Chapter 15

MOOSE HUNTERS, MARINES,
AND THUGS

MAY 9, 2004
SATELLITE NETWORK OPERATIONS CENTER,
LEESBURG, VIRGINIA

The story of Iridium wouldn’t be complete without describing what happened to the satellites after the Colussy group took over. It took a little over three years, but on a day in May 2004 his instincts were all confirmed—the world couldn’t live without the system. The day started with a technical problem at the SNOC. About halfway through the 7:00 a.m. to 7:00 p.m. shift, a technician on the third console received an inquiry from the military gateway in Wahiawa, Hawaii. It seemed that the system was experiencing a high level of dropped calls—or, more precisely, failures to connect—and an extraordinary level of traffic in general. Shortly thereafter, a similar call came in from the civilian gateway in Tempe. The system was jamming up; it was overloaded. The technician scanned his CRT screen. Everything looked normal. Most of the twelve hundred “care and feeding” tasks had been completed for the day. It wasn’t an “anomaly” or a “bump”—the most feared words among the nine men on duty, meaning something in space has ceased working—and it wasn’t an “exception,” which would mean some part of the constellation was working in an unexpected way. Any of those situations would have caused the whole room to scramble into emergency mode. It wasn’t a weather problem—sunspots and solar eclipses had been known to affect the system in the past. No, this was something else. It seemed that satellites in one of the six orbital planes had been stressed beyond capacity.

But that was impossible. The Iridium system could handle 98,586 calls at a time—the math had been worked out by Ken Peterson long ago—and the company barely had 140,000 phones in service. Could there be a glitch in the pattern of cell reuse? Could the phased-array antennas be duplicating the same call or failing to pass it off to the next satellite? The technician dug deeper into the numbers scrolling rapidly across his screen, zeroed in on the heavy traffic, and then realized all the calls were originating in the same fifty-thousand-square-mile zone. It was possible to overload one small part of the system if, by some odd set of circumstances, massive numbers of people were all sending signals to the same satellite.

And that’s what was happening. It was a holiday in the United States, and there were 146,000 American troops in Iraq, and there was only one phone they could all depend on. Technically you weren’t supposed to use an Iridium phone for a “morale call,” but when you absolutely, positively had to get your call through at a certain time to a certain person, every soldier, sailor, Marine, and airman knew there was only one solution. The only situation that could max out the Iridium system was Mother’s Day in a combat zone.

Mother’s Day 2004 was not only a turning point for Iridium—around that time the company reached cash-flow break-even and started making money—but it was the first time the rest of the world realized there was a phone that worked everywhere on the surface of the planet. For cutting-edge professionals, there were actually three events that made Iridium famous. The first was 9/11. The second was the war in Afghanistan, even more than Iraq, since the terrain was so rugged and the infrastructure so primitive. And the third game-changing event was Hurricane Katrina, which was not the first natural disaster where relief workers used the Iridium phone as a lifeline, but was definitely the highest profile.

The new company had started off with exuberance and great promise. On January 17, 2001, Dannie Stamp dressed up in a spaceman costume for the victory celebration at the Metropolitan Club in Washington, and people let their hair down after almost a full year of constant stress. The champagne flowed, the room was filled with warmth, and there was one brief moment when it appeared that Colussy’s ragged coalition could form itself into a family of dedicated satellite operators. But it wasn’t to be. With just a tiny marketing budget, the company struggled from day to day, surviving hand to mouth, trying to overcome the infamy of the name “Iridium” while the boardroom descended into squabbling and dysfunction. Personalities and cultural backgrounds grated on one another. Prince Khalid assigned five different employees to oversee his investment, and their constant requests for microscopic details on every decision, combined with their refusal to make timely decisions themselves, annoyed the laid-back owners of Syncom even as the Brazilians and the Australians ran into money problems and started missing their cash calls. The very fact that the Prince never introduced himself to the other partners, much less showed up for a board meeting, was regarded as insufferably insulting.

But there was a more fundamental problem. Most of the sixty-three thousand original subscribers never came back. In fact, Iridium would come very close to disappearing altogether during those first three precarious years after the Pentagon deal. Colussy began the year 2001 with just $14 million in the bank—enough to run the constellation for two months—but that wasn’t the worst part. He also had no choice but to break his vow to Helene and take over as CEO. The Saudis wouldn’t accept Ed Staiano and there weren’t a lot of telecom executives out there who wanted to associate themselves with Iridium.

Still, it was gratifying to see that the small number of people who did use the phone were fanatical about it. Every time Colussy encountered an active-duty serviceman at an airport, he would ask if he was familiar with the Iridium phone, and the response was always immediate and ebullient. We love the Iridium phone, the war-fighters told him. We can’t live without the Iridium phone, they said. But awareness by the general public came much more slowly. Iridium was still mostly associated with a failed venture by Motorola, not a marvel of modern engineering. Even when the phone started turning up in popular culture—Robert Downey Jr. uses one in the Iron Man movies, Dirk Pitt runs his secret operations with an Iridium phone in Clive Cussler’s adventure novels, Brad Pitt saves the world with an Iridium handset in World War Z—it blended into all the other devices, most of them fictional, that superheroes tend to make use of. The first time most people noticed an Iridium phone in a movie was in 2014 when Bradley Cooper, playing Navy SEAL marksman Chris Kyle in American Sniper, executed the longest kill shot in history, then extended the antenna on his Iridium handset so he could call his wife eight thousand miles away to say, “Baby, I’m ready to come home.”

It was John Castle, of all people, who made the first Iridium phone call from New York after the terrorist attacks of September 11, 2001. With downtown Manhattan in chaos and the Pentagon on fire, Castle couldn’t make any of the phones work in the East 58th Street skyscraper where Castle Harlan was headquartered, so he took out his Iridium handset to call Colussy. Castle’s first thought had been, I wonder if Iridium still works. And, of course, it did, on the day when there was no other service in Manhattan.

Unfortunately, Iridium executives soon became alarmed that the guys responsible for 9/11 may have been using Iridium as well. In late September Colussy got a troubling report from the SNOC and the Tempe gateway. Technicians reported that two or three days prior to 9/11, the dormant Jeddah gateway in Saudi Arabia had suddenly been activated after eighteen months of being shut down. Two or three days after the attacks, the gateway ceased operations again. Iridium was using only two official gateways—the one in Hawaii for military calls and the one in Arizona for civilian calls—but for some reason the old Saudi gateway was still tied into the network. Colussy called a meeting of top executives to decide what to do. Should it be reported to the government? How many calls went in and out of Saudi Arabia during the activation? Was the company in any kind of peril because of the usage? Fortunately Mark Adams was at the meeting, and he said, cryptically, “I’ll take care of it.” So the report was made through channels, the FBI was informed, and no one heard anything else about it—for five years. Then, when former Director of Homeland Security Tom Ridge was asked to join the Iridium board in 2006, Ridge insisted that the matter be reopened.

This time Fulbright & Jaworski was asked to investigate a number of issues involving the Jeddah gateway, including whether it had been turned on around 9/11, whether gateway manager Tom Alabakis had any contact with United Arab Emirates intelligence agencies from his office in Dubai, and why Mark Adams made two visits to Saudi Arabia around the same time. Alabakis’ laptop computer was seized, all call records were examined, documents were accumulated, employees were interviewed, and Fulbright & Jaworski gave its findings to Michael Deutschman, Iridium’s general counsel. That report concluded that the Jeddah gateway had never been turned off because Iridium still had customers in Turkey and Egypt whose phones were “homed” on the gateway. These customers were complaining of spotty service because one of the two Jeddah antennas was defunct and the other one only worked sporadically. As a result, Alabakis had hired a company called Scientific Atlanta to do antenna repair work between September 7 and September 14, 2001, and test calls were being made during that time. The report also determined that UAE intelligence agents contacted Alabakis in October and asked for data on a list of Iridium phone numbers, but apparently the information was never turned over because the UAE had no court order. The visits of Mark Adams were meetings with the Saudi Ministry of Defense and Ministry of the Interior, and they were both deemed to be routine sales visits and nothing more, as Adams solicited business for his various ventures. Deutschman recommended to the Iridium board that no further action be taken, and Tom Ridge then agreed to serve as a board member. Of course, the backdrop to the whole 9/11 query was that Prince Khalid, majority owner of the Jeddah gateway, was a 24 percent owner of Iridium (soon to rise to 31 percent as the Australians and Brazilians had their shares diluted), and various low-level government functionaries had been raising foreign ownership issues even before the Prince invested. It also didn’t help that the minority owner of the Jeddah gateway was the Saudi Binladin Group, especially once it became known that 19 of the 20 hijackers came from Saudi Arabia.49

Ironically, it was President Bush’s actions after 9/11 that ended the foreign ownership issue forever. The President had just announced a “coalition of the willing” to fight the war in Afghanistan, and he was desperate for Middle Eastern allies. Envoys had been sent to Saudi Arabia to get the blessing of the royal family for the military action—and Prince Khalid was married to the sister of King Fahd. “We won’t be issuing any edicts against Middle Eastern companies while this is going on,” reported Dave Oliver.

