Iridium’s NEXT Satellites: Global Reach, New Partnerships
Most of us remember Iridium as the Motorola-backed, multi-billion dollar commercial satellite phone flop. The expensive, bulky phones, the $2 per minute airtime charge, and the inability to use the phone inside buildings doomed the project, which came online when the cell phone market was taking off. Despite all these problems, the US military found the low-bandwidth satellites and phones very useful in remote areas. So the Pentagon backed an effort for the constellation to be acquired by investors at a fraction of the original $5 billion development cost, and became the revived satellite company’s largest customer.
Iridium Communications Inc. has been steadily picking up customers beyond the Pentagon. They now have almost 360,000 subscribers, and in 2007, they began planing a second-generation satellite constellation called Iridium NEXT. With launches expected to begin in 2015, Iridium NEXT will offer higher data speeds, flexible bandwidth allocation, and IP-based routing. In the meantime, militaries have found innovative ways to use Iridium’s services, making Iridium NEXT a privately-held but significant space resource for future military operations.
Iridium: Now, and NEXT
Iridium’s 2010 constellation has 66 satellites in orbit, which includes 7 spares. Since the original Iridium owners began commercial service in 1998, the constellation has lost 7 satellites: 6 to onboard failures, some of which are radiation-induced, and one in a February 2009 collision with a defunct Russian satellite. All of these satellites are long past their 7-year design life, but they are expected to continue to provide the current range of voice and data communications through 2014.
Iridium competitor Globalstar in Milpitas, CA took a serious revenue hit from satellite failures, which are a larger risk thanks to their higher and more radiation-exposed orbits. Iridium wants to avoid that, and also wants to transcend the bandwidth limitations of its current satellite fleet.
From 2015 through 2017, Iridium plans to replace its current low-earth-orbit satellite constellation with a total of 72 new satellites and on-orbit spares, which will provide more features, more flexibility, and more bandwidth. Iridium NEXT’s improvements will include data rates up to 1 Mbps, Ka-band service, private network gateways, and broadcast and netted services.
SpaceX will be one launch agent, using its 2-stage Falcon 9 medium-to-heavy lift rocket. The Falcon 9 is capable of lifting approximately 11 tons to Low Earth orbit, which puts it in a competitive category that includes the Russian/ Arianespace Soyuz 2-3, the Russian/ ILS Proton rockets, and lighter ULA Delta IV and Atlas V EELV configurations. The privately-developed Falcon 9 completed its critical inaugural flight on June 4/10, which was a 100% success.
Iridium expects to contract with at least one other launch service as well. Major contenders in this space include the Franco-Russian services of Arianespace, the American-Russian ILS, Inc., and the American United Launch Alliance of Boeing and Lockheed Martin. The SeaLaunch LLC consortium is currently emerging from Chapter 11 bankruptcy reorganization, and Orbital’s Pegasus air-launched rockets have a payload limit of just under 450 kg.
Once launched into space, Iridium hopes that its next generation of satellites will offer a number of new options, beyond just higher bandwidth. The existing Iridium constellation is already being used in some innovative ways. The USMC’s Netted Iridium Program is using it as an over-the horizon command and control link from ships to inland Marines. Boeing’s HI/i-GPS is far more significant, however, leveraging the Iridium constellation to supplement and improve the US military’s critical NAVSTAR GPS system.
bq. Weight: 50 kg
Dimensions: 30 x 40 x 70 cm
Power: 50 W average, 200 W peak
Data rate: Up to 1 Mbps
Iridium NEXT aims to take that kind of flexibility one step further, in line with commercial practices by companies like Intelsat. In addition to providing voice and data communications, the NEXT constellation will be able to host payloads that will allow partners to add capabilities, using Iridium satellite cross-links and earthside control centers to deliver sensor and other data to the partners who developed the payloads. Key specifications include:
The Pentagon is considering a payload to support its space situational awareness requirements. Other payloads being considered reportedly include remote sensing, weather monitoring, earth observation, and command and control.
