Worldwide Phone Service From Iridium

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Worldwide Phone Service From Iridium
By Milt Baker

Editor’s Note: Milt Baker, together with his wife Judy, founded Bluewater Books & Charts 15 years ago and grew it into the largest seller of nautical books and charts in America. They sold the company and retired last year, and now they are cruising in their Grand Banks 42 trawler, Bluewater.

If you have questions or suggestions for future articles—or if you especially like or dislike what he has to say - send your comments to the editor at dcox@bluewaterweb.com or to the publisher of this newsletter at jmann@bluewaterweb.com.

Just as the highly acclaimed Iridium global communications system seemed poised to de-orbit its satellites, a surprising rescue brought it back from the brink of extinction. And worldwide voice and data service is now available to yachting, individual and corporate users through Iridium at much lower rates than before.

Late last year a newly formed private company bought the operating assets of the original Iridium company and its subsidiaries. The new company owns all of the Iridium assets, including the satellite constellation, the terrestrial network, Iridium real estate and intellectual property originally developed by Iridium.

Last fall it seemed all but certain that the $5-billion constellation of satellites would be de-orbited and burn up in the earth's atmosphere because no buyer could be found. However, Iridium Satellite LLC, the new private corporation, stepped in and acquired bankrupt Iridium's assets in November at a fire-sale price of $25 million — less than a penny on the dollar. Iridium Satellite LLC says its total expenses should be $84 million a year.

As a first step, the new company began Iridium service to the U.S. government through the Iridium gateway in Hawaii. In December, the Pentagon paid $72-million for a two-year contract to provide unlimited Iridium airtime for 20,000 U.S. government and military handheld satellite phones and pagers. Every American embassy now has at least a few Iridium phones for field, backup and emergency communications.

Iridium contracted with the Boeing Company to operate and maintain the satellite constellation at prices much below what the original Iridium company was paying Motorola for the same job. The Iridium gateway in Tempe, Ariz. is now up and running, offering global voice telephone services and data services to non-government users.

On April 1 the new company re-launched commercial Iridium service in the U.S. through a number of companies, including Stratos, a Canadian company that focuses on marine communications. Stratos signed a five-year agreement for management of worldwide sales and distribution of Iridium service.

What does all this mean to users aboard yachts and other vessels? In a nutshell, it means fulfillment of the dream of reliable worldwide voice and data communications at a price most yachtsmen can afford.

Iridium users can now make and receive telephone calls anywhere on earth with no roaming charges. Iridium voice service is available to individuals and corporate users at $20.00 per month plus $1.50 per minute, with no sign-on or activation charge and no minimum contract period. Iridium-to-Iridium calls are 50 cents per minute, but that will soon rise to $1.00 per minute. And in early June Iridium announced the availability of data services: e-mail and Internet service at speeds up to 10,000 baud.

Prices for "refurbished" phones begin at $495, with new phones starting at $895. Former Iridium customers can use their original equipment, but they must obtain a new SIM (subscriber identification module) card. The old SIM cards will not work.

The same Iridium phones originally sold for $3,000 and airtime ranged from $2 to $10 a minute. Fewer than 15,000 customers signed up, forcing the original Motorola-backed Iridium company into bankruptcy—one of the 20 largest bankruptcies in U.S. history.

"We do not see Iridium as a mass consumer service," said Dan Colussy, chairman of the new Iridium Satellite LLC. "It is a communications service that addresses the very specific needs of the industrial markets and other specialized segments. Because of our significantly reduced cost structure and Iridium's unique system capabilities, we will be able to serve these markets more effectively than any other existing service."

Colussy says Iridium's investors have put up a total of $150 million, and he expects to turn a profit within a year. There are no plans to take the venture public "anytime soon."

Motorola originally tried marketing Iridium as an alternative to cellular phone service, but the according to Mark Adams, chief technology officer, the new Iridium company is focused chiefly on "the vertical market—people who will use Iridium in their work." This includes:

• Marine users: yachts, fishing vessels and commercial vessels
• Remote users: oil, construction and mining operations
• International aviation
• Disaster relief
• Government agencies, emergency and relief organizations
• Research sites, hunting and fishing lodges and remote residences
• International business travelers

Iridium has a number of key selling points of interest to yachting customers:

• The equipment is small—not much larger than a large hand-held cell phone
• The equipment does not require a fixed installation, but it also works well with fixed installations and external antennas
• Service is truly worldwide
• The system uses low-earth-orbiting satellites about 420 miles above earth, which means there’s no perceptible delay on phone conversations, quite different from systems using geostationary satellites 22,000 miles above the earth where a built-in delay sometimes makes conversation awkward.