Meanwhile, Mark Adams continued his double life through a unique employment contract. He received a salary as Iridium’s Chief Technology Officer, but he also had a “minority interest” in a company called NexGen Communications that would be developing top secret Iridium applications that could be used by the military and other government agencies. (The other owners of NexGen were all engineers who worked together at MITRE Corporation.) And perhaps Adams had a third job as well: one of the conditions of his employment was that six government operatives would be stationed at the SNOC. (Colussy didn’t know exactly what they did, and didn’t want to know.) Still, it was not exactly clear where Adams’ primary loyalties lay—with Iridium, with the government, or with the economic interests of his own highly privileged company.

In December 2001 Adams suddenly turned up in London, having a face-to-face meeting with Prince Khalid. Reports of the meeting startled Colussy, since no one else at Iridium had ever met the Prince or even spoken to him. It was an especially vulnerable time for the company, with cash on hand running low and Craig McCaw hovering around again, hoping to get a bargain if Iridium ran into trouble. When Adams returned to the States, he explained that the meeting was no big deal—the Prince simply wanted to plead for the Jeddah gateway being kept open. James Swartz backed up Adams’ account, saying the meeting was “just a coincidence.” But how could any meeting with the reclusive Prince be a coincidence? And if it was a coincidence, what was Mark Adams doing at the Prince’s town house in the first place? What were the Saudis attempting to do? What was Mark Adams attempting to do? The deeper you got into Iridium politics, the more paranoid you became.

And then there were those ten stolen phones.

In January 2001 it was discovered that ten Iridium phones had been in constant use, running up millions of minutes in airtime, without ever being registered to any particular user. Once the handsets were identified, they were blocked from using the system—but who were those people and what were they doing? No one ever found out.

So there was this dark underside to Iridium usage—bad guys seemed to know about it, and bad guys seemed to like it—but at the same time it was becoming the favorite handset of the American military. The Colussy investment group had taken over Iridium on December 12, 2000, and less than twenty-four hours later the first six orders for handsets came in—from the U.S. Army’s Battle Command Battle Lab in Fort Gordon, Georgia. By April 2003, when the invasion of Iraq began, it was clear that Iridium was not just a great add-on for small units but the only handheld phone that worked in Middle East combat zones. And because it worked all the time, under all conditions, civilian contracts started to roll in as well, especially from Halliburton, Blackwater USA, and other companies hired to provide services in Iraq and Kuwait. By August 2003, the popularity of the phone had spread to other armies—those of the United Kingdom, Australia, New Zealand, and Canada—but the ultimate badge of approval came when the Israel Defense Forces ordered five hundred handsets, since Israel was notoriously hard to please when it came to military equipment. “We have some forces that can’t get along today without the Iridium system,” said Colonel Barry Patterson, chief of the U.S. Air Force Satellite Communications Division.

It was ultimately the Marines who would become the most ardent supporters of Iridium. They had always relied on Navy satellites for on-the-move communications, but that system remained 250 percent over capacity through the first decade of the twenty-first century. Just as Jack Woodward had predicted, Iridium was perfect for platoons in motion. The Marine Corps Warfighting Laboratory started working with Mark Adams’ company beginning in 2004 to develop a “netted” system that allowed every Marine to be issued an Iridium phone with a “push-to-talk” button on it—no dialing numbers, no delayed connection, everyone can hear everyone else—and after being tested at the Combat Development Command in Quantico, Virginia, the new system was launched. It was called the Expeditionary Tactical Communications System (ETCS), and it became a $70 million addition to the DISA contract in 2009. Netted Iridium was, in fact, the most dramatic advance in combat communications since Motorola’s invention of the Walkie-Talkie during World War II. For the first time, every Marine in a unit could communicate in real time with every other Marine in that unit. Since its introduction, Netted Iridium has been continuously improved and expanded at the Naval Surface Warfare Center in Dahlgren, Virginia, with a view toward achieving the military nirvana of “global push-to-talk.” (Currently it only works within a 250-square-mile area.)

And yet, even as the reputation of Iridium grew, Colussy was frustrated. The company was growing, but it could have been growing faster if it had more capital to introduce new services, especially asset-tracking applications. “This is not a game for individual investors doing a typical venture capital deal,” he complained to the board. “This is for deep-pocket strategic investors looking out twenty years. We’ve only invested $131 million at this point and we need much more to build the customer list and get ready for the future-generation broadband solution, not to mention replacing the whole satellite constellation in ten years.” He pleaded with the board to let him set up a merger or partnership with a company that could finance expansion. But after months of wrangling and the dilution of both the Australians and Brazilians, other companies with inferior products started winning contracts because they were better capitalized. The Federal Air Marshal Service was on the verge of ordering Iridium phones for every officer, but at the last minute the lobbyists for Verizon stepped in and got the government to choose a ground-based system instead. The government of Iraq was about to place a massive order for Iridium phones, only to be talked out of it by Boeing, which had an ownership stake in the new Thuraya phones, a regional service that operated two GEOs from a gateway in Sharjah, United Arab Emirates, and had an annoying half-second signal delay. (The Pentagon eventually banned the use of Thuraya phones in Iraq because they were not secure. It would have been possible to use them to track American troop movements.) Even the DISA contract came under scrutiny by the Pentagon, with several bureaucrats saying, “Maybe we should give part of this to Globalstar”—after Globalstar lobbying, of course, and at a time when the Globalstar constellation was literally falling apart. Just as the Iridium inventors had predicted, the altitude chosen by Globalstar forced it to fly through the South Atlantic Anomaly of the Van Allen belt, where the antennas took so much radiation punishment that by the year 2007 they started failing.

“We’re getting outgunned at every point,” Colussy told his board. “We need a strategic partner with significant resources, even if it means consolidating with one of these inferior satellite companies.”

Colussy stayed on as chairman of the board as the company went through a series of CEOs, including General Electric veteran Gino Picasso, who butted heads so often with the Saudis over their micromanagement that he eventually resigned under pressure. His successor was an executive named Stephen Carroll, whose previous experience had been at a London company called Storm Telecommunications. Colussy made no secret of the fact that he considered Carroll a “lightweight” who was alienating Boeing and Motorola at a time when Iridium needed debt forbearance from both—so eventually Carroll was replaced with Carmen Lloyd, who resigned as CEO of Stratos Global to run Iridium. Lloyd had an extensive background in electronics, especially aircraft electronics, but he, too, started to wear out his welcome when he repeatedly failed to raise money needed for expansion. Meanwhile, the partners resisted Colussy’s attempts to set up a merger with a larger player. Wasn’t the company growing? Wasn’t Iridium the only global satellite service? And besides, didn’t they already have the most powerful lobbyist possible?

Yes, in a manner of speaking, they did. A few months after the company launched, Colussy had received a call from Bob Johnson. Johnson wanted to have lunch—and, by the way, Bill Cohen would be joining them. Cohen had left the Pentagon at the end of Clinton’s presidency, of course, but he had now set up a lobbying firm called the Cohen Group. Wouldn’t the Cohen Group be a great asset for Iridium? Shouldn’t Iridium have a lobbyist? suggested Johnson. Colussy got the message and agreed it would probably be a smart move. By May 2001 he was signing up Bill Cohen as Iridium’s man in Washington.

