DOD out millions with Iridium
- By Paula Shaki Trimble
- Mar 20, 2000
Most of the Defense Department's multimillion-dollar investment in the now-terminated
Iridium satellite telephone system is a loss, according to a DOD spokeswoman.
Iridium LLC, which operated a network of 66 low-Earth orbiting communications
satellites, terminated commercial service Friday after failing to find an
investor to revive the bankrupt venture. The U.S. Bankruptcy Court for the
Southern District of New York approved use by Iridium, backed primarily
by Motorola, of its secured lenders' cash collateral to begin bringing the
satellites back to Earth and selling its assets, according to an Iridium
The Defense Department in April 1999 awarded Motorola Inc. a $219 million
contract to provide Iridium equipment, handsets, telephones, pagers, accessories
and associated airtime services. The services would be provided to the federal
government through its own Iridium gateway in Hawaii. About $140 million
of that had orders written against it, said Susan Hansen, DOD spokeswoman.
"The department is continuing to assess what we can retrieve from our
investment in the Iridium system," she said. "Some of the elements of the
gateway, such as the high-quality, digital switching equipment at Hawaii,
will have residual value and might be reused. The handsets are unlikely
to find other applications. Most of the investment is probably lost."
Fortunately, DOD had not started to field the operation throughout the
department, Hansen said. The government's gateway has about 3,000 registered
users but only about 800 of those were military users, she said.
Iridium filed for Chapter 11 bankruptcy protection on Aug. 13, 1999.