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October 01st 2016 print

James C. Bennett

Obstructing a Better Mousetrap

Author John Bloom's account of the Iridium satellite network is more than a ripping read, it is both a commentary on the way we do technology today and a reminder of Friedrich Hayek's observation that presumed experts and planners are the last people you want picking winners

Eccentric Orbits: The Iridium Story
by John Bloom
Grove Atlantic, 2016, 497 pages, US$27.50

iridium satelA tale well told is a thing of delight, and John Bloom’s Eccentric Orbits: The Iridium Story does not fail. Eccentric Orbits is the story of the Iridium global satellite mobile telephone system, the world’s first, and still its only, mobile telephone system capable of sending and receiving telephone calls from a simple hand-held phone between any two points on the planet. This capability, accurately described in a simple, straightforward sentence, was anything but simple to conceive, design, execute and—as Bloom describes in painstaking detail—maintain and rescue from the morass of rivalrous governments, bickering crony capitalists, adventurers, pirates, idealists and visionaries, that is misleadingly referred to as the global economic system. It is hardly a short read, but, as becomes obvious in the telling, it would be difficult to gain a real understanding of the story in any shorter space.

Bloom begins the narrative at a Perils-of-Pauline moment in its history: in September 2000, at the start of America’s end-of-summer Labor Day long weekend, when Motorola, the creator and operator of the Iridium system, is poised to push a button that will send a signal causing all sixty-six of the system’s active satellites, plus several in-orbit spares, to begin spiralling out of the sky and crashing to their destruction on the surface of the planet. This point has been reached after six billion dollars had been spent researching, designing, building, launching and placing into operation an entirely novel but successful system that kept its promise of delivering point-to-point mobile telephony to the entire planet, literally from pole to pole and everywhere in between. The reason? The system had been slow to fulfil the high expectations of user numbers and revenue its creators had originally projected, and it was in danger of no longer being able to pay the ample sums its business entity had contracted to pay Motorola to operate the satellites, and Motorola was unwilling to defer the payments.

Had they done so, the system would have had enough cash in the bank, even without raising any more investment, to operate for another two years, gaining the customers it lacked, but Motorola was unwilling to give an inch. The real driver behind Motorola’s concern, however, was the fear of legal liability from any damages that might be caused by the satellites “de-orbiting”, that is, falling out of the sky, Skylab-like. Motorola was fully insured against such losses by an unusually broad insurance policy, one unlikely to be renewed or replaced by any other insurer, and the policy was coming to the end of its life. Motorola’s board of directors was consumed by the fear of America’s voracious corporate litigation bar, and in their eyes it was far preferable to crash sixty-six unique and valuable satellites into the oceans and deserts (but hopefully not the cities—although there was no way to control the outcome) of the planet and destroy a unique capability, than to increase their liability. Pauline was tied to the rails and the locomotive was fast approaching.

But what is a Perils-of-Pauline story without a Daring Dan riding to the rescue? In this instance, there actually was a Dan, namely, a former airline CEO turned almost-retired investor named Daniel Colussy. Colussy had been CEO of Pan American World Airways, and had turned around a failing nuclear technology company and turned it into a successful diversified technology company. He had paid no attention to Iridium until well after it had gone into bankruptcy, when he started looking at the company and its financial situation more out of curiosity than from any serious business intent. Besides, he was in his late sixties and about to retire and spend his time getting serious about his golf game. He became fascinated by Iridium, impressed by its potential, and appalled by the fact that a perfectly good functioning satellite system was about to be turned into flaming wreckage scattered randomly around the globe for lack of a small fraction of the capital needed to rescue and revive it. He was the sort of man who loves a challenge, and Iridium was just too good a story for him to resist the hero’s role.

The Iridium story stretches from the mid-1980s, when its basic approach was developed as part of the US Strategic Defense Initiative, the so-called Star Wars missile defence system, through to the present day, as the now-successful system prepares for its next generation of satellites. Bloom concentrates the bulk of his narrative on the period from early 1999, as the original Motorola-sponsored venture went into bankruptcy, to the end of 2000, as the rescue effort led by Colussy finally succeeded in taking over and saving the system.

