March 17, 2000 in accordance with the decision of the Court of the United States Bankruptcy international consortium Iridium LLC announced the termination of activities and services of global satellite voice Iridium. Thus ended the story of one of the most daring of telecommunication projects the end of the twentieth century. The fate of Iridium journalists, passionate search for "roast", wrote quite a lot. Only lazy people are not trying to ridicule the technical solution for many years ahead of their time. What really happened? Why did fate and time have been so unsympathetic to the project that addresses the global challenge of communication at any time from anywhere in the world? Let me remind you, Iridium was the only system that provides voice services anywhere in the world. This was its main advantage over the current system of Inmarsat and recently put into operation a system of Globalstar, fail to link in the polar regions (Globalstar did not set it in ocean waters).
Too expensive
On the development, implementation and commissioning of Iridium consortium spent over $ 5 billion project payback time is 5-7 years, and it is estimated that operation of the system was supposed to bring an annual $ 1 billion profit in the presence of 1 million subscribers. But such a large number of subscribers the system was unable to attract, and the initial costs were enormous. That they will pay off in real terms, marketers Iridium does not come up with anything better than to ask a super-high price for connection, terminal and traffic. However, for most potential customers, these tariffs were prohibitive. The result of operating the system in the first half of 1999 was the initiation of proceedings for bankruptcy of the consortium Iridium. Bankruptcy proceedings Iridium consortium took about 7 months and consisted of several stages. In the first audited financial position of the company, during which the auditors found a huge (more than 400 employees) staff at the central office with exorbitant salary. Does not that bureaucracy in the world is brilliant ability to reproduce and accomplishment? The next stage - the revision of debt. One possible option would be to increase the share capital. You had to convince shareholders to invest additional amounts. However, investors have lost faith in the success of such a move rejected. As a result, Iridium was put up for public auction. This is where the wealthy came McCaw, allocated 100 million dollars to maintain the system as a pledge of their participation in the auction. As it turned out, it was just a game. About any real deal it did not go. And on March 17 Bankruptcy Court ruled to liquidate the consortium. Loss of investors really great. But not all. Motorola, though suffered some material costs, yet gained solid capital. First, the company has gained invaluable experience in creating a system of global satellite communications. Built by a team of specialists, which has a huge technological advance. Worked out the program complex system of inter-satellite svyazi.Vo Second, for the first time have been resolved many issues of legal regulation, especially concerning inter-state level. On the high authority of Motorola is in this area can be judged from the fact that during the time that has elapsed since the commencement of the bankruptcy of a consortium Iridium, the company has received several contracts for the establishment of satellite voice and data. Motorola, like other investors, after insuring their investments and assess the real situation as an impasse, did not find a better solution than moved on. As will be completed by the system of Iridium, is still not clear. Gradually closed the station interface. But now, the system remains operational, since it is enough to one functioning station. Only for works on flooding satellites Motorola has requested $ 80 million source of funding for these works has not yet been found.
Who's to blame?
Analyzing the history of the project Iridium, one can distinguish two aspects - technical, organizational and economic. When creating any technical system, and especially a class project Iridium, in the design phase can not account for all the details, provide all the options. During debugging, Iridium, as well as its operation have been identified shortcomings in the structure of the system and in the principles of operation of several subsystems. Apparently, one of the mistakes of designers was to create a rigid scheme, involving the upgrade. And since the beginning of the development prior to commercial operation took about 10 years, then, of course, there is need to adjust some basic parameters, and even concepts. Perform a refinement, in particular to improve the design data rate 2.4 kbps to 9.6 or even up to 4.8 kb / s, failed. Among the major technical failures, our experts have noted:
- suboptimal choice of orbital altitude;
- insufficient power user terminals;
- fuzzy "transfer" the subscriber from one satellite to another;
- poor quality of the vocoder used in the subscriber terminal;
- large time delay signal for a number of areas;
- low data rate;
- complexity of the system in operation.
What consequences have these or other technical failures - is a separate issue. But, obviously, with the result that they have reduced the quality of the offered subscriber services. Willing to pay thousands of dollars for the poor quality of communication was a little bit.