Hurricane Katrina was the event that cemented Iridium’s reputation. Mark Adams had first realized what a powerful search-and-rescue tool the phone was when he received a call at home late one night in 2003. An emergency had been declared by the Alaska Rescue Coordination Center. A small private plane had gone down somewhere in the heavily forested northern regions of the state, but no one knew where. There was an Iridium phone on board the plane. Was there any way to figure out where the last transmission from that phone had come from? Adams got busy and did figure out how to do that, and the plane was located within several hours. (Unfortunately the pilot didn’t survive.) It was an emotionally wrenching experience that made Adams realize just how important these situations would be in the future, and for the next two years he remained actively involved with emergencies and rescue efforts, especially in rugged areas like Alaska where he dealt with everything from lost backpackers to a hunter who stabbed himself in the leg while dressing a moose.

Meanwhile, stories were trickling in from the field indicating that Iridium phones were already saving lives every day, with or without the help of company headquarters. On April 11, 2001, just two weeks after the system was switched back on, the physician on duty at the Amundsen-Scott South Pole Station, Dr. Ron Shemenski, passed a gallstone and diagnosed himself with acute pancreatitis. After consultations via Iridium phone with specialists in the States, it was decided that he needed to be evacuated. But with winter coming on, the rescue required coordination on three continents involving the military, the National Science Foundation, and a Canadian airline that leased the de Havilland Canada DHC-6, known as the “Twin Otter,” because that plane could land on skis. The South Pole runway was normally closed during the six months of night, with the last plane departing in February, leaving only forty-seven personnel to fend for themselves until October. It took two weeks, but eventually two Twin Otters did manage to land at the Pole with a replacement doctor aboard and to get Shemenski to his home in Denver, where he was diagnosed with heart problems as well as pancreatitis and underwent open-heart surgery—but his life was saved.

Iridium phones were used at every stage of that rescue—on the ground, in the air, at every way station, remotely by physicians—and it was one of a thousand similar stories that began to pour into Iridium headquarters as soon as service was enabled. By 2005, the year of Katrina, Iridium was set up to mobilize for disaster relief and rescue efforts wherever they were called for, having already scrambled for the much smaller Hurricane Frances in 2004. The first impact from Katrina killed 1,833 people, drove 1.5 million people from their homes—and destroyed the telecommunications infrastructure of southern Louisiana.50 The demand for Iridium phones was overwhelming—from FEMA, from law enforcement agencies, from relief workers, from everyone who had to function in the New Orleans area. Thousands of handsets were moved into place—so many, in fact, that the last of the old Kyocera units were finally sold and the company’s new handset factory in Malaysia had to start running around the clock.

In the aftermath of Katrina, relief agencies all over the world started stocking Iridium phones. In 2006 thousands of phones were sent to Taiwan after the typhoons that knocked out telecommunications. In 2008 Hurricanes Gustav and Ike hit back-to-back in late August and early September, and the company sent sixty-two hundred phones to the Gulf Coast in a three-week period. Fortunately, by the time a 7.0-magnitude earthquake hit near the capital of Haiti in 2010, many of the first responders from the United States and Mexico were already outfitted with Iridium handsets kept in readiness for just such a situation. In fact, it could be said that the Haiti earthquake was the first time Iridium became standard operating equipment for virtually all disaster relief workers. More than fifty organizations used Iridium, including the media and Project HOPE, the international health care organization that employed the phones so that local doctors could consult with specialists in acute-care cases such as pediatric burn victims.

But once again, the growing admiration for the phone itself didn’t translate into respect from potential partners. Colussy spent years trying to motivate various CEOs to orchestrate a merger with a larger corporation, but the talks would never get very far. At various times he opened discussions with Inmarsat, AT&T Wireless, Boeing, General Electric, General Dynamics, several defense companies, and even Globalstar once Bernie Schwartz ceased to be part of its management in 2003. He went to Bob Johnson one more time. He had meetings with deep-pocket investors like Paladin Capital Group, the Carlyle Group, Miami tobacco magnate Bennett LeBow, the Pivotal Group of Phoenix, and even his old nemesis Gene Curcio, who said he had $450 million from South Korea and wanted to spend some of it on Iridium. Colussy went back to Eagle River more than once, but the tenor of those conversations changed dramatically after Nextlink Communications, McCaw’s broadband provider, lost 97 percent of its value in a sixteen-month period in the year 2001. Nextel, McCaw’s wireless network, was down 75 percent in the same time period. No wonder he was talking about launching ICO-Global Teledesic “in about four years.” By then McCaw had picked up yet another ­company—Ellipso, the joint venture of Boeing and Fairchild—and folded yet another batch of intellectual property into Teledesic. “Our problem now became how are we gonna raise $9 billion?” recalled Dennis Weibling, Eagle River’s CEO. “With Ellipso and Odyssey and ICO we were taking over spectrum allocations, but I had to be up and running in order to keep that spectrum.” In the end, the skepticism of the Iridium/Celestri team proved correct—McCaw couldn’t raise the capital.

One of the ironies of Iridium’s history was that it was evaluated by some of the wealthiest investment funds and telecommunications companies in the world, and none of them could ever come to terms with Colussy, who considered himself a motivated seller. By the fall of 2002 Bear Stearns already valued the company at $300 million, indicating that a money-losing company had actually become $275 million more valuable during the eighteen months it was losing money. But one by one, the potential investors bowed out. It was too small for some, too speculative for others. Colussy kept plugging, but when he checked with his friends at Bear Stearns, they gave him some sobering news: they’d taken this investment to twenty-six companies and been turned down twenty-six times.

When you go through dozens of potential investors, all excited about an Iridium investment, who then withdraw after going through due diligence, there’s a tendency to start questioning yourself, and this is what happened with the Prince’s advisors, who would periodically suggest that the company simply give up, revert to the Finite Life Project, and see how much money the owners could squeeze out of the constellation before it crumbled and decayed. This infuriated Colussy. In fact, the life span of the satellites had been greatly expanded, mostly through the efforts of Mark Adams and Dannie Stamp, who were now predicting that the constellation could survive until the year 2020 by using such simple measures as letting some of the batteries hibernate during certain points in their orbits. All the better, said the consultants. We can run it until the year 2020 without ever having the expense of a second generation. It was a position that caused Colussy to almost lose his temper on several occasions, and that was something that had rarely occurred during his six decades in the business world.

During the first few months of 2003, Colussy got a temporary respite from constant squabbling with Prince Khalid’s employees as one of the Prince’s Thoroughbred racehorses, a three-year-old named Empire Maker, swept to victory in several stakes races and became the odds-on favorite to win the Triple Crown.51 With most of the Prince’s army preoccupied with horse racing during May and June, Colussy had time to reflect. He was now six years into his retirement, and four of those years had been spent dealing with the daily drama of Iridium. It was time to back off and enjoy his life with Helene. They had been married in the Coast Guard Academy chapel the day after his graduation in 1953, and with their golden wedding anniversary approaching, Colussy decided to transition to less stressful pursuits. That summer he invited his two daughters, his grandchildren, and forty-one other people to a villa near the little Tuscan village of Pienza, and there he and Helene were remarried under the boughs of an eight-hundred-year-old olive tree by a jolly Catholic priest who was willing to ignore the fact that they were Episcopalians. The party continued for a month, with hot-air balloon rides every day, creating the kind of lifetime memories that the Colussys had hoped to make for themselves now that they were selling their Maryland home and moving full-time to Florida. The experience made Colussy take stock of which aspects of his life were most important. Constant bickering with Iridium board members was not high on his list.

Fortunately, while the board continued to argue over CEOs, FCC filings, advisors leaking inside information, exit strategies, and the like, the Iridium system was gradually becoming indispensable to several industries—and one of the main reasons was the emergence of the asset-tracking business. What started in the eighties as a tool for the three million long-haul trucks in the United States had since become an industry considered vital for any kind of large mobile equipment. What Colussy’s team had recognized—and Motorola scoffed at—was that satellite data speeds could be extremely slow and still be extremely useful. That’s not to say it wouldn’t be possible someday to achieve the Bill Gates/Craig McCaw dream of broadband from space. A District of Columbia firm called Sky Station International was launched in 1996 with a $4.2 billion plan to float seventeen-ton stationary platforms eighteen miles above the ground, each one held in place by two balloons and a solar-powered thruster. This would reduce the length of the transmission path so drastically that about 250 platforms could serve the world—one for each major metropolitan area—without interfering with any of the other spectrum users. Sky Station operated for four years but eventually foundered on the regulatory front. Since it functioned so close to the ground, it required airspace approvals from every nation in the world.52 So in a world where high-speed data didn’t yet exist, Iridium offered the next best thing.

