When telecommunications company Iridium chose SpaceX to launch its next generation satellite network, it was the biggest commercial spaceflight deal in history—and SpaceX had never had a successful launch. The wisdom of the deal was proven last year when SpaceX successfully carried into orbit the first forty satellites of the Iridium Next constellation, with one of those launches on a previously-flown Falcon 9 rocket, itself a history-making commercial launch first. In an exclusive interview with ClearanceJobs, Matthew Desch, CEO of Iridium, describes his company’s next generation network and the rockets that are placing it in orbit.
You referred last year to the new Iridium Next constellation as “one of the biggest tech refreshes in the world.” How is deployment going?
MD: Fantastically. Of the eight launches we have scheduled, we have completed four, so we are at the halfway point. We have forty satellites now in space. Each launch carries ten satellites—it is the heaviest payload that the Falcon 9 carries to low-Earth orbit.
The first launch was in January 2017. When you have your first satellite launched, that’s quite an experience and I was quite emotional. The second was in June. The third was in October, and that was really cool because it was our first night flight. The fourth was on December 22nd—the one that broke the Internet as we terrorized Southern California. That was a really spectacular post-twilight launch. The most important thing is that all 40 satellites are in orbit. The last couple are being moved right now into their positions in our constellation.
What does the process of upgrading satellites look like?
Our network is quite unique. It’s 66 satellites in low-Earth orbit at about 485 miles altitude, which is quite low, and they’re all inter-connected in space. No other commercial network has inter-satellite links like us; we have a truly global network. Our original network was launched in 1997-1998, and they were supposed to last seven to nine years at most. A lot of them are hitting year 20, which is amazing, but what we’re doing with these new satellites is one-by-one replacing the originals in space. It is a kind of choreographed operational dance that moves them into position, and the old ones out of position before being deorbited. We’ve deorbited over eight of the original network, and couple of them have entered the atmosphere and burned up. This is a whole process of replacement, kind of like changing the tires on a bus while it’s going down a road, and it’s going really well.
The satellites are performing really well and they’re providing excellent service. There are almost a million devices on our network and the transition is seamless to them . Each satellite goes into operation and literally transfers the callers from one satellite to another and it’s all gone extremely smoothly. We have four more launches to complete by mid-year. What we did over all of 2017, we’re going to do in the very first half of this year. We’re really driving to complete this $3 billion network replacement because of the new capabilities it brings. We’ve been working on this thing for well over ten years.
Because our readers are security clearance holders generally, their jobs mean they are more likely than many to use Iridium services. How will the Iridium network change once Iridium Next is fully online?
Twenty percent of our revenues comes from the Department of Defense. We’ve had a special contract since the first day called the Enhanced Mobile Satellite Services contract. The DOD has a private network with their own gateway, and they like our network because it doesn’t touch the Earth anywhere. No matter where you are, it goes up into space and it transfers around in space securely into the DOD network. They have operational security because only they can see where the devices are—we don’t see them. They use us for secure voice, tracking things, IoT [Internet of Things] services, push-to-talk, tactical radio services—100,000 of those million devices are in support of that private network, that customer. So our traffic is growing quite rapidly and being put increasingly into more and more things.
The new network does everything the old network did for those customers, but also add a bunch of new capabilities. The new satellites are much more powerful, they have more memory, they have much more capacity, and we are soon going to turn on a new service for our customers called Iridium Certus. It is for high speed, very small, broadband devices that operate on our network globally. It will operate anywhere from slow speeds with really tiny antennas, all the way to slightly larger antennas that can operate at 1.4 megabits per second, which is way above the data rates we are able to offer today. It will all be done securely over that private network in a way that delivers capabilities that no one has really seen before.
Another capability that many of our government customers will see is a new service called Satellite Time and Location, where the Iridium network can be used as an alternative source for position, navigation, and time information. GPS is fragile and can be spoofed or jammed easily. The Iridium network with the new satellites offers a powerful alternative for many civil and government applications that need to use GPS.