Contracts and Key Events
June 9/11: Boeing receives an unspecified contract from Thales Alenia Space to provide system integration and testing support for Iridium NEXT satellites, extending through 2017. This work is in addition to the extension of its long-term relationship with Boeing for satellite network operations support (vid. July 12/10 entry). Boeing’s Mission Operations group will support this program out of its Chandler, AZ and Leesburg, VA, locations. Boeing.
April 20/11: RUAG Space AB in Gothenburg, Sweden announces a contract from Thales Alenia Space for 81 Iridium NEXT Payload Interface Units (PLIUs). The combination analog/digital PLIUs will be used for control and monitoring of the Iridium satellite payloads, including temperature control, equipment status, reconfigurations and antenna pointing. RUAG.
April 18/11: Thales Alenia Space awards a payload application software contract to Lockheed Martin, who will handle development, testing and support integration for the Iridium NEXT satellites. Lockheed Martin’s explanation was simple:
“Lockheed Martin, selected as the result of a competitive process, offered the lowest-risk and most comprehensive solution for the payload application software needed…”
April 15/11: Space News discusses the 3rd party hosting opportunity on the Iridium NEXT constellation. Orbital Sciences in Dulles, VA has put down a non-refundable $10 million deposit, giving it right of 1st refusal for 20% of the new constellation’s “hosted payload” capacity. That opportunity could be worth up to $100 million for Iridium, but buyers need to be found for the 30x40x70 cm/ 50 kg payload slots. Iridium asking for all hosted payloads to be confirmed by mid-2012 for those wishing to fly on all Iridium Next satellites, and:
“Iridium Communications may be frustrated in its attempts to get the U.S. Defense Department to agree to place payloads on Iridium’s next generation of 66 low-orbiting satellites, but the company is pursuing multiple prospective customers for the space it is reserving on each satellite for third-party payloads, Iridium officials said.”
March 30/11: Iridium is one of 7 major satellite companies to join a new group called the Hosted Payload Alliance, which will promote the hosting of defense department payloads on commercial satellites. The 7 founding firms are Boeing Space and Intelligence Systems, Intelsat General Corporation, Iridium Communications Inc., Lockheed Martin Space Systems, Orbital Sciences Corporation, SES WORLD SKIES U.S. Government Solutions, and Space Systems/Loral. HPA release.
Jan 27/11: Orbital Sciences in Dulles, VA announces that it signed a systems integration and test contract with prime contractor Thales Alenia Space to integrate the communications payload and platforms for the Iridium NEXT satellites. Orbital Sciences will test the communications system at its facility in Gilbert, AZ. Financial terms were not disclosed.
Oct 26/10: Thales Alenia Space announces that its $2.2 billion contract with Iridium to build 81 low-earth orbit satellites for the Iridium NEXT constellation is now in full effect. With the closing of the Coface financing agreement (see Oct 4/10 entry), the full-scale system development contract between Iridium and Thales Alenia Space replaces the authorization to proceed (see June 2/10 entry). Thales Alenia Space said that it plans to subcontract about 40% of the work on the Iridium NEXT constellation to companies in North America.
Oct 19/10: Iridium Communications Inc. announces a contract with Ericsson Federal Inc. to provide Iridium’s next-generation switching technology, including custom design, development, integration and maintenance for the Iridium satellite communications system. Iridium has transitioned all commercial traffic to the new Ericsson MSS switching technology, and the next-generation Ericsson Mobile Softswitch Solution (MSS) platform will support both current Iridium and NEXT satellite communications services. Iridium hopes that bandwidth upgrade will contribute to a smooth transition into Iridium NEXT. Iridium.
Oct 4/10: Iridium Communications Inc. announces that it has signed the definitive Coface Facility Agreement to finance Iridium NEXT. Societe Generale, Goldman Sachs & Co., and Hawkpoint Partners Limited advised Iridium in connection with the financing. Iridium CEO Matt Desch adds that:
“In the four months since we announced Thales Alenia Space as our prime contractor, they have met the milestones agreed upon for this first phase of the project… Our requirements development process is well underway. Planning and design for the satellites and constellation are on schedule. Both our teams and roster of partners are growing quickly. On the overall Iridium NEXT program, we expect to spend approximately $600 million by the end of 2011. Of this spend, approximately $400 million will be funded under the Facility.”
