Alaskans may get Iridium service again

Posted: Sunday, December 10, 2000

FAIRBANKS (AP) -- A decision by the U.S. military may help Alaskans who want to communicate from remote parts of the state.

The Defense Department announced this week it will pay $36 million a year to Iridium Satellite LLC for unlimited time on 20,000 satellite phones.

The two-year contract could help keep the Iridium satellites in orbit, allowing the company to resume service to civilians and other government agencies who own the expensive, go-anywhere phones.

Despite the high costs, Iridium phones secured a following in Alaska among government employees, miners and fishermen working outside normal cell phone range.

A representative with a public relations firm hired by Iridium said Thursday that the company won't comment yet on what service it will provide to non-Pentagon users.

The Pentagon's contract has options to extend it through 2007.

The Defense Department said it signed the contract because Iridium's system is the best available.

Iridium began service in December 1998, with the company hoping to dominate the global wireless market. But the bulky phones didn't attract enough users and the firm soon had financial trouble. It filed for bankruptcy and, last March, stopped service.

A Pentagon official was quoted in September as saying the military was interested in keeping the system afloat. That prompted an inquiry from Sen. Ted Stevens, R-Alaska.

Though Stevens' office and the Pentagon refuse to release the letter, a group advocating Pentagon involvement said Stevens' letter questioned where the Pentagon planned to obtain the money and whether it was wise to get involved with the bankrupt operation.

Stevens' questions apparently didn't derail the Pentagon.

When the original Iridium company shut down the system in March, its representatives said it would bring down the satellites unless a buyer came forward. Motorola, the primary investor at that point, said it was spending $10 million a month to keep the satellites aligned.

In November, the satellites were purchased for $25 million by Iridium Satellite LLC. A federal bankruptcy court approved the deal Nov. 22, contingent on the Pentagon's participation. The satellites and other assets, valued at $3.4 billion, are expected to be transferred to Iridium Satellite in a few days.

A Pentagon document distributed at a news briefing Wednesday said that the new company would need only about 40,000 subscribers at 80 cents a minute to operate. That would be in addition to the $36 million a year from the Pentagon.

''It is worthy of note that Motorola had 60,000 subscribers at $5 per minute when they initiated bankruptcy,'' the document said.

Boeing will operate the resurrected satellite system, according to the Defense Department.

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