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In the process of creating and debugging the system could not avoid and institutional failures. One of the institutional failures should be considered that the customer (Iridium LLC) was dependent on the contractor (Motorola). I remind you that 18.8% of the shares owned by Iridium LLC the same Motorola. A vicious circle, where all decisions are taken at the Executive, and the customer did not even have units that controls the progress of the project. Naturally, all the technical information has become the prerogative of specialists Motorola. Specialists from the operating companies of Iridium had no access to details of the project at all stages of its introduction. Obviously, at the stage of debugging needed an open, frank discussion: there were problems, and some of them were probably correct. However, no one seminar on the project has been carried out, moreover, according to employees Iridium-Eurasia, the very possibility of technical discussions are not allowed. As it turned out, the system was originally laid down a number of controversial technological solutions. Only in service specialists Motorola convinced that the implementation of the system, not all items technical specifications for the system are satisfied. Although it is still under development, many experts warn, and in particular Russian. Obvious blunder was allowed when running Iridium in commercial use. He was widely advertised and is scheduled for September 23, 1998, but long before that term experts, it became clear that neither the technical nor organizational system is not prepared. When advertising flywheel unleash the full speed, it became clear that Iridium and all the regional operators are simply not ready for commercial operation of the system. According to experts, there was no reasonable coordination of regional stations pairing. Single center, the overall coordination of the system, with the task failed, and reduce the regionals are not directly wanted. This led to failures in customer service from other regions.
Marketers are summarized
Commending the work of marketing consortium Iridium, I dare say that mistakes can prevent and vaunted Western experts. Obviously, marketing companies have overlooked or did not anticipate such a rapid development of cellular networks. In 1998-1999. number of regions was telephones as if by magic. This worsened the situation for Iridium, dramatically narrowed the range of potential clients. Probably, the business plan of the system was created in an environment where mobile communication is making their first successes. By the beginning of commercial operation of Iridium (1999), this plan was completely cut off from life.Therefore, the 1.5 million subscribers, incorporated in the marketing of its foundation, were no more real than the building of communism in one country. On February 1, 2000, the system was around 81 thousand subscribers. At a reasonable tariff policy in the first two years of operation, the system could actually dial 250-300 thousand subscribers. The idea of a decade ago that people need a phone with a single number anywhere in the world, have failed. Cellular networks have given subscribers, almost all the advantages of satellite systems. Bet on the symbiosis of mobile and satellite communications are not justified - the presence of a space segment makes this service an expensive toy. Marketers are hoping that once the satellite consortia will develop sufficient infrastructure, cellular companies will crumbs from the mobile market. It is significant that Craig McCaw, earning billions in U.S. Cellular, sold his company to invest in a satellite project Teledesic. Iridium, apparently ahead of his time - he was not in demand. One of the most attractive marketing Iridium is the marketplace in developing countries, where the connection is really needed. However, the rate on the market itself is also not justified. At any forecasts and estimates based their calculations, today is difficult to define. It is obvious that the real needs and the purchasing power of people living in these regions are far from certain minimum, which makes satellite profitable. By marketing mistakes should be attributed to the orientation of the Iridium system personal use. At the initial stage acutely felt the lack of equipment, intended for corporate clients, as it turned out, the mainstay of Iridium. This primarily refers to the car and fixed terminals. Marketers did not pay sufficient attention to the fact that psychologically prepare the mass consumer, to a new satellite communications services. Focusing on advertising, they missed a direct marketing and work with potential subscribers through the press. New technology of communication required from a person other cultures using your phone. Firstly, to establish a connection is a little longer than usual international communications by telephone or shared when you connect to cellular networks. Second, the relationship is established only in the line of sight satellite antenna apparatus of the subscriber, ie, in open spaces. In the room, and even on city streets with high-rise buildings link can be established and disappear when stationary on the subscriber - the motion of the spacecraft leads to the antenna the phone goes out of sight. Even in the woods for a stable connection is better to look open glade. Thirdly, you must accept the possible distortion of the voice, which is due to the parameters of a vocoder phone system Iridium. That's about it, without a blank advertising fireworks, should be able to converse with future subscribers. Unfortunately, many users are poorly informed about the features of the system Iridium.