After setting the scene with the September 2000 showdown, in which a temporary reprieve from the destruction of the system was gained, Bloom backtracks to the dawn of the Space Age, starting with the Russian visionary Konstantin Tsiolkovsky working out the basic mathematics of space flight, and briskly marches through the V-2, Sputnik, the birth of the American civilian space program, and the invention of the communications satellite. He then delves into the origins and nature of the Star Wars initiative, and gets to the real origins of Iridium.

Although Star Wars went through a number of different approaches, its technicians eventually chose a design with a large number of “kinetic kill vehicles”—KKVs—so-called because at space warfare speeds, they needed no explosive warhead to destroy an ascending Soviet missile—the mere impact of the interceptor vehicle was fatal. But they needed a smart guidance system to be able to find and close with the missile. Thus, after a century of arms races developing more and more powerful explosives, arms-makers were back to throwing rocks—but very smart rocks. So the first KKVs were dubbed “Smart Rocks”. Quickly the designs evolved to even smarter but even smaller rocks, which were therefore dubbed “Brilliant Pebbles”, and the next generation, “Genius Sand”. (Bloom oddly misses the first generation of KKVs in his recounting, which makes the logic of the terminology harder to follow, but that is a minor lapse in a generally accurate account of an arcane and complex topic.)

The biggest challenge in this system was not the KKVs themselves, but the “battle management architecture”—the enormous network of sensors, computers and communications arrays that must hang in space above the KKVs to spot the hostile missiles, screen out the decoys that will be deployed, calculate the interception courses for the KKVs, and decide which KKVs should go after which missiles. There is no time for human intervention, and no time to relay the data to Earth for a terrestrial computer to calculate the problem and send the solution back up. A space-based system must do it all.

Remarkably, the basic issues of this problem were solved by the Star Wars contractors. But before any implementation was made, the Cold War ended, and Star Wars went into cold storage. But the heart of the battle management architecture, the communications solutions, stayed with the contractor personnel, and three of them working for Motorola applied the knowledge to the design of what became the Iridium system. The result was a system that, unlike any other satellite system then, or even today, was close enough to Earth that a simple handset could be used to make a call, always had one and usually two satellites in sight, so there was never a gap in call coverage, and was in polar orbit so every spot on Earth, at sea or on land, from pole to pole, always had the same coverage. The fundamental technical problems were solved, but the business problems were just beginning, and that is what Bloom, after setting the scene with a thorough but readable account of the technology and its origins, spends the bulk of the book tackling.

Here the reviewer must confess and disclose a personal history that has intersected with the Iridium story in a number of times and places. I was a co-founder and officer of a private space launch company in the 1980s, a precursor and technology source of the SpaceXes and Virgin Galactics of today. Several of my friends and associates had been part of the Star Wars team at Lawrence Livermore Laboratories in California, and I had followed the Smart Rocks debate (in general, non-classified terms) as it happened. At the beginning of the 1990s we had been invited out to Arizona to the Motorola headquarters, at the very early stages of the Iridium project, to discuss becoming a launch provider, not to the main Iridium constellation, but for the replacement satellites that would have to be launched from time to time. Signing blood oaths of confidentiality, we were briefed on the system, and I was greatly impressed. Its potential was enormous, and I followed it with great expectations thereafter, along with many others in the industry. Thus it was a great disappointment that, as it began to be rolled out in public, the handsets were so expensive and did not work well indoors, and many teething problems seemed to plague it. I read of its bankruptcy and thought that, shorn of debt, it might yet find niche markets. I guessed that it was probably being sustained by military and intelligence customers, and that the Pentagon and CIA had a hand in seeing that it remained operational, since it was so obviously useful to them.

These guesses were, very broadly, accurate, but what astonished me, on reading Bloom’s account of how it actually happened, was how these logical outcomes were so difficult to achieve, and how, without the intervention of a succession of determined people in both the private sector and government, the value of Iridium, already bought and paid for, would have been thrown away. The other fact that stood out from Bloom’s account was that, although there were heroes, many heroes besides Colussy, in fact, there were no real human villains. The people who opposed the heroes were not, in most cases, acting from evil motives. The Motorola executives who wanted to de-orbit the satellites were motivated by a genuine concern to protect the company, and thus its stakeholders, from a potentially disastrous liability exposure. The Pentagon generals and administrators who opposed giving the contract to Iridium that would enable the rescue finance package were mostly motivated by fear of being accused of giving an improper contract without going through the competitive process. The government bureaucrats and appointees who opposed government indemnification of Motorola from liability for its satellites were concerned about improper exposure of public funds for private benefit.

