Ten years ago, Via Satellite interviewed Matt Desch only seven months after becoming CEO of Iridium. A lot has changed in 10 years and Iridium went from bankruptcy to a successful second Iridium Next launch this week, so we wanted to bring back this exclusive interview where Desch explained his vision for the company back in 2007. This article was originally published in the May 2007 issue of Via Satellite.

Only seven months have passed since Matt Desch was named chairman and CEO of Bethesda, Md.-based Iridium Satellite LLC, the global supplier of mobile satellite communications services. The former CEO of New Jersey-based Telcordia Technologies, a supplier of telecommunications software and services, Desch takes over Iridium during a time of transition for the company, but he anticipates an “explosion of applications” throughout the coming years. This is “an exciting growth company at a crossroads in its history,” Desch says. “As we move to the next generation [satellites], this is an exciting growth opportunity unlike anything else.”

That assessment of Iridium’s future is a direct contrast to comments made by Andrew Sukawaty, head of London-based competitor Inmarsat, who has publicly opined that “the clock is ticking” for Mobile Satellite Services companies that rely on low Earth orbit satellites to provide service. Sukawaty suggests those companies cannot compete with ones that use geosynchronous satellites, which can be deployed at half the cost of the low Earth orbit constellations.

Desch counters that Iridium is in fine shape, adding to its 175,000 customers at a 20-percent clip annually and leading him to believe that Iridium will have 400,000 to 500,000 customers within the next four to five years.

“I am excited to lead the Iridium team as it unleashes the full potential of this unique global network,” Desch says. “Iridium’s evolution from a handheld voice service to a full suite of voice and data solutions has impressed upon me the potential to become the world’s most robust, pervasive and fully-integrated global communications network.”

In February, Iridium unveiled plans to spend $2 billion to replace its 66-satellite constellation with a new generation of spacecraft that will provide even more services.

While Iridium is an infamous casualty among the high-profile telecoms bankruptcies that took place around the turn of the century, Desch also believes the public markets will not shy away from Iridium. The first launches for the new constellation are planned for 2013, and the bulk of the investment will be made closer to launch, meaning there is little immediate need to return to the public markets, he says. “Most of the costs will be handled by Iridium, which is fine since we’re profitable and can generate the cash to build the system,” Desch says.

Desch spoke to Via Satellite contributor J.J. McCoy about Iridium’s current operations and future plans.

Via Satellite: What is your response to the criticism leveled at you and other mobile satellite operators by Sukawaty during SATELLITE 2007?

Desch: I’ve known Andy a long time, and I like him personally and have a lot of respect for him. I think customers understand why he’s saying what he’s saying, but I think that [he is] erroneously trying to create fear and uncertainty in the marketplace, and I don’t think people are believing what’s he’s saying. He tried to create an environment to support Inmarsat, and I understand why he wants that, but I don’t think they’re making sense to do so, and I think it’s the wrong way to go.

Via Satellite: What is the state of Iridium as a company?

Desch: Iridium has been mostly successful for the past few years — profitable for the last three and growing for the past six. Business has expanded into all kinds of fronts, particularly in the data segments. We hope to become the preeminent satellite services provider, taking advantage of and exploiting our position to expand into brand new markets.
Right now, a lot of our growth has been in the maritime segment and the aviation segment, but we’ve newly moved into tracking and logistics and the new wave and untethering of mobile applications. And we’re looking at a broad range of new businesses we’re getting into and looking to take the company into a lot of new areas.

Via Satellite: How do you intend to approach those new areas?

Desch: We rely on a lot of partners. We’ve created a new ecosystem, if you will, that we can’t even track but in which we are exploiting the systems and network we have.
I’ve only understood in the last few months how unique our system is, touching all the globe securely and with infrastructure. We’ve almost created a canopy of coverage across the planet, kind of like GPS did 25 years ago before anyone imagined it would be used by golf carts looking for balls, providing clocks for cell systems, etc. We’re looking at a similar explosion of applications.

Via Satellite: What new applications are being developed?

Desch: Examples are quite broad: One is a chemical company looking to monitor its employees in dangerous situations. When the computer sends an alert asking [an employee] if they’re OK, they can punch to respond.
AirDat is replacing [the U.S. National Oceanic and Atmospheric Administration’s] or the National Weather Service’s balloons with [sensors in] regional jets. The systems check conditions every 300 feet for information to communicate to Iridium’s central collection system that creates a detailed weather model for a much better result.
An unnamed partner with a fleet of delivery vehicles tracks 3,000 drivers who go in and out of cell phone coverage all day long to send information to and from drivers wherever they are. The same thing’s being done with cargo aircraft and pilot communications.
There are fishing vessels that can send information from anywhere. The number sounds unbelievable to me, but one estimate says that there are 137,000 sailors worldwide who get lost at sea each year. With an Iridium system connected to Bluetooth attached to a life vest, it immediately detects a man overboard and even sends information out about his likely direction under the conditions.

