IRIDIUM SAYS IT DISCOVERED KEY TO SATELLITE TELEPHONY
Iridium has found niche in telecom market, CEO Gino Picasso told us Wed. Just 14 months after pulling company out of bankruptcy (CD Dec 13 2000 p7), he said company was on road to success. He said it had exceeded projections for 2001 and should meet 2002 expectations. Privately-held Iridium didn’t release exact numbers for year. Following months of low-key marketing efforts, Iridium has stepped up public presence and marketing. Picasso will be panelist March 6 at Satellite 2002 at Washington Convention Center, discussing “Satellites in a More Secure World.” He will be joined by Loral Skynet COO Joan Byrnes, FCC staffer Marsha MacBride, Satellite Industry Assn. Pres. Richard DalBello, Globalstar Chmn. Olaf Lundberg, communications consultant Walter Morgan. Appearance is in stark contrast to Picasso’s first months on job when Iridium shunned public spotlight while sorting through problems of bankrupt predecessors.
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Financial fortunes of company changed after Sept. 11, Picasso said. Iridium, which had just signed Dept. of Defense contract (DoD), provided communications equipment to Pentagon and Ground Zero in N.Y.C. “We confirmed something we have known for a very long time,” Picasso said: “There was no need for infrastructure, just satellite telephone.” He said Iridium would “shine wherever there is disruption or unavailability” of terrestrial network. Tragedy “brought a lot of focus and a lot of attention on Iridium.”
Company has parlayed success with military into other contracts around world, Picasso said. DoD is considering extending its $72 million contract to provide satellite phones for up to 20,000 users, with company engaged in negotiations, he said. Contract is worth up to $252 million if military picks up options that include subscribing to phone service through 2007. Picasso said war and relief effort in Afghanistan exploded use: “The military has been taking advantage of [system] in a number of operations around the world. That activity has pushed usage up. The most significance difference between Old Iridium and New Iridium is we aren’t going after cellular phone users.”
Picasso said it was rare for company to have “technology that’s so highly differential” from rest of market: “We can’t compete with landlines.” Recent success has sparked new wave of competitors, Picasso said. He said emergency use for homeland security could be important area, and Iridium has been designated by some agencies as backup communication system. “We had never pushed that very actively,” Picasso said: “We're the perfect fit for Homeland Security.” Proposal to replace black boxes aboard aircraft with Iridium system is pending, he said. Iridium also is looking at providing communications for smaller vessels on coastal waters. Unspecified number of other countries are “already using the Iridium system,” he said.
Picasso didn’t rule out acquisition of financially- strapped Globalstar, which would give Iridium corner on satellite telephone market, especially if it could be acquired for good price. However, Picasso said that was unlikely. He said Globalstar situation was vastly different from Iridium’s: “The most important difference involves interconnecting satellite links.” Iridium needed only one gateway to provide service, and Picasso group purchased that from Motorola. Globalstar system provides multiple gateways that are more costly, he said: “The operating costs would be much higher than Iridium. The gateways are no cheap proposition.”
Iridium constellation is operating smoothly despite recurring reports that satellites are burning out at rapid pace, Picasso said. Iridium launched 5 spares, with another 2 spares scheduled for June flights. Company has “sparing pool” of 14 satellites to go with 66 operational birds. He said company has until 2010 and perhaps 2012 until satellite system had to be replaced. “We will not have to make a decision for at least 4 years,” Picasso said: “Technology changes. There are a lot of things that can happen.”