In fact, by the end of the story, most of the people who had been giving Colussy near-heart-attacks over the painful two-year reorganisation process came around and joined the good guys. Motorola finally agreed to the rescue terms and ended up lending Colussy a substantial part of the money he needed to close the deal. The Motorola executives who originally gave Colussy such a hard time in the negotiations became, in the end, advocates of the rescue deal. Administration bureaucrats and Pentagon generals, originally oppositional, became advocates.

What Bloom’s account shows, by the end of the tale, is that the real villain is the system itself—the way we do technology now; the bizarre mix of politics and business that is modern technology, and particularly so in the telecommunications business. The pure global satellite point-to-point mobile telephony business of the early 1990s quickly became bogged down in compromises that were entirely the product of the global and national regulatory systems for telecommunications. Bloom describes the farce that is the World Administrative Radio Conferences (WARC), the chaotic, corrupt means by which the world’s immensely valuable radio frequencies and satellite slots are distributed to nations. The telecommunications systems of most countries have long been treated as cash cows to be milked by governments and their favoured political factions. This has particularly been true of developing nations, where few have historically had landlines, and international calls, made only by diplomats and international aid organisations at extortionate rates, were a major source of income for governing cliques. Equally important was the desire of intelligence and police agencies to tap phone lines.

Iridium in its original form entirely bypassed the ability of governments to control calls or collect rents from calls. It was for that reason revolutionary and subversive, and many countries threatened to withhold permission to operate in their territories. Iridium’s satellite competitors, who did not have the space-based switching derived from the Star Wars battle management architecture, had to use “gateway” facilities in various countries to bring the signal down to Earth and tie it into local mobile and land systems. These gateways provided a means for local graft and police monitoring, and allowed local monopolies to collect additional tolls from those calls. Local well-connected business interests were given ownership stakes in the satellite systems, and thus provided a local political lobby for their licences. Eventually, Iridium was forced to copy the system, even though it was unneeded, and so acquired a group of gateway franchisees who were represented on Iridium’s board of directors, where they were a constant annoyance. It did, however, get them local operating permissions. Furthermore, Motorola’s chosen CEO for Iridium, Ed Staiano, came straight from Motorola’s blue-collar, Chicago-based corporate culture, honed by its early days as a provider of two-way radios to police and fire departments. Aggressive, even rough, tactics, even towards partners, and blunt communication styles were typical, and Staiano quickly aggravated the Arab and East Asian board members, who valued dignity, respect and a quiet, non-confrontational style. This came back to haunt Iridium when rough times later required co-operation all around.

The US regulatory system was not corrupt in the direct fashion of the WARC or the telecoms of the Third World, but it is slow, cumbersome, and adapts to innovation with difficulty. The number of times Colussy had to rely on political allies and pull to navigate the Pentagon or the White House demonstrates that critical decisions determining the success or failure of various directions in technology are driven by politics and connections, not intrinsic merit or market logic. And one of Iridium’s basic ground rules, the inability to easily combine satellite and ground mobile systems, came not from the opposition of Third World rent-seekers, but from the reluctance of the American Federal Communication Commission (FCC) to approve a licence that “mixed” two of their bureaucratic categories. Such a licence is still being denied today.

Even more fundamental is the fact that overhangs Bloom’s book—the extent to which the liability issue, driven by voracious American litigiousness, inhibits risk-taking by American corporate and government decision-makers. Motorola would not have been so insistent on destroying the Iridium satellite constellation, a valuable asset to their corporation and to the world at large, had it not been for the concerns about runaway liability litigation. The government, which had the legal power to indemnify the companies in cases of national security interest, was hesitant to do so, for fear of public criticism.

