Iridium Communications Inc. (formerly Iridium Satellite LLC) is a company, based in McLean, Virginia which operates the Iridium satellite constellation, a system of 66 active satellites used for worldwide voice and data communication from hand-held satellite phones and other transceiver units. The Iridium network is unique in that it covers the whole Earth, including poles, oceans and airways. The founding company went into Chapter 11 bankruptcy nine months later, on August 13, 1999. The handsets could not operate as promoted until the entire constellation of satellites was in place, requiring a massive initial capital cost running into the billions of dollars. The cost of service was prohibitive for many users, reception indoors was difficult and the bulkiness and expense of the hand held devices when compared to terrestrial cellular mobile phones discouraged adoption among potential users.

I saw an immense opportunity to repurpose the network to enable fast, secure, and efficient communications to virtually any location at higher speeds than existing internet dial-up connects for premiere business clients. Moreover, remaining bandwidth allocation could be contracted for the purposes of secure military communications. This would also enable the NEWCO to product a new packet encryption technology for “in theater” operations whose end customers would be  the U.S. and allied governments. In essence, a potentially near broadband experience in the age of dialup 56.6 kbit/s modems which was possible through compression of packet data up the ka-band which had transmission speeds of 8 Mbit/s. As an alternative business model,  the satellites “L” band could potentially be deployed as the primary communications network, freeing up the larger satellite bandwidth pipe to become potentially the infrastructural communications hub for the world’s first IP radio network, 2 years prior to XM or Sirius’s inception. Moreover, it was the hypothesis of  both the Iridium engineers and my telecom advisors that if the satellites were networked in an array configuration the subsequent bandwidth could increase up to 19+ Mbits/s.

After meeting with Iridium Iridium executive management, a business case, proforma and investment package was developed within 45 days. In less than 90 days, we had acquired 1 lead investor and 3 syndicate funds. All have signed term sheets totaling $120 M for an anticipated $50-60 M acquisition cost, which would provide enough operational capital to maintain current Iridium terrestrial operations as we completed the final negotiations of a senior debenture to fund the NEWCO and development of it’s future lines of business. Unfortunately, Iridium reorganized itself under a chapter 11 and never entered into an expected  7 final bankruptcy liquidation. Furthermore, the Department of Defense stated to Iridium’s executive management that changing over of the bands themselves is not in the interest of national security.

Though the project itself was a nonstarter, the insight and relationships that I gained into the telecommunications industry was priceless.