Since joining Iridium nine months ago I have been impressed, not only with the products and services we deliver and the performance of the constellation, but also with the expertise and enthusiasm of our employees and partners. This excitement and confidence is reflected in the performance of the company—the second quarter of this year was a record quarter for Iridium, with more than 25 percent growth in subscribers and revenue, and, as of this summer, by revenue, we are now the largest provider of handheld MSS services in the world. Congratulations and thanks to all of you who have made this possible.
As the Executive Vice President for Government Programs, I wanted to take a few minutes to give you an update on our recent activities and how we expect this market segment to continue to provide significant opportunities for all of us.
As I have talked to people I have found the perception to be that the bulk of our business comes from the government sector. The reality is that today only about 15 percent of our subscribers are government, with about 25 percent of our revenue coming from this sector. Nevertheless, the government in general, and the U.S. Department of Defense (DoD) in particular, remains one of our most important customers given the mission-critical role our technology plays. Every day, soldiers in harm’s way rely on Iridium handsets to provide reliable, assured connectivity for time-sensitive and life-saving applications. And innovative uses of our data products enable tracking and identification of equipment and people around the world. It is not an overstatement to say that Iridium-based solutions save lives and are key components in the Global War on Terror. This sentiment is perhaps best expressed in a conversation I had with two young U.S. Navy SEALS a few months ago who said, “We absolutely do not go on an operation without our Iridium phone. It’s our last line of communication.”
While the government market has not shown the growth we’ve experienced in the commercial sector, it continues a steady increase. We now have almost 30,000 subscribers and data applications enabled by the 9601 Short-Burst Data Modem are taking off. Market studies indicate that many more opportunities exist in the government sector. Recently Booz-Allen-Hamilton completed an analysis of the government market which highlighted the coming gap between UHF Follow-On (UFO) and Multi-User Objective System (MUOS), systems which provide DoD with narrowband communications. Iridium is ideally suited to help bridge this gap and we are looking at ways to do so. The study also pointed out the growing need for medium bandwidth capabilities in the range of 64-128 kbps, again a need we can target, both in the short run with our soon-to-be-released broadband solution discussed in this issue’s Feature story and in the next decade with our NEXT constellation.
In recognition of the importance and potential of the government market, we recently created the Government Programs division to provide increased attention and focus on this sector. We’ve started several initiatives to raise the visibility of Iridium including visits with key customers such as the Combatant Commands, service communications staffs, and Joint Staff communications and logistics staff. We’ve also held meetings with leading officials including the Office of the Secretary of Defense, the Assistant Secretary of Defense for Networks and Information Integration, and the CIO of the DoD. And, finally, we are kicking off a campaign to visit key members of Congress and their staffs.
The breadth of new products and services we and our partners deliver to government make our visits and briefings extremely well received. As I mentioned earlier, the 9601 SBD Transceiver is a product which has literally thousands of applications in the government sector, from tracking of equipment and people, to command and control, to unattended sensors, to monitoring of systems and operations. Our broadband product, due out early next year, is also drawing a lot of attention, both for marine and ground applications, and for potential future aeronautical applications. And, the application that is getting the most interest right now is the push-to-talk capability demonstrated last year for the U.S. Marine Corps Warfighting Lab (MCWL). Commonly called “netted radio,” this capability allows Iridium handsets to be used like push-to-talk radios on user-defined nets. We’ve seen great interest in this capability from other services and non-DoD government users as well.
However, the most exciting project we’re working on is our NEXT initiative, which will bring to market our next generation satellite constellation. NEXT is generating tremendous interest in the government because of the capabilities it will enable and because of the opportunities for government to participate in this initiative through development partnerships. Government customers are watching closely and counting on NEXT to provide new products and services for the warfighter.
I look forward to the next 12 months and predict it will be tremendously busy as we simultaneously introduce new products, enable new services, close new contracts and complete the NEXT system definition. I am proud to work with such a dedicated team of partners and employees. It is not often in a career that we get to participate in such an exciting and pivotal effort, and I look forward to working with you to make it happen.
Lt. Gen. John Campbell, USAF (ret)
Executive Vice President for Government Programs
Iridium Satellite, LLC