Eccentric Orbits is an effective comment on the way we do technology today, and is an illustration of Friedrich Hayek’s concept of the “Fatal Conceit”—the idea that any group of experts or planners can see the future and plan out the best way of accomplishing a goal, particularly with new technology in a time of rapid change. At the start of the 1990s, it was clear that satellites could be used to support global mobile telephony for a great advantage in cost and coverage. It was not obvious how to do so. Many ventures emerged, most with plans far more cautious, and far less useful, than Iridium’s. The “wise men” who advised the military services supported much more conservative solutions. The only real way to settle the question was to build several approaches and see which worked out better. And the only effective way to ensure this is done is to ensure that access to capital is unhindered, so that the various players can use their own judgment to place bets. The more we interfere with this process, the more we skew the results. Did the system work with Iridium? Just barely, not as well as it could have, and mostly due to the personal merit of a few people. Bloom calls this right.

Bloom has delivered a good, readable book on a complex and somewhat obscure topic. He makes it interesting, whether you expected it to be or not. He is forced to explain at least a dozen complex fields of knowledge, mastery of any of which would entitle a practitioner to a fee of a thousand dollars an hour. Yet he does it well, and accurately (at least to my ability to tell in areas in which I have some knowledge). His style is entertaining. He is more or less forced to write in a straightforward and clear style in the many passages in which he is conveying complex knowledge, and in places in which he has the space to be entertaining he employs a sort of damped-down version of Tom Wolfe’s style in The Right Stuff. (I had to laugh at his apt description of the FCC headquarters in Washington as a sort of Indian-reservation gambling casino as designed by Mussolini.)

It was his authorial choice to focus on the period of Colussy’s rescue of Iridium from Motorola’s obsession with destroying it. It is a complex story and could not be told well in less space. Perhaps I have been through too many high-tech rescue attempts myself, but reading episode after episode of “Colussy then approached x for money; after long periods of due diligence, and demands for more and more information, they said no” gets a trifle repetitive. But that is the nature of finance for high-risk ventures. Those with thin skin or fear of rejection need not apply. At the end, I found myself wishing for more detail on the many successful uses of Iridium since the rescue and revitalisation of the project. But that, I suppose, is another book.

Eccentric Orbits is a fascinating human study, a gritty tale of endurance and rescue, and a useful discussion of how we do technology today (and the shortfalls of that system). I would recommend it all around.

James C. Bennett is the author of The Anglosphere Challenge: Why the English-Speaking Nations Will Lead the Way in the Twenty-First Century

Comments [2]

  1. en passant says:

    Another tale of a world of chaos from which we are rescued almost by accident by a ‘few good men’ (guys & gals) who rise above the mediocrity of selfishness to do what they think is the right thing.

    It just goes to show that individuals can overcome the odds and have a good effect, though evil and bad outcomes are much easier to accomplish and much more popular …

  2. ianl says:

    Wonderful story. I admit to having had a stake here in the most piecemeal way. I bought an Iridium-capable handset for use in my project work. It was a combination phone, with standard mobile circuitry and satellite capability added. It certainly worked, both in the city spaces as a standard mobile (Vodaphone)and in the remote areas on satellite.

    The “but” here, the old fly-in-the-ointment, was the then influence of Telstra’s unions with Keating. The unions were concerned that Telstra would lose standard business custom – James Bennett touches on this above as a form of corruption, accurately described so in my view – so convinced Keating to “hobble” this new form of competition. How was this achieved ? The system was organised so that if someone called your standard Vodaphone mobile number but you were out of this signal reach (like, say, the Simpson Desert), it would automatically switch the call through to the satellite system … which was a much more expensive $/second cost, of course. All that was needed there was a warning to the caller that the switch to satellite was about to occur, giving them the chance to leave a message, hang up and try later or persist with the extra cost. But this didn’t suit the unions, they wanted ham-fisted control, they wanted to discourage people from using this system. So the warning was not permitted, but the extra cost was invoiced to the recipient by regulatory fiat. That is, anyone could call you on the sat system, talk till Methuselah re-appeared and wear only the standard mobile cost – you had to wear the extra sat cost. That’ll learn us to adopt new technology …