As early as June 2001, Mark Adams had introduced the first Iridium data device, working at the painfully slow rate of 2.4 kilobytes per second but still representing the first time the Internet was available globally. Adams admitted it was primitive, but pointed out that it was intended for parts of the planet where the only other option was carrier pigeon.53 A few months later Adams had jury-rigged the system to bump that rate up by a factor of ten, enabling the first Iridium modem for asset tracking. It was huge and retailed at $850, so the only people who used it were those who needed to track very expensive equipment (helicopters, aircraft, ships) in the Arctic and Antarctic regions. In order to get the price down to $100, thereby becoming competitive with the Orbcomm Little LEOs, it took Iridium management five years and seven trips to the board to get the development money. The device that emerged in 2006 allowed short-burst machine-to-machine messaging between any two points on the globe within five seconds. That was good enough for ExxonMobil, which instantly bought three hundred units, creating publicity that made it possible for Iridium to start capturing huge contracts from trucking companies, then power companies, then pipeline companies. (The most important contract of all didn’t come until 2013, when Caterpillar—the industry leader in heavy equipment—started using Iridium as standard equipment on all its machinery.)

The next frontier, Colussy thought, would be airlines, and a few small ones were indeed signed up—Aloha Airlines of Hawaii, the regional Frontier Airlines, the private-jet leasing firm NetJets, and two cargo carriers—but it was the shipping magnates who came aboard in vast numbers. By 2004 the maritime uses of Iridium had become 50 percent of the system’s total usage, mainly because Iridium was the first cheap handheld device to be available in places operating far from a landmass. Iridium calling cards were introduced so that crew members, frequently at sea for weeks at a time, could remain in contact with their families at rates that were affordable to a sailor. On smaller ships, the Iridium phone started gradually replacing the SSB radio, which was used in the same way truckers use CBs—socially as well as for safety and ­business—but the SSB system was intricate and hard to master, whereas the Iridium handset worked just like any other phone. The company’s biggest leap forward came when Iridium introduced a device for ships called OpenPort. At that time Inmarsat’s cheapest device for ships was $18,000. OpenPort retailed for $3,500, and despite everything Inmarsat attempted in an effort to match Iridium, it could only get its price point down to $7,500. By this time a British technological design firm called Cambridge Consultants had worked out a compression solution that raised the data rate on Iridium to 128 kilobytes per second, or the equivalent of traditional copper-wire dial-up services. Slowly Iridium started to make inroads into the $400 million maritime market that had been dominated by Inmarsat for decades.

By the end of 2005 Iridium had shown its first small profit ($30 million). But that was also the point at which Colussy, with board approval, asked for the resignation of Carmen Lloyd, the company’s fourth CEO, because Lloyd had been at the helm during a disastrous failed merger with Inmarsat that ate up nine months of due diligence time and, in the opinion of some, gave away trade secrets to the enemy. Lloyd had also tried to raise $100 million in a Bank of America bond offering—and failed.

In early 2006 Colussy apologized to his wife once again and told her that he was going to spend his seventy-fifth birthday functioning as a full-time CEO. Four months later, Iridium had $210 million in interim financing. Colussy had done a one-man road show and come home with the bridge money the company would need.

But Colussy had now interrupted his retirement for six full years, and he wanted out. He wanted to be building his final home in Florida and resuming his golf lessons. But he vowed, before he quit forever, that he would find a competent CEO who believed in the future of the constellation—no more “empty suits” backed by the Saudis. At the end of 2006, the company had obviously entered an explosive growth stage, with around 250,000 subscribers, $200 million in revenues, and $50 million in earnings. That curve would continue all through the decade, with Iridium eventually passing Inmarsat in number of subscribers and being declared “the market leader and industry standard” by the consulting firm Frost & Sullivan. The board members thought this was reason to celebrate, and to start talking about distributing the wealth. But the success of the company was actually costing them money. Since Iridium was set up as a limited-liability corporation, each partner had to pay huge tax bills whenever there was an operating profit. Colussy, Syncom, and the Saudis all believed in theory that they should be building the next generation of satellites, but not if it meant never getting back their original investment. The dilemma had less meaning for the Saudis, simply because they had deeper pockets than Syncom or Colussy, but Colussy kept looking for a way to do both—get the partners out of debt and fund the next generation at the same time.

Another person who believed that Iridium had to be saved and preserved at all costs was Ray Leopold, the most public of the three Iridium inventors, who was still often asked to speak about the system. “In the history of mankind,” said Leopold, “Iridium is the first and only worldwide communications system. We’ve had radios since Marconi, but it’s the first common carrier for anyone to use. When Iridium first went into bankruptcy, of course I was shocked like everyone else. But then I read about the building of the railroads in the nineteenth century. All of those companies went out of business, just like all the satellite companies went out of business. The people who built the infrastructure were never the same people who were able to figure out how to use the infrastructure. It had to be consolidated and preserved.”

And indeed, Iridium was proving day by day, month by month, year by year, that the world couldn’t live without it. It wasn’t going too far to say, in fact, that Iridium’s effect on business and government was revolutionary. Beyond the asset-tracking business, it had become essential by the end of the decade for fisheries management, man-overboard alarm systems, location detectors used to map seventy thousand ships on the high seas, the SSAS silent-alarm system to combat piracy, flight following systems, airline cockpit communications, over-the-horizon military communications, the Blue Force Tracking systems to identify the positions of military forces in real time, oceanographic data sensing, the tracking of dog sleds in the 1,150-mile Iditarod race through the Alaskan wilderness (making it a spectator sport for the first time), early-warning systems for Pacific tsunamis, devices to monitor migrating whales, and cell service for people in Newfoundland, Greenland, Siberia, Iceland, the Yukon, northern Scandinavia, the southern Atlantic, and the Indian Ocean who otherwise wouldn’t have mobile phones at all.

When the latest Iridium data device was introduced in late 2009, its small size and cheap price made the market explode. Suddenly Iridium transceivers were being used by the oil, gas, chemical, rail, cargo, and shipping industries for machine-to-machine transactions in which no human being was ever involved. Navibulgar, a Bulgarian shipping company, used Iridium to monitor all sixty of its heavy vessels, while the Albanian government employed it to monitor that nation’s commercial fishing fleet, thereby ensuring compliance with complicated European Union regulations. When the last ice blockage in the Laptev Sea melted in 2008, the Northeast Passage between Europe and Asia was finally opened, allowing ships to travel north of Russia instead of using the Suez Canal. The first regularly scheduled vessels to use that route were the heavy ships of Bremen-based Beluga Shipping, which were outfitted with Iridium because it was the only communications system that worked that far north. More mundanely, the iCone was introduced at the 2010 Rose Bowl, using Iridium to measure traffic patterns and bottlenecks in Pasadena, sensing what happened on the road, counting the cars, transmitting the speeds and road temperatures, and then sending short-burst messages to technicians who could reroute vehicles.

Then there were the humanitarian uses of the phone, which so far surpassed everyone’s expectations that Iridium was starting to gain the status of standard safety equipment, like having life preservers aboard a ship or a second parachute. In fact, some government agencies started treating it just that way, such as the Alaska Department of the Interior, which required that every plane carrying government employees be equipped with Iridium in the cockpit. GlobalMedic, a Canadian agency known for its fast-acting paramedics, considered the Iridium phone standard equipment for its personnel in Angola, Cambodia, Iraq, Somalia, Sri Lanka, Chad, and Gaza. MedStar Health maintained 165 Iridium phones in its Washington, D.C., medical facilities and its helicopter fleet in case of terrorism, war, or natural disasters. Iridium was used to monitor the health of small Beechcraft airplanes and, in case of trouble, allow the pilot to speak to an expert on the ground. When the Tohoku earthquake and tsunami hit Japan in 2011, it was Iridium buoys that first detected the tidal waves and Iridium phones that were used for disaster relief.