The credit facility consists of 2 pro rata tranches, and the repayment period of 7 years begins following substantial completion of the Iridium NEXT launch program, which is expected to occur in 2017. One tranche of up to $1.537 billion will bear a fixed interest rate of 4.96%. The second tranche of up to $263 million will bear a variable interest rated based on the London Interbank (LIBOR) rate plus 1.95% per annum. Based on the current six-month LIBOR, the interest rate on this tranche would be 2.41% per annum, but if interest rates rise as expected over the next couple of years, Tranche 2 could become more of an emergency fund.
The syndicate of 9 banks is led by Deutsche Bank AG, Banco Santander SA, Societe Generale, Natixis and Mediobanca International S.A., and includes BNP Paribas, Credit Industriel et Commercial, Intesa Sanpaolo S.p.A. and Unicredit Bank Austria AG. Iridium.
Oct 1/10: Iridium Communications Inc. announces that
“…it has signed a confidential settlement agreement with Motorola, Inc. (NYSE:MOT) that resolves all disputed matters in the lawsuit filed by Motorola in February 2010 in the Circuit Court of Cook County, Ill. against two Iridium subsidiaries.”
The larger Iridium bankruptcy case involving Motorola was settled in 2008.
July 21/10: Iridium Communications Inc. signs 2 comprehensive, long-term agreements with Boeing to maintain, operate and support Iridium’s satellite network.
The first agreement is a new support services contract under which Boeing will become the exclusive operations and maintenance provider for Iridium NEXT. In addition, Boeing will further upgrade Iridium’s satellite control system to become fully compatible with Iridium NEXT.
The second agreement maintains Boeing’s decade-long relationship as the Iridium constellation’s operator and satellite control system support. Under the new terms, Iridium says it will will receive significant cost savings, and benefit from the release of more than $15 million in restricted cash required under the prior agreement. Iridium.
June 15/10: Iridium picks its first launch partner, using its financing assurances to sign a $492 million contract with SpaceX for Iridium NEXT launches. This is the largest single commercial launch deal ever signed, involving launch services from Vandenberg AFB, CA between 2015-2017. SpaceX’s Falcon 9 will carry multiple Iridium NEXT satellites on each launch, inserting them into a low-earth orbit (LEO). SpaceX has been working with Iridium and Thales Alenia Space to ensure compatibility between the satellite design, the Falcon 9 vehicle, and the Iridium NEXT program schedule. Iridium CEO Matt Desch added that:
“Hands down, SpaceX offered us the best value coupled with an unwavering commitment to flawless performance and reliability… SpaceX also offered dedicated Iridium NEXT launch slots within its manifest, which currently has 24 Falcon 9 flights scheduled ahead of us, including those for commercial and government customers, during the coming five years.”
Iridium expects to contract with at least one additional launch services provider, but this contract makes them one of SpaceX’s mainstay customers, alongside NASA’s $1.6 billion contract for 12 Falcon 9/Dragon capsule missions to the International Space Station from 2011-2015. Iridium | SpaceX.
June 2/10: The $2.1 billion contract to build the Iridium NEXT constellation… won’t go to Lockheed Martin. Thales Alenia Space walks away with the fixed price contract to design and build 72 operational satellites and in-orbit spares, plus an additional 9 ground spares. That will expand the project’s expected size, bringing the total estimated cost to design, build, and launch the constellation to $2.9 billion.
The first Iridium NEXT satellite is now expected to launch in Q1 2015, with satellites launching through 2017 as 1-for-1 replacements of the existing constellation. Iridium’s ground segments are already evolving, and will be capable of commanding and controlling both old and new satellites. Likewise, the new satellites will remain compatible with existing receiver deices.
The French export credit agency Coface who financed Thales Alenia Space’s win to build the new Globalstar constellation for Iridium’s rival, also played a role here. They issued a $1.71 billion a “Promise of Guarantee” that will cover 95% of the project’s required credit, and is not conditioned on Iridium raising any further debt or equity financing. The financing to cover that guarantee is being syndicated through French and other international banks and financial institutions, and is expected to be completed in summer 2010. Goldman, Sachs & Co., Société Générale, and Hawkpoint Partners Limited continue to advise Iridium in connection with the financing.
