DOD takes loss in stride

The Defense Department is still committed to using commercial satellite

services despite the loss of most of the Pentagon's multimillion-dollar

investment in the failed Iridium LLC satellite telephone system.

According to a Pentagon spokeswoman, the military invested at least

$140 million in Iridium equipment, handsets, telephones, pagers, accessories

and air-time services, through a $219 million contract awarded last April

to Motorola Inc., the primary backer of Iridium LLC. DOD also had set up

an Iridium gateway in Hawaii solely for the federal government.

Iridium LLC, which operated a system of 66 satellites in low-Earth orbit

that could provide telephone service anywhere in the world, terminated service

March 17 after failing to find an investor who could rescue it from bankruptcy.

But even the millions of dollars lost won't deter the military from outsourcing

in the future, the spokeswoman said.

"We really are an unqualified champion of emerging commercial satellite

systems," she said. While DOD decides where to proceed, it will continue

to use services from Inmarsat and other commercial communications services.

The government's gateway has about 3,000 registered users, but only about

800 of those were military users, the spokeswoman said. Fortunately, DOD

had not started to field the whole operation throughout the department,

she said.

"The department is continuing to assess what we can retrieve from our investment

in the Iridium system," she said. "Some of the elements of the gateway,

such as the high-quality digital switching equipment at Hawaii, will have

residual value and might be reused. The handsets are unlikely to find other

applications. Most of the investment is probably lost."

Analysts say the government should continue to champion such services,

which also include ventures such as Globalstar, ICO Global Communications

and potential broadband Internet-by-satellite providers such as Teledesic

Corp. and Astrolink International LLC.

"It is cheaper to do this and have it fail than it was to build it themselves,"

said Frank Dzubeck, an analyst at Communications Networks Architects Inc.

"This is what's known as stark reality."

For DOD, a loss of millions of dollars is far easier to rationalize

than the $8 billion to $10 billion it could have cost the agency to design

and operate its own satellite communications system, Dzubeck said.

Warren Suss, a telecommunications analyst, stressed the need to use

services on demand. "You never know where the next conflict is going to

break out, and you will need bandwidth [there]," Suss said.