DOD out millions with Iridium

Most of the Defense Department's multimillion-dollar investment in the now-terminated

Iridium satellite telephone system is a loss, according to a DOD spokeswoman.

Iridium LLC, which operated a network of 66 low-Earth orbiting communications

satellites, terminated commercial service Friday after failing to find an

investor to revive the bankrupt venture. The U.S. Bankruptcy Court for the

Southern District of New York approved use by Iridium, backed primarily

by Motorola, of its secured lenders' cash collateral to begin bringing the

satellites back to Earth and selling its assets, according to an Iridium

news release.

The Defense Department in April 1999 awarded Motorola Inc. a $219 million

contract to provide Iridium equipment, handsets, telephones, pagers, accessories

and associated airtime services. The services would be provided to the federal

government through its own Iridium gateway in Hawaii. About $140 million

of that had orders written against it, said Susan Hansen, DOD spokeswoman.

"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."

Fortunately, DOD had not started to field the operation throughout the

department, Hansen said. The government's gateway has about 3,000 registered

users but only about 800 of those were military users, she said.

Iridium filed for Chapter 11 bankruptcy protection on Aug. 13, 1999.