And then there was the Iridium market that no one ever anticipated: daredevils and thrill seekers. Trekkers, mountain climbers, competitive yacht racers, wilderness campers, and adventurers of all sorts started packing Iridium phones right alongside their bungee cords and first-aid kits. John Castle thought he was making history when he stood on the South Pole in 2003 and placed an Iridium call to Colussy, but he was actually doing the same thing everyone did when he or she got to either of the Poles for the first time—call someone on an Iridium phone and say “Guess where I am.”54 Most adventurers use Iridium for safety, not novelty, although a team of whitewater kayakers used it to chronicle their journey on Twitter from wilderness areas on the Kamchatka Peninsula. Others think they’re going to use it for filing reports on the Internet and end up using it to save their lives—like Cathy O’Dowd, the South African climber famous for being the first woman to reach the summit of Everest from both the north and the south faces, but whose ascent of the east face in 2003 had to be abandoned. Then there was Henri Chorosz, better known as “the mad Frenchman,” a sixty-eight-year-old retired IBM executive who tried to fly around the world via the Poles in a home-built single-engine plane called a Glosair. He narrowly escaped death after leaving Cape Town bound for the South Pole, when he suddenly lost speed, then lost altitude, then ended up flying between icebergs and barely making it to Marion Island, where he flipped over and was pinned inside the plane. Fortunately someone was monitoring his Iridium tracking device and noted a 180-degree turn just prior to his disappearance. He was rescued and, true to his nickname, returned later to salvage the plane and reconstruct it for a later attempt.

Ironically, Iridium inventor Ray Leopold was a Boy Scout leader who had participated in wilderness expeditions in remote regions of northwestern Montana in which the organizers refused to carry Iridium phones. “The thinking is that it’s supposed to be a survival hike, and Iridium is an unfair advantage,” said Leopold. Many outdoorsmen, pilots, sailors, and hermits would disagree with that gamble—like the flight instructor and student who crash-landed in a mountain range south of Auckland, New Zealand, but whose lives were saved by Iridium; or the Seattle couple stranded in the Pacific with no propeller, no sails, no engine, and no communications equipment (just an Iridium phone that eventually got a lifesaving message to the Colombian armada); or Cliff Glover, the man who lived so far out in the boondocks of British Columbia that the only way to make sure he didn’t miss his transplant call was to carry an Iridium phone—he has two new lungs today as a result.

Rear Admiral Hugh D. Wisely assessed the Iridium system halfway through the Iraq War and concluded that it had been “transformational.” With reviews like that, law enforcement and security agencies took notice. In 2004 the Republican Party was paranoid about terrorism at its national convention in New York City, so they ordered 230 Iridium phones in advance. Orders came in from the UK Defense Ministry, the national police of Colombia (which needed Iridium phones to keep up with the Iridium-linked drug traffickers in the mountains), the government of Alberta, the Spanish special forces, and the government of Poland, which became so enamored of Iridium that at one point it inquired about what it would take to install its own military gateway. In 2006 Boeing and Iridium teamed up to create a “virtual fence” along the U.S.-Mexico border, and Homeland Security chief Tom Ridge ordered hundreds of phones for various first-responder personnel. There was an Iridium device in every bus, van, or sedan used to transport illegal immigrants, under the theory that it was the only way to guarantee officer safety when one man was in charge of dozens of detainees. DARPA developed an Iridium app to be used in concert with the GPS constellation to create a highly classified 3-D mapping service in outer space. (Whereas GPS is accurate to within several meters, the DARPA application is accurate to within centimeters.) In 2011 Navy SEAL Team Six carried an Iridium phone into the house in Abbottabad, Pakistan, where Osama bin Laden drew his last breath.

But when the final accounting comes of all the ways Iridium has changed the world, no doubt the primary focus will be on its contributions to science. In some cases Iridium simply provided contact with the outside world for scientists who had no other option, such as the team from the University of New South Wales that settled in at the most remote place in the world: Dome C in Antarctica, where France and Italy have run Concordia Station since 2005. The darkest place on the planet, and therefore the best place in the world for ground-based telescopes, this was where the Iridium-connected operation built the Italian Robotic Antarctic Infrared Telescope (IRAIT). Likewise, the International Space Station had an Iridium phone aboard (in the TMA-4 descent module), and there were several at the Institut Polaire Français, where fourteen scientists worked in temperatures as cold as 112 below, relying on Iridium for an audiovisual application that made it possible for station physician Alexander Kumar to have consultations with doctors in the United Kingdom.

In other cases, Iridium was part of the scientific device itself. Seaglider, for example, is a bright pink torpedo-shaped drone created by the Applied Physics Laboratory at the University of Washington. It gathers data from the ocean, then pokes its nose up out of the water to transmit Iridium messages detailing what it has found. After the Deepwater Horizon oil-rig explosion in April 2010, seven helicopters were equipped with an Iridium application that allowed biologists in the air to tell biologists on the water the exact location of birds in the most imminent danger. The Pelagos Sanctuary for Mediterranean Marine Mammals used an Iridium device to record the locations of whales in real time and transmit this information to high-speed ferries so that courses could be altered when collisions were likely.

At the beginning of the second millennial decade, Iridium applications and machine-to-machine uses started growing at such a rapid rate that the company ceased to be primarily a phone service and became more of a communications platform that could be accessed and used by the app developers of the world, especially those in the asset-tracking fields. As early as 1997, MIT’s Nick Negroponte, guru of the digital revolution and a Motorola board member, had said, “The phone should answer the phone, like a secretary does. I wish Motorola did not make handsets, but phones which behaved liked well-trained English butlers.” And that’s essentially what the Iridium system had become.

Oddly, many of the uses Colussy had predicted in that first meeting in John Castle’s Palm Beach house—the most obvious uses—never worked out. Year after year, Colussy thought the major airlines of the world would adopt Iridium as their first choice in cockpit communications and air traffic control, but time and again they passed on the mere $30,000 per plane that would have been required to employ Honeywell’s AirSat system. To demonstrate just how reliable it was, Honeywell installed it in an F-16 and had the pilot do three- to five-second aileron rolls at Mach 1.6 in an effort to lose the signal. The best the pilot could ever do was a slight fade when the plane was upside down.55 Nevertheless, the airline industry as a whole was continuing to use Inmarsat, despite it being triple the cost of Iridium and despite it being worthless beyond the 65th parallels, as late as 2011. That was the year that Iridium was finally certified by the FAA for aviation safety services, and slowly the airlines started coming around to AirSat.

Likewise, the plan to provide village phone service to the most disadvantaged parts of the Third World never panned out, despite concerted efforts by Syncom. Shortly after the new Iridium launched, a special WorldTel division was created for western Africa. Ty Brown made several trips to Ghana, Senegal, and Nigeria in 2001 and 2002 to secure licenses but could never line up any African partners. A pilot project in Senegal started with great promise, including the blessing of Iridium supporter Nelson Mandela, but there were practical problems. With only one phone in each village, determinations had to be made about when it should be turned on, who was appointed to receive calls, how a call intended for a particular person would be handed off to that person, who would be available to translate from the national language to the tribal language—in other words, a single phone per village provided an administrative problem, in that you ended up needing two to four employees to operate the one Iridium handset. But that was not even the main roadblock. “We were threatening British Telecom and France Télécom,” said Brown. “They wanted to develop something by themselves. If we developed an alternative to their land-based trunk lines, we could possibly get bigger contracts later and supplant them. And when you have a battle like that, it’s usually the legacy company that wins out.” In the early days of the project, Brown expected to get support from the World Bank and other funding organizations devoted to the welfare of the developing world, but that never worked out either, primarily because the potential African partners couldn’t get their act together to apply for the funding.

