M&G reporters
A group of American private investors on Monday made a last minute attempt to rescue the $5-billion satellite telephone service Iridium, which was forced into liquidation last Friday.
Iridium, which has United States electronic giant Motorola as a shareholder and backer, was set a deadline of last Friday by the court to attract a buyer for its assets, which include 66 satellites.
The company, which was widely regarded to have suffered from poor marketing, high charges and expensive, heavy handsets, failed to live up to the promise of vast mobile communities hooked up to large satellite networks.
It was only on Monday that Merit Studios, a US software and e-commerce group, emerged as a possible white knight.
Merit sent an e-mail to Iridium’s lawyers saying it represented a group of private investors who wanted to use the satellite system to create an additional transmission network for data and the Internet.
Merit, which would rename the company Meridium, proposes to collect a fee from message senders for the use of the satellite service.
Iridium’s South African office was closed two weeks ago, not because of pending bankruptcy, but because South African authorities procrastinated interminably over granting it a licence. The company easily acquired licences in other African countries.
Iridium was to have been MTN’s satellite partner.
Should the rescue bid fail, Iridium is destined to be the most costly technological blunder in history. Sixty-six satellites which cost the Iridium telecommunications group more than $5- billion to build and launch are to be sent spiralling into Earth’s atmosphere and allowed to burn up, it was announced on Monday.
The decision followed the Washington- based company’s failure to find a buyer to rescue it from bankruptcy and adds a new name to the list of the world’s greatest scientific failures.
Iridium’s failure will bring an end to dreams that engineers could create a telecommunications system that would allow users of handheld phones to make calls from any point on the globe. Only 55E000 customers could be persuaded to sign up.
“No bid was received which was a qualified bid,” William Perlstein, an attorney representing the debt-plagued firm, told a bankruptcy court in Manhattan.
Judge Arthur Gonzalez then ordered Iridium to spend $8,3-million to start winding up its business while selling its remaining Earth-bound assets, including ground stations.
The last act of the company will be to “de-orbit” and ultimately burn up its constellation of 66 satellites orbiting 776km above the ground, a network that is estimated to have cost up to $7-billion to create just over a year ago.
Engineers will tip the craft, one by one, on a death ride that will send them down in flames above the ocean – a spectacle that should be visible from Earth. It could take up to two years to complete the scuttle.
Iridium’s failure is a bitter blow to Motorola. Although international phone calls have been relayed by satellites for several decades, these are typically transmitted to probes that orbit in deep space where their velocities exactly match the speed of Earth’s rotation, allowing them to hover over one area.
However, this geostationary orbit is so high – 35E200km – that only telephones linked to powerful transmitters can use them. Iridium signals needed no boosting because they were picked up by low-orbiting satellites. The drawback was that dozens of satellites were needed. The phones were as big as bricks and were initially priced at $3E000 apiece, with calls costing as much as $7 a minute. Even worse, they did not work indoors.
The final blow was the rapid spread of ground-based networks which now let business travellers, a prime market for the satellite phones, stay connected from most major destinations.
Iridium’s fate bodes ill for ICO Global Communications, a second satellite phone network, which filed for bankruptcy protection shortly after Iridium. A new buyer is desperately attempting to save the service, while Teledesic, a third satellite network, is scheduled to begin service in 2004 – though it is marketing its services as “an Internet of the sky”.
Meanwhile, a lone oarsman crossing the south Pacific fears he could be made a virtual castaway after the satellite communications network went bankrupt last weekend.
Father of five Jo Le Guen, 52, embarked on the 8E350km journey from New Zealand on February 3, in an attempt to raise awareness of ocean pollution. He is relying on an Iridium satellite telephone for communications, including information on the weather, from his 9m boat.
But Iridium is cutting off its 55E000 customers.
This week Le Guen was still more than 4E480km from Cape Horn, where he hopes to make landfall in May. Phillipe Tuffigo, a member of Le Guen’s Paris-based support team, said he feared the network would cut off its most vulnerable customer
“Jo could still use his phone [this week],” said Tuffigo, “but May is far too long a time away. We have heard that communications are still available for people in delicate situations, and conservationists.
“But it is costing so much to keep the constellation of satellites up, and nobody seems willing to pay.”