Via Satellite: Has the industry overcome the stigma of the bankruptcies?

Desch: The bottom line is, we’ve moved a long way away from “cell phones on steroids.” That was the mistake of the original systems in place. I mean, we’ll still have phones and they have gotten smaller and less expensive, but that’s not really where [business] is going. It’s really about an unlimited potential to communicate over the Internet.
I talked about the ecosystem. That’s the powerful thing about Iridium, the possibilities of what can be provided through value-added manufacturers, resellers and well over 100 other partners — and we’re gaining between two and five new ones a month — who are experts in their own right and who may have all their own hardware. They know how to do whatever they need done; they just need something to connect them to the Iridium system. It’s really about the partners signing up to make those decisions and investments on our behalf. Then the more that sign up, the more we can address things as we need; it’s all extremely scalable.

Via Satellite: Does your constellation suffer from any issues similar to those unveiled by Globalstar?

Desch: We don’t have the same issues they have. They have gone below their constellation’s design status, and now they’re trying to launch satellites to get to 100 percent. We’re designed for [a constellation of] 66 and have 75 up and idling above our current constellation, which is why it’s expected to last another six or seven years.
Our business is different than Globalstar’s, but to the extent that we overlap, we have seen some defections coming to us, and we welcome them with open arms.

Via Satellite: Are there any other advantage Iridium can gain from Globalstar’s troubles?

Desch: We had advantages to Globalstar even beforehand. Iridium works in the oceans and the poles; they work only over major land masses — and not all of them. So ours is a truly global system. Frost & Sullivan recently found that even where you expected [Globalstar]  to work, they didn’t stay with ours in providing coverage.

Via Satellite: What feedback have you received following the announcement of your Iridium Next program for the next-generation constellation?

Desch: We announced Next as a response to all the positive discussions we had, and the feedback has been kind of overwhelming, with calls from clients of all kinds who are really excited and want to be a part of it. We have had great feedback from all kinds of people who want to participate. So we had the announcement and a few people to speak on our behalf. I’ve been extremely busy lately just meeting people.
Our big partners are interested in the vision we announced. I think people expected we’d launch a replacement system but perhaps not a vision extended to secondary payloads, communications systems or other satellites of content providers. I think people understand now more than before what the real power of the Iridium architecture may be.

Via Satellite: What will Next offer beyond just allowing you to continue your operations?

Desch: Our constellation is unique. We’re the only ones with six satellites in polar orbit and 11 more backups behind them looking over any part of the planet at any time. The Iridium constellation is constantly overhead and can connect to each other wherever it needs to go to a private military or commercial gateway. It’s a backbone in space. Next will add to that backbone. That’s the real value, and as we launch these new systems, that will be very valuable and powerful as we talk to our technical partners.
We’ve moved now from just communications to navigation, sensors and even something like imaging. We probably can’t do high-resolution imagery because of the complexity and cost considerations but low-resolution imagery could provide a lot of value in constantly remapping the planet.

Via Satellite: Will is the status of your government business and your relationship with the U.S. Defense Information Systems Agency (DISA)?

Desch: Government contracts have gone from what once was 99 percent of our business to about 25 percent. Yet our business now extends to over 40 agencies, and we’ll continue to see our services applied in new ways.
There are as many different applications as there are customers. One you may have heard about is blue force tracking — keeping track of all the positions of all your people. Netted Iridium works like the Nextel ads, with a push-to-talk capability that allows hundreds of people’s phones to hear what you’re saying. Before, they used line-of-sight systems that can’t cut through to opposite sides of a mountain. We can provide the net overhead.
Those kinds of new systems have added growth potential that we expect to see continue, not just among U.S. agencies but other governments, too: the European Union, United Kingdom, police forces in Australia and New Zealand, fire departments, and other emergency response organizations. While the gross number of contracts will increase it will grow less fast than in the commercial market, probably around 20 percent in next year or two.

Via Satellite: Will the U.S. government or any international government customers providing any financing for the development of Next?

Desch: There are a number of government customers we’re working with, and they’re providing unique requirements and payloads to ride on top of our system.
We’re not launching the Next system for six years or so, but we’re going to design space on the satellite that doesn’t need to be filled in this year but potentially could be put on board when we launch in 2012, and as we launch additional spacecraft and as the requirements change, we can launch additional payloads. That has a lot of value for people whose systems and needs change.

Via Satellite: Iridium reported a 23.2 percent increase in subscribers in 2006. Where do you expect those numbers to go from here?

Desch: As you get larger, you can’t keep the same growth rate, but we expect to see it in the teens at least.  Especially healthy is the business for short-burst data. I think it grew over 100 percent, and we can see that again this year. At those rates, that will become significant over the next few years.