Our satellites also have hosted payloads. We designed extra space on our satellites knowing that in addition to our communication mission that we’ve done for over twenty years, some customers might want to ride along with us and create different kinds of services. We created a separate company called Aireon, that has a payload on each of our satellites and listens for the next-generation out-signals from every airplane in the world. It relays the information from space to air traffic controllers to expand the airspace that airplanes can be seen, from about 20-30% of the Earth to 100% of the Earth. That’s a very valuable new service. When MH370 went down, no one could believe that airplanes are off the radar, but that actually happens everywhere. It happens over the north Atlantic if you’re going to Europe, it happens over the Pacific, it happens over Africa. So we’re going to be the next generation radar for the world going forward. It will let airplanes go more direct routes and it’ll let them fly more efficiently, faster, at higher altitudes.
Last year Iridium made history by being the first company to launch on a previously flown rocket. As cost of access to space falls, how do you see it changing the way the telecommunications industry does business?
SpaceX was a game-changer for us. Our network, because it’s so sophisticated and unique, was expensive. Three billion dollars is a lot of money for a company, at the time when we first envisioned Iridium Next, only doing maybe $200 million of revenue every year. It was expensive, we didn’t have all the money for it, and when we went out to look for launch suppliers to launch 72 to 75 of our satellites, the bills were pretty extraordinary, originally. It was eight or nine years ago when we started talking to the industry—before SpaceX. I think the best bid we got besides SpaceX was like $1.2 billion, and SpaceX came in at less than $500 million. Part of it is that we were their first and largest commercial customer, but part of it is that they were designing reusability into everything that they were doing. And they knew that their rockets would be reusable eventually. We didn’t. We hadn’t planned on using a reusable rocket when we started—in fact, we bought all new rockets, and it was only recently that we agreed to have some our our flights use “flight-proven rockets,” as they like to call it.
There is a little bit of financial benefit to using previously flown rockets, but we’re not doing it for that reason. We’re doing it, frankly, because we think it’s either the same or lower risk as the current new rockets. These things have been fully tested by going into space. We thought it would help our schedule and ensure that our network was built on time. By the way: our insurance companies also felt the risk was the same, so they said it wouldn’t cost us more, either. So it was just a smart decision for us to make.
By the way, if we were doing this today, I wouldn’t be getting bids for $1.2 billion. The prices have declined dramatically across the industry as people try to stay competitive. And you have new rocket manufacturers—Blue Origin and others—trying to do the same thing. It’s been healthy and it’s going to enable new networks and new missions and new payloads that never would have been built if they had to pay the old—more monopolistic—prices, when the industry was smaller and did it the old way. It’s been great for access to space overall.
In 2010, the decision to partner with SpaceX was a gutsy call. The company was then a young and unproven launch provider. It must have seemed crazy to some at the time. What factors played into your decision to sign with them?
They were a good fit for us. We started working with them four to five years before that. We had gotten to know them very well. We had a lot of respect for the kinds of expertise they were bringing on board. We had reviewed their plans—by the way, they hadn’t had a successful launch prior to our making a selection for them. We went off and raised debt—almost $1.7 billion—and at our first finance meeting, all the bankers were in a room. We asked Gwynne Shotwell [chief operating officer of SpaceX] to come speak to them about this new rocket we wanted them to finance, and obviously that was a big risk. The day of the meeting in Paris, it worked out that it was the week after their first successful launch. You can imagine how different that meeting might have gone if it hadn’t been a successful launch. Instead Gwynne had really cool pictures of the rocket launching that today are becoming commonplace, but in those days had everyone’s mouths open as the first privately owned company to successfully launch a major rocket like the Falcon 9 into space.
We looked at it and said we liked the design, liked the price, liked the people, and the good news is I don’t need them for about five or six years. I don’t have a payload today. I’m going to start building it but I’m not going to be launching it until about 2015 or 2016. (Turned out to be 2017 in the end.) We were, according to their records, going to be something like their 35th launch. So we had alternatives if something happened. We had off-ramps together. If things weren’t working out we could stop paying money and go get someone else. We actually had another rocket as part of our plan. It was a really great idea when we selected them. It was a Ukrainian rocket with Russian components. That was before Crimea was invaded and became not a very good rocket after that.
