Reviving Iridium

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Resurrecting Iridium Contd...

Following this, Colussy took many constructive steps towards positioning Iridium as the best mobile satellite service in the market. Iridium Satellite entered into a contract with aviation major Boeing to operate and maintain the 66-satellite constellation instead of Motorola, which now only provided subscriber equipment. He then introduced closely monitored plans to ensure a successful re-launch of Iridium's services. Having learnt its lessons the hard way, Iridium Satellite was careful not to repeat its mistakes Iridium had committed earlier.

Since Iridium was bought only for $25 million as compared to the $5 billion spent to create it, the new management was not under severe cost pressures. Iridium Satellite decided to make its satellite communications services affordable to customers and refocused on its target customer base. It decided to target all those industry segments that had a particular need for satellite communications like the government, military, humanitarians, heavy industry, maritime, aviation and adventure. Along with voice communications, Iridium also launched a series of data services, Simple Messaging Service (SMS) and paging services for its customers. The company started offering several value-added features that include: • Flat rates for calls from/to anywhere in the world. • Unlike cellular services where customers had to use different phone numbers for different locations, Iridium proposed to give its customers the facility of using only one phone number worldwide. • Introduction of SIM cards15 and a host of other Internet-enabled features.

In December 2000, Iridium Satellite got the much needed boost when the US Department of Defense (DoD), awarded a $72 million contract to the company for providing satellite communications services for the next two years. By the end of March 2001, Iridium Satellite had re-launched its commercial services. The company also incorporated certain technological improvements in the satellites and handsets, which improved quality of voice and equipment performance.

The company's research showed that each satellite could function well for around seven years. Since many of these satellites had already been in orbit for 2-3 years before the launch of the service to customers, they had only 4-5 years of satellite life left. However, with the above improvements, the company ensured longer life for its satellite constellation. In late 2001, Iridium Satellite also changed the design of its handsets.

The company launched handsets weighing less than 400 grams that were as light and small as regular cellular phones. The cost of calls had also become cheaper than that of calls made on GSM mobile phones. Iridium charged a flat rate of $1.50/minute to call any other phone in the world, without any constraint on the duration of the call made. Reportedly, Iridium also claimed to have attained the status of being able to provide 100% global coverage.

The company also took steps to enhance its customer service and support by setting up 24/7-customer support call centers. This improved its acceptance in the market and enhanced its goodwill. With all these favorable developments, it seemed that Iridium was resurrected and was on the road to success. The company had come a long way into becoming the most advanced telephone and paging service till date.

Exhibits

Exhibit I: Players in the MSS Market
Exhibit II: Iridium's Satellite System Configuration

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15] Subscriber Identification Module (SIM) card is a 'smart' card that allows users to make and receive calls. The SIM card identifies the user to the network and contains a microprocessor chip, which stores unique information about the user account, including his phone number and security number. SIM cards have many functions like providing memory space to save up to 100 names, phone numbers and 15 short text messages (SMS).