Meanwhile, the structure of the guarantees allows Iridium to enter into an Authorization to Proceed (ATP) with Thales Alenia Space. This means that development work can begin immediately, without waiting for final financing.
Thales Alenia Space says that 40% of the work will be performed in North America, but the announcement is still a blow to an American satellite industry that has been sliding for some time. The Wall Street Journal adds that Lockheed’s management had been counting on the Iridium job to avoid production cutbacks, after a recent reorganization of its military and civilian satellite units. Thales is emerging from its own restructuring and upheaval, after a bitter boardroom battle for control and pressure to improve margins. About 10% of the French company’s revenues are now tied to the American market, and the win is consistent with ousted CEO Denis Ranque’s strategy of expanding US sales.
With so much investment pouring into the global satellite market at Iridium and Globalstar, some analysts like Tim Farrar wonder whether the new satellites will prove disappointing for the firms, but good news for customers. Time will tell. See Iridium Communications release and multimedia release set | Financing Power Point [PDF] | Information Week| V3 UK | Wall St. Journal (subscription).
Feb 8/10: Iridium awards a contract to Hughes Network Systems, a supplier of Iridium handsets and terminals, to develop the access network controller (ANC) for the Iridium NEXT ground control network.
Under the development contract, Hughes will design and supply an ANC system, which will process voice and data calls received from the satellites and route them to the end user. It’s intended to double the capacity of the existing Iridium system, and let the firm add more ground terminal sites. Iridium expects the ANC to be complete and operational by the 4th quarter of 2011. Iridium release.
Jan 28/10: Integral Systems in Colorado Springs, CO announces that its subsidiary RT Logic received a contract to supply 2 Telemetrix 400XR modulator/receiver (T400XR) modems for the Iridium NEXT system.
Nov 19/09: Iridium announces that it completed technical studies, working with independent technology partners, that demonstrate the feasibility of hosting earth observation and remote sensing payloads on its Iridium NEXT satellites.
Sept 24/09: Iridium CEO Matt Desch says that the firm may need to delay its selection of a satellite provider until early 2010. He adds that Lockheed Martin and the Franco-Italian firm Thales Alenia Space are both actively seeking support from their country’s export-credit agencies. Space News.
Sept 23/09: GHL Acquisition Corp. and Iridium Holdings LLC sign a definitive agreement to combine their resources, leaving debt free. GHL Acquisition is a special purpose acquisition company sponsored by Greenhill & Co., Inc. It raised approximately $400 million, and is approximately 17.5% owned by Greenhill & Co. SatNews | Digital Trends.
The transaction was unanimously approved by the Board of Directors of GHL Acquisition and Iridium, as well as Iridium’s major shareholders. It values Iridium at approximately $591 million. The combined enterprise will be renamed “Iridium Communications Inc.,” and will apply for listing on the NASDAQ. SatNews.
Aug 4/09: Iridium Satellite announces it selected 2 companies – Lockheed Martin and Thales Alenia Space – to participate in the final phase of its procurement process for the Iridium NEXT constellation. Iridium chose Lockheed Martin and Thales Alenia Space as a result of their initial constellation design concepts; demonstrated understanding of performance requirements and capabilities; and preliminary cost estimates for the manufacture and launch of Iridium NEXT.
February 2007: Iridium Satellite announces its intention to build a second-generation satellite constellation called Iridium NEXT. Anticipated to begin launching in 2014, Iridium NEXT will offer enhancements including: improved data speeds, higher quality voice, flexible allocation of bandwidth, and IP-based technology.
- Iridium Communications – Iridium NEXT. See also Hosted Payloads page and Iridium NEXT Brochure [PDF].
- SpaceX – Falcon 9
- DID – High Integrity GPS/ iGPS: Boeing’s Iridium Ace Card
- DID (Dec 3/09) – Phase II of Netted Iridium Program Underway
- Space News (March 26/09) – Iridium Next Satellites To Be Integrated
- Space Daily (Dec 7/07) – Iridium Satellite Appoints Leader For NEXT Development
- PCWorld (Feb 17/07) – Iridium Plans Next-Generation, IP-Based Satellites
- DID (April 17/06) – US Military Pays $80.4M for Iridium Services