SpaceX has been—we could tell they are a can-do kind of company. They’ve been really great to work with. When we need something, they don’t say no. They say let’s try to make it work. When we need information, they give it to us. We’ve worked very, very closely with them and they’ve been transparent with us. This experience has been win-win through the whole thing. As I look back, that’s been one of the best decisions we’ve really ever made. It’s worked very, very well.
As a result of the Iridium contract and the stability that provided SpaceX, in a very real way you essentially underwrote and enabled this new era of commercial spaceflight.
We did it with a lot of due diligence. You can be on the bleeding edge and do a lot of bleeding if you’re not careful. In our case we took a risk ourselves but we knew it was a very smart risk and we made sure we were doing it with somebody who had every chance of success and had a very good plan. I will tell you I relied a lot on some really great expertise inside of Iridum. We’re the only company to have launched a low-Earth orbiting system twenty-something years ago, and despite it not being an immediate business success, it was a tactical success and we brought a lot of the people who pulled that off back onto the team. They had more experience than anyone else, and they were attracted to being part of one of the most interesting projects in the world. They were the ones that recommended that this was a really smart risk to be taking. In retrospect, I don’t think we were lucky; I think we were careful and deliberate and decisive. If it did play a part in SpaceX’s development, I’m proud to have been a part of it because I believe SpaceX is doing important work.
It’s an exciting time to be part of “new space” because there’s suddenly a lot of interest in getting into low-Earth orbit and into space exploration again. Certainly Elon [Musk, CEO of SpaceX] has done a lot to grab people’s imaginations. So is Jeff Bezos and Richard Branson and OneWeb and a number of other networks and small payloads. It’s an exciting time to be around, but I’m glad we’re decades into it and not starting all over again. I like where I’m at right now.
If all goes well, next year you won’t have any launches to look forward to. Is that a relief or a letdown?
It’s funny, I thought about that a little bit. I’ve been to all four launches and I’ll probably be to all eight by the time we’re done. I’ll be an expert I guess. I can tell you it gets a bit easier, but it’s a little different for you when you know you have approximately $350 million of stuff sitting on top of that rocket, no matter how confident you feel about it. I’ve never felt that much apprehension and excitement. I’m going to miss the adrenaline rush of launch and the excitement and joy that follows it. We’re able to bring around 150 of our partners and friends and customers along with us at each one of these launches, and share that with them, I don’t know that I’ll ever go through that kind of experience again. It’s brought us closer together as a company and as a team and with our partners, and I will miss that.
Now, we have some other ideas about what we want to do with our growing success. There are a lot of opportunities in space going forward. The landscape for the kinds of satellites that are getting launched and the kind of capabilities that they are doing is diversifying, and given our expected financial and business success that will come from completing Iridium Next, I wouldn’t be surprised if we won’t be launching more satellites in the coming years. But we’ll certainly be happy to have finished a chapter in the completion of Iridium Next.
It’s really the financial and business transformation of our company that we’ve been planning for many years. I’ve often said that people are telling us it’s amazing where Iridium is these days and what a player we are, but in some ways it’s like the actress who gets the Oscar and everybody goes, ‘Where have you been?’ and she goes ‘I’m a 30 year overnight success story.’ We were created and envisioned back around 1990, so to suddenly burst on the stage as this successful, mature, growing satellite company… you could call us the first successful New Space company. Launching on SpaceX and using reusable rockets, we’re kind of at an advanced stage right now. We have worked hard over 30 years to become an overnight success story and it will be exciting when we’re finally at that stage, when our cash flow flips from spending $150 million building stuff, to having hundreds of millions of dollars that we can use to innovate and invest, and doing all kinds of positive things. That will be really exciting. It will be the end of one era and the start of a new one for us.