Eventually Brown and Wilkins gave up on that particular concept, but the idealistic goal of “global connectivity” for the Third World was still alive eight years later when Google announced it was backing an Internet-in-the-sky project called O3b, supposedly to provide Internet access to “the other three billion” without any connection to the Web. Ten other partners joined with Google to raise $1.2 billion for 8 MEOs and 180 LEOs. Strangely, O3b would cover only 70 percent of the world’s population. The announcement of O3b sounded, in fact, a lot like a revamped version of Teledesic, with “the other three billion” replacing “universal dial tone” as the goal of all right-minded technology enterprises. Then, in 2014, several O3b employees left Google to form yet another broadband-in-space company called WorldVu, with backing from Qualcomm and Richard Branson’s Virgin Group. WorldVu announced a system called OneWeb that would consist of 700 LEOs traveling through the Van Allen belt at 750 miles up. Then, as though the satellite craze of the early nineties had never abated, yet another new company—LeoSat of Arlington, Virginia—announced a 120-satellite constellation that would provide global broadband. (“We are a commercial company,” said CEO Vern Fotheringham in a Wired interview. “We’ll stick with the top 3,000 rather than the other three billion.”) By the end of 2015 there was once again a full-fledged battle to be the first broadband operator in space, with Elon Musk, the entrepreneur best known for founding SpaceX, Tesla Motors, and PayPal, announcing a constellation that would make Craig McCaw dizzy—a constellation of 4,000 LEOs designed to provide broadband not just to our planet but eventually to Martian colonists as well. With big satellite systems suddenly becoming “cool” again after fifteen years of neglect, it’s odd that all the emerging companies are choosing bent-pipe transmission, eschewing the intersatellite switching in space pioneered by Iridium, and all of them are choosing to fly through the Van Allen belt that destroyed the first Globalstar constellation.

Since no Mega LEO system has ever been built, some of the old low-tech solutions started to revive in popularity as well. Google resurrected the abandoned Sky Station International business plan in 2013 and launched thirty experimental balloons in the Canterbury area of New Zealand, hoping to eventually supply the world with broadband through what it was calling Project Loon. (Interestingly, each balloon carries an Iridium device—a “command and control” transceiver that tells the balloons to climb, descend, move into the wind, or change direction.) And in 2014 Facebook founder Mark Zuckerberg dusted off the old HALOSTAR project and announced he was backing development of a solar-powered drone that would provide broadband access for “suburban areas” around the world that weren’t yet wired. A few weeks later Google acquired its own high-altitude drone company, Titan Aerospace. When you try to chart the objectives of all these various Ka-band projects, you see the investors running up against the same problem Craig McCaw had—namely, that they’re not sure who the customers are, not sure what those customers want, and not entirely certain that people won’t be able to get it some other way before the system is launched. None of the balloon or drone ventures have explained how they expect to conquer the fundamental problem of licensing and government approval, since all would be flying below the Kármán line and would therefore be within the national airspace of every country in the world.56 The answer seems to be that none of the systems would be truly global.

The executive business traveler is another species that never really took to the Iridium phone, even after it became smaller and capable of doing what Ed Staiano had promised it could do. Just a few months after taking over the company, Iridium management had already figured out a way to get rid of the old cassette-based roaming system. By accessing terrestrial repeaters of the sort used by Sirius and XM to deliver music to car radios, Iridium could have been used as a universal phone that would seek out the strongest signal wherever it was—no cassettes or attachments needed—but the FCC wouldn’t allow it. After two years of rule-making hearings, during which Craig McCaw sent a small army of lawyers to Washington to try to get approval for what was called the “Ancillary Terrestrial Component” (systems to use satellite signals through land-based relays), the FCC denied every application, calling it a “murky” area where two technologies converge. The Iridium and Globalstar spectrums were allocated for satellite use only, and the FCC was uncomfortable with the concept of a hybrid satellite/terrestrial phone.

Still, with engineers all over the world choosing Iridium every day because it’s an easy, reliable connection in the sky, and therefore free of all the infrastructure you need for any other communications system, the question is worth asking: Why didn’t the original Motorola plan work? Why isn’t everyone in the world walking around today with satellite phones in their hands instead of phones dependent on land-based cell towers? Most of the analysis of the first Iridium said it failed because the phone was too big, the phone was too expensive, the phone had limited capacity for data, and the link margin was weak. But all these were the kinds of first-generation problems that eventually would have been solved—and, in fact, were mostly solved by the end of 2001. Judge James M. Peck, who studied eighteen years of Iridium data and listened to numerous expert witnesses during the bankruptcy trial, eventually concluded that “handset size was not a material factor in Iridium’s lack of success in attracting subscribers.” At any rate, the phone got smaller. The price came down dramatically for industrial users, and if Iridium had been signing up millions of consumer users, it would have been even cheaper still. Leopold, Peterson, and Bertiger had worked out the logistics of expanding system capacity by layering new planes of satellites between the existing planes, so the number of calls that could be handled by Iridium was essentially infinite. The second-generation Celestri system, which would have been launched in 2003 to interface with Iridium, had a data rate 11,000 percent faster. As for the link margin, the terrestrial repeater had already solved the strength-of-signal problem. Even if the FCC continued to block the use of terrestrial repeaters, economies of scale would have allowed for larger satellites, more durable batteries, and stronger signals.

The bottom line is everything about a world using satellite phones would have been safer and probably cheaper as well. The average consumer believes that cell service is much more pervasive than it really is. Only about 12 percent of Earth will ever be covered by terrestrial cell towers. The five million towers that exist today were erected at a cost of about $1 trillion, and they periodically have to be replaced, moved, torn down, or altered at a huge continuing cost not just in money but in lives. (Working on cell towers is among the most dangerous construction jobs in the world.) Systems like OnStar, the General Motors auto safety and navigation system, work only within range of a tower, whereas Iridium keeps you safe in places that don’t even show up on the map. Every time disaster strikes, in the form of earthquakes or fires or hurricanes or bombings, the first thing that goes down is the cellular phone system. During an electrical blackout, most of the panic among the citizenry is not caused by “Will I be able to stay warm?” but “Will my smartphone work?” And one reason companies like AT&T, Verizon, and T-Mobile spend hundreds of millions of advertising dollars promoting their coverage maps is that, even in the United States, none of them is able to provide universal coverage. Dropped calls remain common even in the most heavily populated urban areas, and anyone who has traveled on a long-distance train knows that there are extensive dead zones all across the continent that has the best coverage in the world. Fishermen who never leave the continental United States sometimes buy Iridium phones simply because they spend long periods on lakes where cell coverage disappears as soon as you move away from the shoreline.

The answer seems to be that Iridium’s backers, frightened by the debt burden, simply gave up too soon, and then Motorola failed to show the kind of leadership that would have carried the company through a Chapter 11 reorganization. “After they fired Ed,” said Leo Mondale, “we still had enough money to run the company for two years, provided we could defer those unreasonable Motorola payments. It didn’t seem like a fatal situation. All we were asking Motorola for was time. But we could never get extensions from them.” Even Ted Schaffner, who examined Iridium repeatedly over the years with the most skeptical of eyes, said the project should have succeeded. “I don’t think the size of the phone had much to do with the decline of Iridium,” recalled Schaffner, “and I don’t think the link margin had much to do with it. I think there was not enough runway for the company to succeed.” The crucial moment came during the first six months of 1999, when Motorola could have essentially taken over Iridium with a cash infusion at a time when everyone else wanted to sell. Why not redeem twelve years of work and preserve the technology for the future? Instead, Motorola issued a press release: “Motorola will not provide any further support beyond existing contractual commitments unless there is substantial participation in the Iridium LLC restructuring from all parties with a significant financial interest.” In other words, the gateways and the bondholders and the banks and the service providers and the stockholders—everybody involved in the giant, multinational mess that Motorola had created—needed to dig deep down into their pockets one more time and prop up a system designed to funnel fees to Motorola. To use just one example, Motorola slashed its monthly operations-and-maintenance charge from $45 million to $8.8 million once the company entered bankruptcy and McCaw was doing due diligence—the same deal Staiano had asked for a year earlier and been denied.

Then, once Iridium so publicly crashed and burned, there was the perception by every other company that “if Motorola couldn’t make that thing work, then nobody can.” And all the mythology surrounding the company—it was a fancy, wrongheaded science project; it was analog; it was worthless for data; it was too elaborate and expensive to keep ­flying—not only enveloped the inexperienced partners in gloom but stuck to the company for years to come. If Motorola had simply adjusted its expectations, written off the debt, and taken control of the situation—in other words, chosen a middle course, like Dan Colussy, who was constantly saying “the data is not great but it’s good enough,” “the name is not perfect but it’s good enough,” “the link margin is faulty but it’s good enough”—it would have ended up with a perpetual multibillion-dollar asset that would set Motorola up for all kinds of other applications in every country of the world. And it wouldn’t have taken Motorola four or five years to turn the corner either, because its international marketing and sales force would have already been in place.