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Well-known errors of Iridium and pricing policy, when the armament was accepted marketing model used by cellular operators. Marketers are hoping that the first phase of ultra-high fares do not deter wealthy individuals and corporate subscribers. Then assumed a gradual reduction of tariffs. Today it is obvious that the strategy should have been diametrically opposite: to start with should have relatively low tariffs, minimum prices for phones and connection fees, as well as demand gradually increase them. But it was the first, obviously inflated prices, scared off potential customers. Despite the subsequent decline in prices, Iridium customers associate with something insanely expensive elite. Another no less significant marketing mistake - this is the orientation of the tariff system Inmarsat, nor on the customer base, nor on the historical roots of the model failed to meet Iridium.Guidance should be tariffs of mobile operators, naturally, with some amendments to the "global communications". Has failed, and bet on global roaming (read - the prestige of Iridium). These, as well as a number of less significant reasons predetermined the failure of a project Iridium. Firstly, the need to use another antenna for indoor and even in the car. Secondly, the initial price of the terminal (more than 3000 dollars), although decreased to 1300 dollars (without VAT), nevertheless was twice higher than the price of the most prestigious cell phone. Long overdue such a service as Iridium communications for airline passengers. But dozens of airlines in the world with thousands of aircraft. As aircraft owners have expressed interest in Iridium, the weight of this market segment could have an impact on the overall situation.
Lessons Iridium-Eurasia
There were mistakes and the Russian operator of Iridium-Eurasia. Experts see flaws in the personnel policy. This led to the failure (otherwise you will not tell) in marketing. According to experts, the number of Russian users of the system could be 3-4 times higher. Attract Russian consumers through mobile operators, too, failed. The regions have been wiser to rely on the company, established and operated by corporate and agency communication systems. They have direct access to their clients. Interest in the system was in the administrations of many Russian regions, as evidenced by letters received in Moscow. However, work directly with the regions should be actively and clearly long overdue - the aforementioned letter dated end of 1999, and could come a year earlier. According to some experts, the example of Iridium can understand the attitude of the former State Committee for Problems of communication in the country. One gets the impression that the agency has seen its task in the development of certain rules: how and to whom you can create a communication system, own frequency bands who is entitled to this or that service - and all. That there is long history of struggle of our bureaucracy with technology CDMA! A permissive, prohibitive, restrictive regulations have followed one after another. Although anyone who, as officials, signalers should be well aware that the systems third generation mobile communication is mainly based on this technology. A few words about the paging - a service which also offered Iridium. By itself, a unilateral paging of little interest, it is necessary only if the subscriber has received the message, somehow can respond to it, such as somewhere to call. Is designed to whom is this service? It is unlikely that she found a demand in remote regions of the world where the winner gets a miracle-pager for $ 1000
All for the better beyond all expectations
One expert suggested, in general, a paradoxical: "... perhaps this is the best that Iridium has ceased to exist in early 2000, when the users were relatively few. If it had happened a year or two, the consequences for the users could be much more serious. " In some ways he's right - for this time associated with the system could be hundreds or even thousands of organizations already have developed technology in many areas appeared to communication systems that rely on funds Iridium. But the flaws that were inherent in the system initially, and could not be eliminated in the process of debugging, it is still inevitably would have led to the bankruptcy of Iridium. And overnight, structures built, based on this system could collapse. Today, users of the Iridium failure is not so painful.
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Why the fate of the current communication system is not interested in business, government and supranational structures? It is obvious today that Craig McCaw statements about the possibility of purchasing the system no more than an advertising, marketing ploy to attract attention to your super without exaggeration Teledesic (288 satellites), in which he co-owned with Microsoft Chairman Bill Gates creates a satellite broadband access to Internet resources . Nothing more than advertising purposes and did not pursue the other businessman - Michael John.To transform a system designed to support voice services in data communication is futile. No matter what compression methods are not offered, the capacity data transmission channel Iridium is minimal. Iridium system was supposed to be of interest to international bodies, primarily the United Nations. Cost of maintaining a system with one gateway will not exceed $ 50 million, but the relationship with any point of the planet at any given time is worth it. Is not excluded that the Iridium will show official interest in government and law enforcement agencies the United States. As the system except for voice communication function incorporated location, it would provide them a solution of several problems for many years. A 50 million for the U.S. budget is not a problem. Confirmation of this should be considered that, in early 1999, Motorola sold its U.S. Department of State Party in 1000 Motorola devices 9500, designed to work in a standard Iridium. State Department and other government agencies are going to have to actively use the Iridium in their work, especially overseas. Services for the State Department provided a special unit of Motorola M-WINS, and the relationship of American officials with the offices was carried out through a special gateway, located in Hawaii and specially designed to work with the U.S. government. This hypothesis says, and such a fact. Since the end of March 2000 the share price from 40 cents Iridium suddenly crept up and slowly approaches the $ 1 (http://www.bloomberg.com/). In April, has sold over a million shares. Since the announcement of bankruptcy officially became impossible to sell shares, it is easy to assume that began behind the scenes game. It is a question or a majority, and perhaps about buying at the price of paper on which are printed all 150 million shares of Iridium.
