Iridium's project for a constellation of satellites providing a global telephone service seemed to have real credibility in the late 1980s/early 1990s. Unfortunately, as is often the case with pioneering high technology, high investment schemes, it took too long to materialise, rendering the company a legend even before its own lifetime.
During the project's gestation, the size of the predicted market has been reducing progressively and the market itself changing shape - driven by the inevitable advances in communications technology that now provide potential users with considerably more potential than a straightforward satellite telephone service. When Iridium was finally ready to launch, its marketing was poor, its handsets too cumbersome and in short supply, and the cost of making calls was far too high.
Despite having its full constellation of low earth orbiting (LEO) satellites in place, Iridium has struggled to progress beyond 10,000 customers worldwide. Its financing was not in place before it went operational and, with the failure to attract sufficient customers, investor confidence dwindled.
Iridium's near-demise has had a detrimental effect on competitive systems which got caught up in the hype surrounding its market predictions. ICO Global Communications is also now in deep trouble and still needs to raise a billion dollars, with none of its planned 12 Medium Earth orbit satellites launched.
A third player, Globalstar had its financing in place before its satellite launch, and is ready to go operational on a regional basis in October, with a fully operational system of 48 prime satellites in LEO - although whether it will meet its full market expectations remains to be seen.
In the early 1990s, Iridium's idea was the right one. Cellular telephone users - particularly business people were too often out of cellular coverage range. They were called the "roamer" market, and it seemed reasonable to provide a system which could enable them to make a call from literally anywhere on the planet.
If Iridium had had the system up and running by 1994, it would perhaps have succeeded. But as it struggled with its technical hurdles, and Globalstar, ICO and other potential competitors emerged, the market lost its momentum as terrestrial cellular coverage widened, cellular handsets became ever smaller and call charges consistently fell.
The development period also allowed Inmarsat, which was historically the only provider of global satcom services - with the exception of polar coverage - to put its own house in order by being more responsive to customer needs.
Inmarsat, which has been providing mobile communications to users worldwide since the early 1980s using larger satellite "terminals", has gradually been able to reduce the size of its equipment, with the costs of calls coming down at the same time.
It will take a long time for new mobile satellite communication suppliers to shake off the "Iridium effect", and Globalstar and ICO are by no means out of the woods yet.
The Iridium experience has left other casualties, including the commercial launcher companies and particularly new small launcher organisations. Many will not launch the satellites they had been contracted to launch and many that have been developed mainly to meet this market will go out of business.
Following the Iridium experience, the commercial projections for LEO launches are being reduced significantly. Satellite manufacturers - Lockheed Martin, which provides the Iridium bus, Space Systems Loral (Globalstar) and Hughes (ICO) - will be adjusting their business plans, or trying to find uses for unflown manufactured satellites.
The likelihood now is that the Iridium constellation will be sold off at a bargain basement price and operated under a refinancing package. Meanwhile, internet-based satellite communications systems are on the cards, promising vastly more powerful capabilities than could possibly have been envisaged at the beginning of the decade.
In the end, Iridium became a casualty of a rapidly changing market and fast-moving technology. It seems that it may indeed become a legend, but for all the wrong reasons.
Source: Flight International
