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A 'Ma Bell' for the space age (Motorola Inc. plans Iridium project for satellite-based phone service)

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
             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

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.

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