But the solution didn’t have to be Motorola. If any other large corporation had decided to buy Iridium, it could have had an even faster turnaround and an even more lucrative asset, because it wouldn’t have had to deal with all the lawsuits against Motorola. That’s the genius of the American bankruptcy system: the asset is preserved even if the founders lose all their money. In later years, as people started to realize the value of Iridium, they tended to say, “Well, that’s the American bankruptcy system in action. That’s the way things are supposed to work.” Not really. The bankruptcy system in action would have had fifty deep-pocket bidders at an Iridium auction. In this case, there were six shallow-pocket bidders and fifteen empty-pocket bidders, and only one of them was prepared to write a check. The most complicated satellite constellation ever devised was saved because of the persistence of a single man.

And now, several years later, the same man was still fighting his own board, the telecommunications industry as a whole, and sometimes even the government to try to preserve the constellation and get it to the next level. He drew up deals. He drew up partnership agreements. And every time Colussy got to the key meeting with potential investors, their response was always the same: “Aren’t those analog devices? Aren’t those satellites going to fail two years from now? Hasn’t the world moved on from satellite phones?”57 The one company Colussy kept coming back to was Inmarsat. Inmarsat was the world leader in fixed-terminal satellite service. Iridium was the world leader in handheld satellite service. Didn’t it make sense to merge them? Surely the powers that be at Inmarsat knew their business model was an endangered species. After twenty-five years in business Inmarsat was still charging $8 to $10 per minute for airplane calls, whereas the Iridium price averaged $1.50 and the installation was much cheaper. As early as August 2004 there were ten teams working on an Inmarsat-Iridium deal, but by October everything had blown up. Inmarsat executives professed to be “shocked” by the valuation of Iridium, which was now $400 million, saying they were thinking more along the lines of $125 million and 14 percent of Iridium’s stock. Later attempts to revive that deal were equally frustrating.

And so, after five years of trying to partner with a larger entity, everything fizzled. The board members were all fatigued. They were starting to get tired of Colussy’s “dream vision” of a new constellation.

And then Matt Desch showed up.

When Desch was interviewed in 2006 to be the fifth Iridium CEO in a little over five years—the sixth if you counted Colussy twice, like Grover Cleveland—Colussy worked quietly with Ty Brown to line up candidates and stage-manage interviews, mainly to limit the influence of the Saudis. Colussy’s first impression was favorable—Desch seemed scrappy, opinionated, confident. He was a restless, fast-talking tough guy from Dayton, Ohio, a computer scientist who had been on the front lines during the past two decades of telecom wars, first at Bell Labs, then as head of wireless at Nortel Networks, and most recently as the CEO of Telcordia Technologies, which was the descendant of Bell Labs after the breakup of AT&T in 1982.

Colussy told Desch he liked his energy and attitude but would vote against him unless he agreed to one nonnegotiable condition: “You must believe that there can be a next-generation Iridium system. You will need to find $3 billion for the next generation of satellites. And that may be conservative. Some people are telling me $4 billion.” The current constellation might last five years or it might last fifteen years or it might, if you believed Iridium’s detractors, last only three years. But before the satellites started to die, there had to be new satellites, with high-speed data capacity, in their place. You will have no allies, he told Desch. The board of directors is tired of talking about it, and the partners would prefer to take their profits and go home. They’re probably perfectly willing at this point to let the constellation coast into history, taking out a few hundred million in profit as it dies. Everyone you talk to will tell you you can’t raise the money and that Iridium is hopelessly outdated technology. The system that runs the constellation uses the same 32-bit processors that were used in the Commodore Amiga personal computer. Remember the Commodore Amiga? Neither does anyone else. I realize I’m asking you to do the impossible, but that’s what I’m asking you to do.

Desch listened carefully, studied the system, talked to other board members (many of whom disagreed with Colussy), took a weekend to think about it, and called Colussy back on Monday morning.

“Okay,” he said, “I drank the Kool-Aid.”

In fact, Desch wanted to shake up his life. He had grown bored with the wireless business. That market was mature. The cell business was all about who could sign up the most service plans and hawk the most gadget-heavy handsets—a pure marketing game. “It went from a technological innovation to a mere commodity,” he said. “Wireless companies are all the same. So what do you do? Become faster? Become cheaper? The world I was part of, the technology end of the industry, was coming out of a six-year downturn. It was a declining business. Everything was moving to China, becoming commoditized, breaking up, pieces were being sold off. But there’s still that 91 percent of the world that doesn’t have cell coverage. And there are high barriers to entry with satellite. And if there’s one thing I learned from twenty years in wireless, it’s that the first three things you need are coverage, coverage, and coverage. So I felt I had a lot to work with.” He was also intrigued by Iridium because it was an underdog company with the potential to break through one final frontier and become the dominant satellite communications company in the world. Or at least that’s how he saw it. And that’s how Colussy saw it as well. But a lot of what Colussy was telling him still seemed like wishful thinking. Since the company was only on target to earn $75 million in the year 2007, you could get discouraged by the math—it would take forty years at that rate to pay for the new constellation—so obviously Desch was going to have to get creative.

From his first day on the job, in September 2006, Desch started making plans for what was being called “Iridium NEXT.” When the first constellation was launched in 1997, Motorola intentionally avoided any secondary payloads like cameras or sensing devices, because the company wanted to avoid appearing to be an instrument of the U.S. government.58 The new Iridium had no such limitations, and Iridium engineers started suggesting government uses that would help fund the next generation, everything from cameras to telescopes to weather sensors. In each case, the appropriate government agency would express initial interest; then the proposal would fall into an endless bureaucratic dead zone, delaying decisions and forcing the company to look elsewhere. Colussy thought the most promising secondary payload would be air traffic control, but he also became fascinated by the idea of a camera that was pointed not down at Earth, but up at the rest of the space traffic. Since Iridium had the lowest orbit of all the big space systems, it was in perfect position to photograph the space vehicles and space junk above. For a while Colussy thought the idea might pass muster with the spy-versus-spy guys in the Pentagon, but the company never gained any traction. Iridium executive Don Thoma also had a high-level meeting in Mountain View, California, with the three gurus at Google Earth, including one of the “Fathers of the Internet,” Vinton Cerf, who admitted that Google’s database consisted of imagery that was four years old, bought from DigitalGlobe, the Colorado-based satellite company. But there was no follow-up on Iridium’s offer to provide close-up real-time global photography.

Meanwhile, all the board members were tired of writing big tax checks and started pushing for an exit strategy—meaning either selling the company outright or merging with a larger company in a deal involving cash and stock. Colussy still believed—and Desch agreed with him—that the solution was a strong partner. “We needed a Blackstone or a Carlyle,” said Desch, “someone with deeper pockets.” The Saudis, on the other hand, believed the company shouldn’t be wasting more time after seven years spent looking for a partner and not finding one. The Prince’s team wanted to simply take the company public with an initial public offering and realize its true value. Colussy was extremely skeptical of IPOs, however, having run small-cap companies for much of his life and suffered the slings and arrows of day trading and short selling.

After a full year of arguments, Desch took action in 2008, hiring Evercore Partners, a boutique investment bank in New York, to find a deal. Evercore came up with fifty-four possible buyers for Iridium, including several hedge funds and special-purpose acquisition companies, or SPACs. Colussy was steeped in the old-school ethics of Harvard Business, where trading for a living was considered sinful, and he hated hedge funds on principle. “Any group of smart people that devote 100 percent of their energy and time to hedge securities and manipulate markets—at the end of the day, what have you done for the nation or the economy?” he told Herb Wilkins. “They say, ‘We’re providing liquidity.’ Bullshit! Commodities markets were created for users and producers. The brightest minds in our country should be building companies, building our nation.” Colussy was not quite so hostile toward SPACs, although he regarded them with suspicion. SPACs were corporations set up specifically to acquire a company and take it public, thereby realizing a profit from the IPO. The concept was pioneered in the nineties, waxing and waning in popularity as a last resort for companies that couldn’t raise money from banks or institutional investors, or companies that were unable to launch IPOs on their own. From the investor’s point of view, it’s essentially a bet on the SPAC management team—that it will be able to identify an acquisition target and shrewdly increase its value fairly quickly. The SPAC will also end up owning warrants to buy shares of the new stock at a low price—a factor in the deal that often comes back to haunt the company. For the target company, a SPAC provides a source of quick cash and a motivated partner to set up the IPO.

