Space: August 13, 2004

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The Department of Defense is negotiating a new contract with its primary supplier of satellite telephone service. The Iridium satellite system was put up in the 1990s at a cost of $5.5 billion. Alas, not enough customers could be obtained for the expensive satellite telephone service, and in 2000, the company was not only broke, but no one wanted to take over its network of 79 satellites. The situation was so dire that the birds were going to be de-orbited (brought lower so they would burn up in the atmosphere.) Then the Department of Defense stepped in with an offer. For $3 million a month, the Department of Defense would get unlimited use of up to 20,000 devices (mostly phones, but also pagers and such.) That was enough for someone to come in and take over the satellite system (which cost more than $3 million to operate) and make a go of it. The new owners didnt have the $5.5 billion in debt to worry about, and were able to lower prices enough that they were able to sign up 80,000 other customers (civilian and military.) 

The Department of Defense expects to pay more than $150 a month per satellite phone account under the new contract, because the current Iridium network of satellites will need replacing by 2014. But the Pentagon wont pay a lot more, and will be using more satellite accounts as well. If the army has its way, each infantry division will have several thousand satellite phone accounts. The air force and navy want lots of them as well. This satellite communications capability is the key to making the battlefield Internet work, and more 50,000 or more satellite phone connections will be needed just to get started. This also makes all those satellites a vital military installation, and target.

 

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