Motorola Was About to Deorbit a $5 Billion Satellite Network
Iridium had 66 satellites, 10,000 customers, and was weeks from being burned up on purpose.
Motorola spent about $5 billion lofting 66 satellites into low earth orbit between 1997 and 1998 to build Iridium, a phone system that worked anywhere on the planet. The 1998 forecast said 500,000 subscribers by the next year. The actual count, when Iridium defaulted on $1.5 billion in debt and filed for Chapter 11 in August 1999, was around 10,000.
The phones did the things they had been advertised to do — work in the Sahara, work on a fishing trawler, work on the South Pole. They also did things the marketing had glossed over. The handset was the size of a brick, cost $3,000, would not work inside a moving car or a building, and billed up to $5 a minute. Meanwhile cellular networks had quietly metastasised across exactly the parts of the world Iridium had been designed to skip.
By mid-2000 Motorola had filed plans with the FCC to begin deorbiting the constellation. The cheapest disposal option was to drop the satellites into the atmosphere and let them burn. A scramble to find a buyer hit a wall when Craig McCaw's $600 million rescue collapsed with the dot-com bubble.
What saved Iridium was an unlikely consortium led by Dan Colussy, a retired airline executive, who put together a bid for $25 million — about half a percent of what the network cost to build. The leverage was a $72 million two-year contract Colussy had quietly nailed down with the U.S. Department of Defense, which already used the satellites and did not want to lose them. A bankruptcy judge approved the sale in November 2000.
The satellites are still up there. Iridium now does aviation tracking, maritime distress, and the SOS button on a Garmin watch. Its replacement constellation cost about $3 billion. Motorola got nothing.
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