Market for satellite communications today
With the bankruptcy of Iridium its competitors breathed a sigh of relief. To a large extent this relates to a system of Inmarsat. Her position looks quite robust - it takes a market sector in which stature over the years and in which for 17 years she has developed a certain parity with alternative telephone service. Was correctly bet on vertical markets such as maritime transport. Stability did not shake the positions of Inmarsat Commissioning loser Iridium. Despite the bulky terminals and the need to deploy an antenna at the beginning of this year's system had 140,000 subscriber terminals (90 000 for voice calls and 50 000 data). In the presence of a competitor (the system Iridium) Inmarsat's leadership quickly triggered survival instinct - tariffs in March 1999 have been significantly reduced. Moreover, the developers of the system at the end of the same in 1999 produced a strong pre-emptive strike - in addition to transmitting data at speeds of 64 kbps (Inmarsat-B HSD) and ISDN-compatible connection (64 kb / s, Inmarsat M4), Mobile network Inmarsat became the first global network with the ability to packet data over IP (also speeds up to 64 kb / s). It is particularly important that the payment of this service is not to wait, but for actually received / transmitted by the amount of information. System Globalstar, entered into commercial operation in early 2000, also offers global satellite telephone service. Expanded part of the system covers more than 60% coupling surface of the Earth. The latter were put into operation the station in China, Australia and Venezuela. Globalstar plans to guide the company in the I quarter of 2001 to put into operation all the 38 stations of conjugation of the first stage, which will provide coverage of the surface of the Earth in accordance with the project, and satellite services will be available in 120 countries. Interestingly, in Russia, the system was first officially used at the end of March 2000 to transfer the results of presidential elections in Russia from remote areas of Chechnya. Phones Qualcomm, and there were more than 20 pieces., Did not disappoint, and the president was elected in the most democratic way. If you compare the technical solution to the organization Globalstar connection with inter-satellite communications, used in the Iridium, it is not so gracefully, but it is much cheaper and more reliable. Onboard equipment easier, because performs only the function of relaying the signal to the nearest ground station.A comparison of Iridium and Globalstar, recalled that the first provides 100 percent cover the earth's surface, subject to several conditions. Globalstar, as we have already noted, does not provide full coverage. But the advantages of this are generally more simple system of relatively low tariffs and prices for the equipment. It should be noted, and high quality voice communications technology provided by CDMA. Globalstar managers try to avoid the mistakes of Iridium, in particular, are not adhering to the formula of "one person - one number", they are concentrating their efforts in those market sectors where the presence of solvent subscriber is more likely. In Russia, rates depending on the service areas are in the range 1,30-2,30 dollars now marketers are hoping to attract customers not only voice communication but also a wider range of services, offering a variety of applications. Control systems and telemetry-based data transmission channel Globalstar can find the consumer. In addition, a key area of interest Globalstar announced market fixed wireless services in sparsely populated regions. " Prepared to sell the stationary access device and pay phones. Do not forget that Motorola offered to subscribers of Iridium to go under the wing of Globalstar, appropriate discounts and benefits have already been announced. What services system is Globalstar? In addition to wireless telephony services, mobile and stationary, the user is available to send and receive short messages, global roaming, call the emergency services, voice mail. Additional types of services provided by Globalstar, include: call forwarding, call waiting, call hold, call barring, caller ID, CLIR, call trehnapravlenny. Data transmission (fax, E-mail and Internet) in April this year has been demonstrated in Rio de Janeiro and will be put into commercial operation by early 2001 is another trump card Globalstar - global positioning service, which is based on the Doppler effect, by not based on the GPS system and can be solved by means of the system Globalstar. Therefore there are no problems using the legal system of positioning in Russia. Note that the legal aspect of using GPS-based positioning, we finally worked out. Apparently, for the successful future of this system is an extremely important factor will be the data service. It is appropriate to recall that Iridium was not able to offer this service to subscribers. By itself, the rate of 9.6 kb / s, planted in the development of Globalstar, by today's standards, and low. However, for e-mail and fax, it is enough, besides it does not depend on external conditions. Some pro and contra appear when subscribers will learn how to be charged this service.