The small, 1,500-pound Iridium satellites in the 66-satellite constellation are electronically linked as a network to provide continuous worldwide coverage. Communications are relayed via satellite and through terrestrial gateways.

Is this a perfect solution? Definitely not. Among the downsides are:

• Security deposit. A security deposit of $500 to $1,000 may be required for some customers until credit is established. According to Andy Cool of Stratos’ Fort Lauderdale office, this has come as a surprise to some users, but it’s necessary when a customer does not have established credit in the United States or Canada.

• A view of the sky. Another downside is that the Iridium phone can be used only where its antenna has a view of the sky. With a portable antenna, that means doing your talking on deck. Unlike cell phones, Iridium phones will not work inside a building or a yacht only when connected to an external antenna. However, most installations aboard yachts involve a small fixed external antenna about the size of a Coke can and making the necessary connections is simple.

• High cost for incoming calls. Another downside of Iridium communications at the moment is that calls to Iridium phones are treated as international calls, and many long distance providers charge $8.00 to $10.00 a minute for such calls. That charge, by the way, goes to the calling customer, not the Iridium user. According to sources at Stratos the company is addressing this by developing an inbound gateway to Iridium phones. The new gateway is expected offer inbound phone service to Iridium customers at perhaps $2.00 or $3.00 per minute, but the timing on the rollout of this service is still uncertain.

One interesting feature is that anyone can send free 120-character e-mails to any Iridium subscriber using e-mail or the Internet. It’s easy, for example, to send a message like: "Call me—I have good news for you! Love, Mom ". When a short e-mail message like this is received, the Iridium phone beeps to signal that a message has been received, and the message is called up and read right on the phone’s display.

The new data service announced in June allows users to send and receive e-mail of any length (including attachments) and to use the Internet via their Iridium phones. Two services are now available at no charge other than the $20 monthly/$1.50 per minute charge:

• Dialup service, where an Iridium user dials up his own Internet service provider. This service runs at a pokey 2,400 baud, as compared with typical landline dialup service at roughly 20 times that speed.
• Direct Internet service, where a user accesses the Internet through Iridium’s own gateway at a speed of 10,000 baud. According to Adams, the company’s chief technology officer, to achieve this speed Iridium employs its own Internet servers and fast T-1 phone lines, uses data compression and has tweaked its servers for satellite communications.

Although 10,000 baud sounds slow, Adams, the Iridium chief technology officer, said, "Users have been pleasantly surprised that the new data service is as responsive as it is."

According to Adams, the new data service was beta tested throughout April and May by approximately 60 users before being rolled out for commercial customers in early June. Users who want access to the data service must buy a data kit, which includes a CD with what Adams describes as very user-friendly software, for about $180.

While the Iridium system was designed for voice communications, the new company believes that ultimately data services will account for up to half of the system's traffic.

Top competition for Iridium comes from two sources:

• Globalstar, which uses small phones and a network of 48 low earth orbiting satellites and may eventually cover over 80% of the earth's surface. Data is available at up to 9600 baud.

• Inmarsat, which offers virtually worldwide coverage for voice and data using geostationary satellites and requiring much larger fixed equipment. Data available at up to 56,000 baud, depending on equipment.

Will Iridium make it this time? Prospects seem good, but only time will tell.

For more information, see Iridium’s website at www.iridium.com and Stratos’ website at www.stratos.ca.

P.S. After doing the research for this article, I decided that Iridium made sense for us on Bluewater, so I signed on. I contacted Stratos’ Andy Cool in Fort Lauderdale and purchased "refurbished" Motorola equipment that appeared brand new in the original boxes. I got everything needed to install the system with a permanent external antenna (as well as two portable antennas) for about $735 plus tax. While I've used it only a little, I've found Iridium service to perform as advertised and the voice quality satisfactory though slightly more artificial sounding than a digital cell phone. One unpleasant surprise was that federal and state taxes added an extra 19.5 percent to the bill for my first month’s service. Even so, when Judy had a nice conversation with her 86-year-old mom on Mother's Day from about 100 miles out in the Gulf Stream, it all seemed worthwhile! I’ve just placed my order for the data kit so I can use Iridium for e-mail and Internet use. Stay tuned for further reports.