data to the partners who developed the payloads. Key specifications include:
Weight: 50 kg
Dimensions: 30×40 x 70 cm
Power: 50 W average, 200 W peak
Data rate: Up to 1 Mbps
The Pentagon is considering a payload to support its space situational awareness requirements. Other payloads being considered reportedly include remote sensing, weather monitoring, earth observation, and command and control
June 2/10: The $2.1 billion contract to build the Iridium NEXT constellation… won’t go to Lockheed Martin. Thales Alenia Space walks away with the fixed price contract to design and build 72 operational satellites and in-orbit spares, plus an additional 9 ground spares. That will expand the project’s expected size, bringing the total estimated cost to design, build, and launch the constellation to $2.9 billion.
The first Iridium NEXT satellite is now expected to launch in Q1 2015, with satellites launching through 2017 as 1-for-1 replacements of the existing constellation. Iridium’s ground segments are already evolving, and will be capable of commanding and controlling both old and new satellites. Likewise, the new satellites will remain compatible with existing receiver deices.
The French export credit agency Coface who financed Thales Alenia Space’s win to build the new Globalstar constellation for Iridium’s rival, also played a role here. They issued a $1.71 billion a “Promise of Guarantee” that will cover 95% of the project’s required credit, and is not conditioned on Iridium raising any further debt or equity financing. The financing to cover that guarantee is being syndicated through French and other international banks and financial institutions, and is expected to be completed in summer 2010. Goldman, Sachs & Co., Société Générale, and Hawkpoint Partners Limited continue to advise Iridium in connection with the financing.
Meanwhile, the structure of the guarantees allows Iridium to enter into an Authorization to Proceed (ATP) with Thales Alenia Space. This means that development work can begin immediately, without waiting for final financing.
Thales Alenia Space says that 40% of the work will be performed in North America, but the announcement is still a blow to an American satellite industry that has been sliding for some time. The Wall Street Journal adds that Lockheed’s management had been counting on the Iridium job to avoid production cutbacks, after a recent reorganization of its military and civilian satellite units. Thales is emerging from its own restructuring and upheaval, after a bitter boardroom battle for control and pressure to improve margins. About 10% of the French company’s revenues are now tied to the American market, and the win is consistent with ousted CEO Denis Ranque’s strategy of expanding US sales.
With so much investment pouring into the global satellite market at Iridium and Globalstar, some analysts like Tim Farrar wonder whether the new satellites will prove disappointing for the firms, but good news for customers. Time will tell. See Iridium Communications release and multimedia release set | Financing Power Point [PDF] | Information Week| V3 UK | Wall St. Journal (subscription).
Feb 8/10: Iridium awards a contract to Hughes Network Systems, a supplier of Iridium handsets and terminals, to develop the access network controller (ANC) for the Iridium NEXT ground control network.
Under the development contract, Hughes will design and supply an ANC system, which will process voice and data calls received from the satellites and route them to the end user. It’s intended to double the capacity of the existing Iridium system, and let the firm add more ground terminal sites. Iridium expects the ANC to be complete and operational by the 4th quarter of 2011. Iridium release.
Jan 28/10: Integral Systems in Colorado Springs, CO announces that its subsidiary RT Logic received a contract to supply 2 Telemetrix 400XR modulator/receiver (T400XR) modems for the Iridium NEXT system.
Nov 19/09: Iridium announces that it completed technical studies, working with independent technology partners, that demonstrate the feasibility of hosting earth observation and remote sensing payloads on its Iridium NEXT satellites.
Sept 24/09: Iridium CEO Matt Desch says that the firm may need to delay its selection of a satellite provider until early 2010. He adds that Lockheed Martin and the Franco-Italian firm Thales Alenia Space are both actively seeking support from their country’s export-credit agencies. Space News.
Sept 23/09: GHL Acquisition Corp. and Iridium Holdings LLC sign a definitive agreement to combine their resources, leaving debt free. GHL Acquisition is a special purpose acquisition company sponsored by Greenhill & Co., Inc. It raised approximately $400 million, and is approximately 17.5% owned by Greenhill & Co. SatNews | Digital Trends.
The transaction was unanimously approved by the Board of Directors of GHL Acquisition and Iridium, as well as Iridium’s major shareholders. It values Iridium at approximately $591 million. The combined enterprise will be renamed “Iridium Communications Inc.,” and will apply for listing on the NASDAQ. SatNews.
Aug 4/09: Iridium Satellite announces it selected 2 companies – Lockheed Martin and Thales Alenia Space – to participate in the final phase of its procurement process for the Iridium NEXT constellation. Iridium chose Lockheed Martin and Thales Alenia Space as a result of their initial constellation design concepts; demonstrated understanding of performance requirements and capabilities; and preliminary cost estimates for the manufacture and launch of Iridium NEXT.
February 2007: Iridium Satellite announces its intention to build a second-generation satellite constellation called Iridium NEXT. Anticipated to begin launching in 2014, Iridium NEXT will offer enhancements including: improved data speeds, higher quality voice, flexible allocation of bandwidth, and IP-based technology.