Information for future users
The collapse of Iridium will be a good lesson for marketers Globalstar. Prices for vehicles are in the range of $ 1000-1500 in the United States minute call costs 1.70 dollars in Asia and South America - less than 1.0 dollars expected leasing of equipment, various plans for pre-payment. Service providers, including GlobalTel, prepared a program of support to subscribers of Iridium, which is to provide price discounts at the conclusion of the contract. Thus, all former subscribers to Iridium, which appeared without context from the termination of the system, proposed on concessional terms to become a subscriber of the Globalstar system and continue to use the services of satellite communications. At what cost to subscribers in Russia connection to the system and its operation? Thus, the initial connection. You will pay the telephone (eg, type TELIT SAT) - 550-1200 U.S., connecting to the system - $ 180, prepayment for traffic (for example, with international access) - 216 USD Total: 1600 U.S. monthly expenses include a monthly subscription fee (for example, the tariff plan "Priority") - $ 48 and payment of traffic. We give some prices for 1 min.: Outgoing call to a subscriber in any area of the system - 1,8 dollars, an incoming call from the system of Globalstar - 1,2 dollars for those who remember the prices of the first stage deployment of cellular services in Moscow, given prices not seem excessive. To assess the possible traffic, assume that the total time of the negotiations during the month was 200 minutes (for example, 120 minutes of outgoing and incoming 80 minutes).In this case, the fee negotiations will be about $ 220 So, with the subscription fee monthly expenses amount to about $ 270 Naturally, international calls, roaming and additional services will require a certain costs, but the subscriber receives a link at any time and anywhere. Draft ICO - the situation here remains uncertain. Saved in the middle of May 2000 from the debt pit one of its owners, the same Craig McCaw, the project has changed owners and name. McCaw invested in the restructuring of satellite operator 1.2 billion ICO-Teledesic Global - a new holding company that controls the satellite-based investment company Eagle River Investments and is the controlling shareholder New ICO, - intends to merge the two satellite project: New ICO and Teledesic . Hosts ICO planned to start providing services to the end of 2000, however, until that happens.
Satellite mobile communications - what next?
I think that is so widespread as it has seen 10 years ago, these systems do not get it. Most potential customers Iridium become subscribers of cellular networks. Already begun to deploy mobile networks of third generation, where the prerequisite is the possibility of international roaming. However, its market niche satellite systems still occupy. Demand for such services exist. What factors might determine the prospects for satellite systems? First, the uneven population density in many regions of the world, particularly in Russia, Canada and Brazil. Build cellular networks in sparsely populated areas simply not profitable. The second reason - to remote villages where traffic is low, pull the fiber as unprofitable, and put a fixed satellite terminal that connects through the switchboard number of subscribers, payphones, it is quite reasonable. Another sector of the market - a telephone connection with global roaming. Technological barriers between countries on different continents to continue to exist. And then satellite systems have certain advantages. In this case, it shall be a service reception / transmission of data, albeit with limited speed access to fax and E-mail. In addition, mobile satellite systems may actually provide communication of air passengers, railway trains and cruise ships. In the next five years, experts estimate the global market for satellite communications in the 1 million subscribers (for Russia is 10.8 thousand). Technical requirements for such a system can be defined quite succinctly - a single telephone number, voice quality and the ability to transfer data to a limited extent. Will the operating companies to meet these challenges not only technically, but in economic terms, and succeed where the fiasco Iridium? Sources, Materials:
