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Title: A 'Ma Bell' for the space age. (Motorola Inc. plans the Iridium Project for satellite-based phone services) Authors: Kinni, Theodore B. Citation: Industry Week, March 21, 1994 v243 n6 p71(2) ------------------------------------------------------------- Subjects: Telecommunications industry_Innovations Artificial satellites in telecommunication_Innovations Long-distance telephone services_Innovations Companies: Motorola Inc._Planning Reference #: A15259160 ============================================================= Abstract: The Iridium Project will cost $3.37 billion and employ 77 satellites to bounce phone signals from $3,000 cordless handsets to anywhere in the world. The project required innovative management changes and some company restructuring. The first satellite will be launched in 1996. ============================================================= Full Text COPYRIGHT Penton Publishing Inc. 1994 AMBITIOUS GOALS ARE FAIRLY COMMONPLACE at Motorola Inc. The well-publicized Six-Sigma quality initiative (requiring no more than 3.4 defects per million parts), a successful run at the 1988 Malcolm Baldrige National Quality Award, and a commitment to best-in-class employee training as characterized by Motorola University are just a few of the challenges the company has undertaken. The corporate emphasis on internal fundamentals has led to superior business performance-- Motorola cellular telephones dominate the U.S. market, and the company's pagers are even selling well in Japan's competitive marketplace. A company that pursues the future as aggressively as Motorola is bound to come up with big ideas, and in 1987 a small team in the Satellite Systems Engineering Group of the Strategic Electronics Div. came up with a whopper. The team's unique vision involved a networked infrastructure of low-level satellites orbiting the planet. This satellite network would offer the ability to place and receive calls from anywhere on earth, at any time, to system subscribers with a hand-held phone. They named the project Iridium, the element whose atomic number corresponded to the 77 satellites in the proposed networks. Although refinements in the system's design eventually lowered the number of satellites to 66, the potential and logistics of the Iridium Project remain staggering. The networked satellites, each weighing about 1,500 lbs, will orbit the earth on six different planes of 11 satellites each. They will travel longitudinally, ringing our planet from pole to pole, at an altitude of 420 nautical miles and completing a full orbit in 100 minutes. This low-level orbit (geostationary communications satellites orbit at 22,300 nautical miles) allows high-quality transmissions essentially free from both delay and echo. The satellite network communicates with established telephone networks via earth-based gateways. Gateways consist of a collection of tracking dish antennas, which will be owned on a regional basis by Iridium investors. The antennas will locate the callers, route the calls, and save billing information on a continuous basis. The system includes a switching capability that ensures that calls are routed via the least-expensive route--earth-based lines, cellular systems, or the satellite network. To the Iridium subscriber, the mechanics of the network will be transparent. "You will subscribe to a local cellular service that is licensed with Iridium, buy a handset, and start making calls," explains John Winthrop, Iridium's director of corporate communications. The handset, which Motorola will manufacture, will be compatible with the local standards of the subscriber and the Iridium network. Pocket-sized, it is designed to operate for 24 hours on a single charge and requires only a short antenna because of the low level of satellite orbit. Initially, the cost of accessing the system will be high. The handset could cost up to $3,000, and calls on the network will average $3 per minute, Mr. Winthrop says. Conservative estimates call for 2 million users by 2002, consisting mostly of business, government, and the military. Eventually, however, huge markets are anticipated, especially in areas without existing telecommunications infrastructure. In Russia, for example, only 10 million phones serve a population of 250 million, and in India thousands of villages have no telephone service at all. Expertise in orbital mechanics, rocketry, satellite design, and cellular telephony are just a few of the skills needed to launch Iridium. The cost of the design, production, and launch of the satellite network is pegged at $3.37 billion. Once in place, the cost of operation and maintenance of the network over a five-year period will be another $2.8 billion. The potential rewards of Iridium are correspondingly large. The owners of the network will constitute a Space Age version of the pre-breakup Ma Bell. They will own an extraterrestrial telecommunications network designed to transmit international calls in an era when global wireless communications is a high-growth opportunity. How much is such a franchise worth? "The probable returns are extremely attractive," is all Mr. Winthrop will volunteer. Add on the $6.17 billion in production and maintenance contracts, and the scope of the opportunity becomes compelling. In June 1990, after two years of feasibility and marketing studies, Motorola's top management approved the project and the Iridium organization as it appears today began to evolve. A subsidiary, Iridium Inc., was formed to finance and manage the proposed network. In the first round of financing, $1 billion was raised from 14 organizations that each now own from 5% to 15% of the company. These organizations include international supplier partners and service providers. Motorola retained the role of Iridium's primary subcontractor and controls the implementation and maintenance contracts. Within Motorola a new strategic business unit, the Satellite Communications Div. based in Chandler, Ariz. oversees the international supplier partnership. In August 1992 Iridium received an experimental license to construct and launch an initial network of five satellites to demonstrate the feasibility of the system. The first satellite launch is scheduled for 1996, and commercial service is expected to become available in 1998.