The board members made it clear to Desch that they wanted “a clean buyout deal,” not a SPAC, because they didn’t want to end up owning stock in a company that may or may not have their best interests at heart. Besides, SPACs had a reputation for being less than they were cracked up to be from the point of view of the company being acquired. But Desch had a good reason for pushing a SPAC. Of the fifty-four companies that had entertained the Evercore road show, only one was left standing—GHL Acquisition, a SPAC formed by Greenhill & Company, the New York investment bank cofounded by former Smith Barney chairman Robert F. Greenhill in 1996. GHL was willing to value Iridium at $650 million, to be paid partly in stock and partly in cash, which would mean the Iridium partners would earn back—depending on how the stock performed—up to fifty times their initial investment.

Colussy was still skeptical but didn’t want to waste any more time on a marketplace that was obviously less enamored of Iridium’s future than he was. Just to be sure the company had more than one bidder, he called John Castle to tell him he had another chance to own Iridium. “You missed out in 2000 because you wanted immediate cash flow,” Colussy told his friend. “You’ve followed the company from the beginning. You’ve called me from the South Pole on your beloved Iridium phone. Now you can still get in for $650 million, but we need your money now.”

Surprisingly, Castle said yes this time, and Colussy flew to New York to try to work out a deal. Castle said he could put in up to $100 million in cash and work out the rest of the deal for a valuation of $600 million. Colussy thought a Castle Harlan buyout would be cleaner than a SPAC deal, because he thought it would provide more liquidity for the cash-strapped partners, but Desch wasn’t that crazy about working with Castle. Desch believed that a private equity fund like Castle’s would be self-interested, looking after its own profit before the long-term needs of the company, and he wanted to go public sooner rather than later. Castle also had a reputation for nitpicking his investments. He was notorious for knowing arcane details about the various restaurant chains he owned, including the fact that Morton’s The Steakhouse always had between forty-five and fifty thousand steaks in the refrigerators of sixty-four restaurants, and that Marie Callender’s sold twenty-one million pieces of pie per year in the state of California. Desch frankly said he feared that Castle would be “domineering,” and Desch didn’t like people looking over his shoulder. One of the advantages of going public was that Desch would finally be free of what he called “this ragtag group of investors who, after all, were not going to come up with the money themselves”—but he wasn’t sure John Castle as the owner would be a better trade. For a while Colussy tried to work out a combination deal—Castle Harlan and Greenhill working together—but after a month of meetings, he gave it up. Greenhill was simply not interested in partnering with Castle, whose ardor was cooling as well, once he heard the company would have to immediately raise $3 billion for the next generation of satellites. In September 2008 Colussy told Castle that if he wanted in, he would have to put up the whole amount and he only had a couple of days to make up his mind. Four days later Castle called to say he was still considering the investment. Colussy told him, “Too late.” The deal with Greenhill had been concluded.59

The merger between GHL Acquisition and Iridium was publicly announced on September 23, 2008—ten years to the day from Ed Staiano’s “can’t miss” start date—with the company being sold for $591 million, allowing the partners to receive $102 million plus 45 percent of the new company. Greenhill ended up with 17.5 percent of the stock. But this was exactly eight days after Lehman Brothers became the biggest bankruptcy in U.S. history, presaging a collapse of the world economy, leaving half-finished deals in peril and throwing any proposed IPO into jeopardy. By December Desch was telling Colussy that Greenhill wanted to “reprice” the deal. When Bob Niehaus, the banker who cofounded Greenhill Capital Partners in 2000, ran into the CFO of Inmarsat at a technology conference, the CFO openly mocked his deal, telling him it would never close given the dire straits of the economy, and, even if it did, Desch would never be able to raise the money he needed for the next generation. Then, as if Desch needed any more headaches, a defunct Russian Kosmos spy satellite slammed into Iridium Space Vehicle 33 in February 2009, smashing it to smithereens somewhere over northern Siberia. (If anything, the one-in-a-million accident demonstrated the resiliency of the system. A spare satellite was moved from its storage orbit to replace the dead bird in less than a month.)

The Greenhill deal turned out to be both a blessing and a curse. By the time Iridium Communications Inc. was launched on the NASDAQ in September 2009, early trading valued the company at around a billion dollars, but that valuation didn’t hold up. Greenhill & Company had overexpanded and ended up getting battered by the bear markets of 2009 and 2010, ultimately losing half its value. To assuage angry investors, the Greenhill board agreed to dump all its Iridium stock. That meant regularly scheduled sales of large blocks of stock every month for three years, depressing the price and the valuation. There were also millions of warrants in circulation, most of them held by Greenhill, allowing the bearer to buy the stock at a steep discount. Then, even after Greenhill had sold off its holdings, Niehaus remained chairman and Greenhill kept its seats on the board of directors, angering big shareholders who now regarded them as meddlers and speculators. At the same time, short sellers were saying that Desch would never be able to raise what was now an estimated $2.7 billion to launch the second generation of satellites, leading to analysts’ reports that portrayed the stock as highly risky. Then, as though the past decade had never happened, all the old whispers returned—the satellites would all fail at the same time because the momentum wheels were faulty, the link margin was bad, the system was analog, the company was too small to compete—and institutional investors stayed away while day traders piled on, enjoying the up-and-down bumps that were only possible to control when it was a small-cap company. Adding to the misery was a sudden lawsuit filed in Chicago by Motorola, rising zombielike from the Iridium past to claim that it was owed $24.68 million because of a “change of control” clause inserted into that $30 million loan agreement that Keith Bane had grudgingly approved for Colussy back in 2000. The Greenhill deal had stimulated yet another Motorola performance reminiscent of George C. Scott in The Hustler: “You owe me money!”

Matt Desch ignored all the ambient noise and, during the years 2009 and 2010, positioned himself to launch the next generation. First he invited bidders for the $2.7 billion contract. Then he narrowed those down to two: Lockheed Martin and Thales Alenia Space, owned by the French electronics company Thales with a minority interest held by Italy’s Finmeccanica. He told both companies that the contract would go to whoever helped him raise the most money—and a year and a half later, the answer was clear. The French had wanted to be major players in space ever since launching the first European satellite in the seventies, and Thales Alenia Space had spent four decades becoming the preeminent satellite source for most of the civilian and military systems of Europe. The company also had the backing of the French government, the French banking system, and, most important, Compagnie Française d’Assurance pour le Commerce Extérieur, better known as COFACE, which was similar to the Export-Import Bank in the United States and existed to promote French industry. A consortium of six French banks, headed by Société Générale, were willing to set up a $1.8 billion credit facility for Iridium’s next generation, and that credit facility was guaranteed by COFACE up to 95 percent. The rest of the eventual $2.9 billion cost of the new eighty-one-satellite system would be covered by Iridium cash flow, which was still growing with each passing year, and by secondary payloads. Desch was so happy with the French deal that he took advantage of the low price of Iridium stock and loaded up on it himself.

It’s hard to imagine a more complete French corporate victory over America. Lockheed Martin would have been equally capable of building the satellites and managing the launches, but Lockheed’s entreaties to America’s Export-Import Bank, begging it to match the COFACE offer, fell on deaf ears. The Ex-Im Bank was set up to help American companies exporting products overseas, so it was not that interested in helping an American company invest in another American company. The prospect of Iridium NEXT being designed in Toulouse and Cannes was full of irony. Thales Alenia Space was not only the company that had built the Globalstar satellites, but some of its executives were the same fierce opponents of Iridium who were accused of rifling through the hotel rooms of Motorola executives in the early nineties, and then challenging Iridium’s European patent through its subsidiary Alcatel-Lucent. In the final analysis, it was a no-brainer for Desch. All systems were go for a constellation to be launched in 2015 that would double the subscriber capacity of the old system, have a much higher data speed, and contain secondary payloads that would help defray the cost. In 2017 Iridium would begin de-orbit of the Chandler satellites—and yes, Public Law 85-804 would still be in effect. The annual cost of running Iridium NEXT was expected to be only about $35 million a year, meaning that finally, after twenty years, it would be a “mature” system. In fact, Iridium after 2018 was expected to be such a cash cow that a third generation around the year 2033 was projected to be funded entirely out of the company’s cash flow. Iridium satellites would fly into perpetuity.