Once-bankrupt Iridium to relaunch satellite-based phone service

Wednesday, March 28th 2001, 12:00 am
By: News On 6

NEW YORK (AP) _ Fresh from its $5 billion bankruptcy and near-destruction in the earth's atmosphere, Iridium plans to relaunch its satellite-based mobile phone service this week.

The new owners of the 66-satellite network, Iridium Satellite LLC, announced Wednesday that the system will go live again Friday, almost exactly a year after commercial service was turned off.

Iridium Satellite paid just $25 million to acquire the system, which cost Motorola and other investors more than $5 billion to develop. The original company launched service in late 1998, and slid into bankruptcy court by the following summer, drowning in debt.

The new venture insists the key to success will be its new focus on bringing satellite phone service to remote work settings such as oil rigs and cargo ships, not the business travelers and consumers the old Iridium tried to lure. Another distinction will be the launch of wireless data services in June.

It certainly won't hurt, however, to start out without a crushing, multibillion-dollar debt load to shoulder, a burden that now threatens to sink satellite phone rival Globalstar.

``Inheriting a $5 billion system for $25 million is very good place to start,'' said Jose del Rosario, an industry analyst at Frost & Sullivan. ``You don't have to recoup such a huge investment in such short period of time.''

In the end, the old Iridium peaked with 55,000 customers, but probably scared away hundreds of thousands of potential users with sticker-shock calling rates of $7 per minute and mobile handsets costing up to $3,500.

When the old Iridium gave up its search for new backers in March 2000, it received permission from the bankruptcy court judge to destroy the 66 satellites by having them burn up in the Earth's atmosphere. But that ``de-orbit'' plan was never put into effect.

Despite the colossal financial debacle associated with the name, the new owners of Iridium consider the moniker an asset.

``The Iridium name has incredible brand name recognition across the globe,'' said Ginger Washburn, chief marketing officer for Iridium Satellite.

The new Iridium expects that the wireless carriers it has partnered with will charge about $1.50 per minute for calls. Exact details, including any monthly charges, weren't immediately available. A new handset will cost $950.

Globalstar, which began service in North America about a year ago, recently lowered its rates to $1.49 a minute for entry-level subscribers to as low as 89 cents per minute for high-volume users.