microprocessors for the codification of digital wireless and Internet transmissions.
Because of his work on transmission techniques, mobile telephony and space
technology joined the digital information revolution.
The track record of the Space Economy 1.0 also contains great failures, such as
the Iridium satellite project. This is a case that still impacts how financial investors
perceive space commercial initiatives. It all began in 1985, when the wife of Berry
Bertiger, a Motorola executive manager, lost a major real estate deal. While on
vacation at the Bahamas, she tried to close a deal but her mobile phone – one of
the first models produced by Motorola – had terrible connection. In the end, she
lost the deal, but her husband saw an opportunity in this failure. Once back in
office, he proposed to his CEO to launch dozens of satellites into space to create
an orbital network of radio links that would allow a global connection to cell
phones anywhere in the world.
The Motorola shareholders liked the idea and created the $3 billion Iridium
LLC, to be the first satellite phone company. Lockheed Martin was contracted to
build and launch 70 satellites into orbit, along with ground stations all over the
planet. Iridium LLC made special contracts with dozens of telephone operators
around the world to sell its services and finally went public on Wall Street, raising
over $2 billion.
After seven years, the first satellites were launched into space and Iridium
started selling Motorola phones for $3000 each, proposing an average fee of $7
per call. However, sales never went up, subscribers were too few (only a thousand
after one year) and revenues were so low that Wall Street stocks soon declined to
near zero. By then, the satellite business had been scooped up by the competing
terrestrial cellular network GSM. The latter had expanded worldwide in a few
years, and cell phones had started to become an affordable mass-market product.
Iridium went bankrupt alongside Motorola itself.
A Wall Street analyst said that “Iridium was probably one of the most expensive
space wrecks of all time”.
20
This was true from a financial point of view, but false
from a technological one. Indeed, the satellite network worked perfectly for almost
20 years through an incredible connection technique called sky switching, which
allowed all satellites in orbit to transfer calls in real time through laser beams, thus
enabling communication everywhere in the world without using any terrestrial
link. Iridium was a true space-based telephone exchange. The failure became yet
another opportunity for a group of investors who bought, with the Pentagon’s
approval,
21
all the satellites and broadcasting rights for just $25 million. In a short
time, the new Iridium garnered more than one million users, most of which were
from the Pentagon itself. In 2010, the company obtained a $3 billion bank loan to
20
Bloom, John. 2016. Eccentric Orbits: The Iridium Story. Copyright © 2016 by John Bloom.
21
Idem
88 Space Economy: A Business On the Launch Pad
Because of his work on transmission techniques, mobile telephony and space
technology joined the digital information revolution.
The track record of the Space Economy 1.0 also contains great failures, such as
the Iridium satellite project. This is a case that still impacts how financial investors
perceive space commercial initiatives. It all began in 1985, when the wife of Berry
Bertiger, a Motorola executive manager, lost a major real estate deal. While on
vacation at the Bahamas, she tried to close a deal but her mobile phone – one of
the first models produced by Motorola – had terrible connection. In the end, she
lost the deal, but her husband saw an opportunity in this failure. Once back in
office, he proposed to his CEO to launch dozens of satellites into space to create
an orbital network of radio links that would allow a global connection to cell
phones anywhere in the world.
The Motorola shareholders liked the idea and created the $3 billion Iridium
LLC, to be the first satellite phone company. Lockheed Martin was contracted to
build and launch 70 satellites into orbit, along with ground stations all over the
planet. Iridium LLC made special contracts with dozens of telephone operators
around the world to sell its services and finally went public on Wall Street, raising
over $2 billion.
After seven years, the first satellites were launched into space and Iridium
started selling Motorola phones for $3000 each, proposing an average fee of $7
per call. However, sales never went up, subscribers were too few (only a thousand
after one year) and revenues were so low that Wall Street stocks soon declined to
near zero. By then, the satellite business had been scooped up by the competing
terrestrial cellular network GSM. The latter had expanded worldwide in a few
years, and cell phones had started to become an affordable mass-market product.
Iridium went bankrupt alongside Motorola itself.
A Wall Street analyst said that “Iridium was probably one of the most expensive
space wrecks of all time”.
20
This was true from a financial point of view, but false
from a technological one. Indeed, the satellite network worked perfectly for almost
20 years through an incredible connection technique called sky switching, which
allowed all satellites in orbit to transfer calls in real time through laser beams, thus
enabling communication everywhere in the world without using any terrestrial
link. Iridium was a true space-based telephone exchange. The failure became yet
another opportunity for a group of investors who bought, with the Pentagon’s
approval,
21
all the satellites and broadcasting rights for just $25 million. In a short
time, the new Iridium garnered more than one million users, most of which were
from the Pentagon itself. In 2010, the company obtained a $3 billion bank loan to
20
Bloom, John. 2016. Eccentric Orbits: The Iridium Story. Copyright © 2016 by John Bloom.
21
Idem
88 Space Economy: A Business On the Launch Pad