Competitors not fazed by Iridium woes

Despite the lack of success of Iridium LLC's self-named satellite system, which led the company to file for bankruptcy earlier this month, competitors say the industry has a healthy future with strong demand in the federal market.

Elaine Wolfson, director of government sales for Comsat Mobile Communications, said "mobile satellite services is a very viable business before, during and after Iridium."

Wolfson said Comsat Mobile, which uses geostationary satellites operated by the International Maritime Satellite Communications Organization to provide its services, has started rolling out a new service that provides greater functionality at a lower price than the voice-only Iridium satellite phones.

This new service, dubbed "Planet One" by Comsat Mobile, provides federal users with voice, fax and low data rate (2.4 kilobits/sec) capability from anywhere on the globe from a 6-pound, computer-size terminal for $2.15 per minute. Iridium initially charged $7 to $10 per minute for voice-only calls from its 1-pound phones, although it has since dropped its rates to less than $2 per minute.

Hardware for the Planet One system costs about $2,000, Wolfson said, much less than the $3,000-plus Iridium charged for its voice-only phones.

Wolfson said Comsat Mobile has signed up a number of federal customers for the Planet One service, but she declined to provide specific numbers or users. She did say that it has been embraced by federal users for operations in areas of the globe that lack satellite coverage and for contingency operations. Federal users also have purchased Planet One service for "[Year 2000] backup purposes since our system is totally Y2K-compliant, including the satellites," Wolfson said.

Globalstar, a company backed by Loral Corp. and Qualcomm Corp., plans to start a mobile satellite service this fall that will be similar to what Iridium offered but with lighter and less expensive handsets.

Mac Jefferey, a Globalstar spokesman, who called the 66-satellite Iridium system "technically brilliant," said his company plans to offer service over a 48-satellite constellation, with switching performed on the ground rather than in the satellites.

This simpler technical approach will result in air time costs far lower than the original Iridium prices, with calls within North America pegged at roughly $1.50 per minute, Jefferey said. Airtouch Communications, which handles U.S. marketing for Globalstar, expects to sell handsets for about $1,500, according to an Airtouch spokeswoman.

The Defense Department, which invested an estimated $50 million in building its own Iridium gateway in Hawaii for use by DOD users worldwide, should not be affected by the Iridium bankruptcy, according to a spokeswoman for the Defense Information Systems Agency, which operates the gateway. She said DOD has purchased only 800 handsets and that the secure service through the Hawaii gateway has not begun.

Frank Dzubeck, an analyst with Communications Networks Architects Inc., described the DOD gateway as "not a good investment...when you look at the time it took to deploy the service."

Warren Suss, another analyst who covers the federal communications market, took a different track, saying that now that Iridium has started to shave its air time prices, the Pentagon "could eventually end up with the bargain of a lifetime."

Despite the high cost of the gateway, Suss said it still costs the Pentagon far less than building and operating its own satellite system. "It's premature to judge [the DOD investment in the Iridium gateway]. I believe DOD did the right thing by going with a commercial service provider, and they should be looking at every other commercial service, including Globalstar."