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The Rise and Fall and Rise of Iridium

Iridium's constellation of 66 comsats was a technological triumph but a business disaster-until an executive and a computer geek found salvation in the Pentagon.

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IT WAS 11:30 ON A FRIDAY NIGHT IN 2003 when Mark Adams got a call at his home in suburban Virginia. The Alaska Rescue Coordination Center was on the line, looking for a pilot missing in the vast northern forests of the state. The flier had been carrying a telephone serviced by Iridium, a global satellite network for whom Adams is the chief technical officer. In 2000 Iridium had come within a whisker of disappearing itself, but it lived to transmit again, thanks to the magic of Chapter 11 bankruptcy.

The Alaskan pilot wasn’t so lucky. Iridium has staff on duty 24-7 to support the technical operations of the system, and though Adams spent several hours that night coordinating an effort to identify the approximate location of the flier’s last transmission, by the time rangers found the man, he was dead. Since that Friday night call (which Adams got because a friend associated with the Alaska Rescue Coordination Center just happened to remember that he worked at Iridium), Adams, 40, has aided in a dozen successful rescues, most memorably one of a pilot with engine trouble off South America’s Cape Horn. Thanks to Iridium, the pilot arranged an emergency landing on a snow-covered speck of an island in the far south Atlantic. The derring-do is a small part of the chief technologist’s work. But for Adams, an MIT research engineer with a Bill Gates anti-haircut who when asked to give a visitor driving directions goes to a white board, it symbolizes the lurch his life took four years ago toward adventure and the outer envelope of information science.

The unlikely path Adams’ life has taken resulted from a few folks taking a second look at the greatest dog ever launched into space and having the chutzpah to offer its receivers half a cent on the dollar. And from knowing enough people in the Pentagon who were bent on keeping Iridium as a unique battlefield resource, the worth of which has been proved daily for U.S. troops stationed in Iraq and Afghanistan.

Surely you remember Iridium, Motorola Corporation’s $5 billion low-Earth-orbit debacle. Planned in the mid-1980s, the system was archaic by the time it was deployed in 1998, offering global communications from a brick-size, $3,000 phone at charges from $6 to $30 a minute. “The Iridium business plan was locked in place 12 years before the system became operational,” says Dan Colussy, the veteran aviation executive who masterminded Iridium’s buyout and now reflects happily on it next to his pool in a particularly lush section of Palm Beach Gardens, Florida. “The idea was that a businessman would carry this thing around the world in his briefcase and dial home from Paris or London. Of course by the time it got up, nobody needed it in Paris or London.” Colussy stepped out of retirement and into Iridium’s destiny in 2000; he was a small investor in old Iridium, and thought it “a terrible waste to let this unique technological marvel just die.”

Motorola, itself one of the big players in the cell phone revolution that made Iridium obsolete, should have known better. So should many of its partners, like Telecom Italia and France Telecom, each of which poured hundreds of millions into building 18 Iridium gateways, or ground-relay stations, around the globe. The project plowed on nonetheless and opened for business, eating up another $1 billion in operating costs during its first year.

By August 1999, Iridium was bankrupt. And by the fall of 2000—when Colussy was shuttling between the U.S. secretary of defense’s office, Lloyd’s of London, a member of the Saudi royal family, and Iridium’s principal gateway, in Tempe, Arizona, to paste his deal together—Motorola was threatening daily to let the whole satellite network crash back to Earth. “All the software to bring it down had been uploaded,” Colussy recalls. “I know because we later hired the guy who was in charge of it. He just had one button to push, and he was waiting for the call.”

The call never came. Iridium flies still, six groups of eleven 1,412-pound satellites orbiting Earth every 100 minutes, guided from the basement of a featureless two-story office building in Leesburg, Virginia, which houses a bank of Sun computers as long as a football field. Two or three techies lounge in a room next door, making sure a wall full of monitors bleep the way they are supposed to.

Is maintaining the grand celestial miscalculation worth it? At an investment of $5 billion, of course not. But at $25 million, plus an undisclosed amount Colussy and his partners agreed to invest after the purchase, it may very well be.

Iridium and Globalstar, a satellite phone competitor that also went bankrupt, though with a somewhat smaller loss, were a triumph of engineering over common sense. “People have realized by now that the way to go into the satellite business is to start localized so your initial investment is low,” says Max Engel, who follows space communications for the consulting firm Frost & Sullivan. “XM Radio, for instance, which I have in my car, uses just two satellites. Iridium’s system was based on building [for] the whole globe, then wondering whether you were going to have any customers.”

Iridium’s architecture locked it into massive upfront costs. The project was the world’s biggest deployment of low-Earth-orbit satellites (known in the trade as LEOs), which hover a mere 483 miles above our heads, compared to 22,000 miles for geostationary satellites (GEOs). A LEO network’s proximity to Earth all but eliminates the half-second signal lag users of geostationary communications experience, an advantage Iridium counted on as a great selling point for its telephone service. But the lower altitude of LEOs shrinks the service footprint of each satellite. From 22,000 miles up, one geostationary satellite can fan out communications to a third of the world; each Iridium LEO satellite, on the other hand, reaches just 1/66 of the globe, so any one or two are usually useless without the others in the constellation.

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