Iridium’s Hosted Payload Efforts Disappointing, Though Solution in the Works, Says Desch

Hosted payloads seem unlikely to become the norm in the satellite industry in the near future and the lack of government involvement is worrisome, Iridium CEO Matt Desch told the Washington Space Business Roundtable. While there’s hope for the hosted payloads in the future, the idea remains very much nascent, he said Thursday. Iridium, which had advertised a significant amount of space on its coming IridiumNEXT constellation but has so far been unable to fill it, likely has found a solution, he said. Iridium and the mobile satellite service (MSS) industry is fraught with misperceptions, he said.

There has been talk of Iridium going outside the Defense Department for customers. Desch declined to provide detail about the solution to the hosted payload vacancies on IridiumNEXT. “We are very confident, but still not sure, that we will have a plan for using this space effectively,” he said. “It’s not how we originally envisioned it five years ago.” Desch said he thought the U.S. government would have been a bigger customer. While there have been changes in U.S. space policy advocating hosted payloads, the leadership on this issue hasn’t been there, he said.

Iridium had been marketing the hosted payload space for the last five years, but was unable to find a customer willing to go forward, Desch said. Hosted payloads won’t be widespread in the “near future,” he said. Orbital Sciences has paid Iridium about $10 million for the right of first refusal for 20 percent for the hosted payload space on the 81-satellite constellation. Orbital didn’t comment. Maybe the industry will have matured once “IridiumNEXT NEXT” is needed in 2030, but it’s going to be a number of years because the “systems haven’t changed in any government,” Desch said. The lack of progress should be a concern to all taxpayers because it’s a good opportunity for government, he said.

While concerns about space debris have gained attention in recent years, due in no small part to a collision between an Iridium satellite and a Russian satellite in 2009, low earth orbit continues to be a relatively safe place to operate, said Desch. “We don’t see this as much of an issue anymore.” Improved interaction with the Joint Space Operations Command and the sharing of actual data, which wasn’t the case before the 2009 collision, has increased ability to avoid debris, he said.

Consolidation in the MSS industry seems unlikely at this point, Desch said. As is, there’s big enough opportunities, though some, such as LightSquared and possibly Globalstar will soon become “spectrum producers,” he said. Iridium seeks to “complement the 7 billion wireless devices,” rather than compete directly with companies like Inmarsat, he said. While the two companies are often described as direct competitors, the two have different aims, he said.

Questions about $3 billion for IridiumNEXT being too big an expense for the company ignore Iridium’s growth, he said. “We're buying 81 of these. We're buying a lot.” Iridium has a fully financed plan and cash flows are now quite profitable, he said. “I don’t think a lot of people appreciate what the value of this system is to us.” If the company grew by 10 percent in revenue each year through 2030, which Desch said would be a disappointment, that would mean $10 billion made over the lifetime, he said. Thales Alenia is the prime contractor on the satellites and construction is progressing, he said.