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Today’s Satellite Boom Was Foretold in Busts of Yesteryear

Musk and Bezos are betting that their space ventures won’t replay Motorola’s Iridium flop three decades ago.

Bloomberg Businessweek

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Engineers working on Motorola's Iridium

Engineers at work on Motorola’s 66-satellite Iridium network. (Source: Iridium)

If the idea of tech impresarios sending fleets of satellites into space to revolutionize communications by making high-speed connections available just about everywhere sounds familiar, it should. That’s certainly the news of today, with Elon Musk’s Starlink already girdling the globe with more than 4,000 satellites in low-Earth orbit and rivals including Amazon.com Inc.’s 3,236-satellite Project Kuiper—the brainchild of founder Jeff Bezos—not far behind.

The Satellite Boom

Annual number of objects launched into space

Source: United Nations Office for Outer Space Affairs, compiled by Our World in Data

But it also was the news of yesteryear, during the fevered runup to the big tech bust of the late 1990s. Names involved on that earlier satellite frontier included Microsoft Corp. co-founder Bill Gates, Saudi Arabia’s billionaire investor Prince Alwaleed bin Talal and cellular industry visionary Craig McCaw. Yet few of the satellite dreams were bigger than those of radio pioneer Motorola, which in the late ’80s had the audacious idea to launch a satellite network called Iridium that could connect calls—in space—between users of its own brick-size phones around the globe.


A first-generation Iridium satellite, prior to launch. (Source: Iridium)

One snapshot hints at the buoyancy in the air at the time: Vice President Al Gore, standing in the Rose Garden at the White House on a breezy October afternoon in 1998, made the first official call on the 66-satellite Iridium network. The recipient was the great-grandson of telephone inventor Alexander Graham Bell.

By the following August, however, Iridium was bankrupt. (It’s since been revived.) It had focused its array of satellites on voice communications: simple phone calls. Other satellite neophytes back then aspired to offer broadband connections. But they, too, were on a downward path, taking with them billions of dollars of investors’ money.


An Iridium satellite at the National Air and Space Museum in Washington. (Source: Smithsonian National Air and Space Museum)

So does that history offer a cautionary tale for the likes of Starlink and Kuiper today?

Not necessarily, says Brian Weeden, chief program officer in Washington for the Secure World Foundation, which advocates for sustainable and peaceful uses of outer space. The costs of building satellites and their control systems and then staging launches “are all much cheaper now than they were 25 years ago,” he says, mostly because technologies are now adapted from broader computer and internet innovations.


A man in Mali with Motorola’s hybrid satellite/GSM phone in 1998. (Photographer: Odd Andersen/AFP/Getty Images)

This surely wasn’t the case in the ’90s. Iridium’s phones were large and unwieldy and didn’t work well inside buildings or cars. Plus, they were pricey, costing as much as $3,000 at a time when prices for then-novel cellular phones and service were dropping dramatically.

Since then satellite phones such as Iridium’s have become cheaper and slimmer. But they’re still aimed at special use cases—“for when your adventures take you off the beaten path,” perhaps hiking a glacier, as Iridium suggests in its marketing. Likewise, the satellite-enabled internet service that Starlink sells today across the US requires a dedicated $599 dish and costs at least $120 a month, so (in the US, at least) it’s still regarded as a product aimed at users in places beyond the reach of the usual broadband networks.


Starlink’s satellite service on display at a Best Buy store in Union City, California. (Photographer: David Paul Morris/Bloomberg)

That’s one thing that hasn’t changed since the early Iridium age: Earthbound networks are still cheaper. And Verizon Communications, AT&T and T-Mobile are investing billions of dollars in network improvements like more antennas, fiber lines to carry data traffic, and software to manage it all to better serve their tens of millions of customers even as satellite companies push to get their businesses off the ground. In 2021 they combined spent more than $80 billion on access to airwaves to handle fast 5G signals.

“The biggest thing that killed the previous iteration—competition from the terrestrial sector—may still prove a challenge this time around as well,” Weeden says.

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This post originally appeared on Bloomberg Businessweek and was published February 15, 2024. This article is republished here with permission.

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