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DEVELOPING NEW BUSINESS IDEAS100

The bootleg group devised a technically brilliant solution to the problem
as they defined it. Instead of creating a telephone network on the
ground, they elected to put it in the sky. And instead of using
conventional system architecture, they created their own.

Convention favoured what was known as ‘bent-pipe’ architecture. This
meant that when a telephone handset sent a signal to a satellite, the
satellite bounced the signal straight back to a land-based ‘gateway’, which
then routed the call into a land-based telephone system. Global coverage
required 40–70 such gateways, each costing around $25 million.

Motorola’s technically ingenious solution was based on a ‘bypass’
system, which meant that when a handset sent a signal to a satellite, the
call was re-routed in the sky between the other satellites until it reached
the satellite orbiting above the system’s single gateway into the land-
based telephone system. This saved the capital cost of constructing
gateways, increased operating margins by cutting out the local land-
based operators and provided true global coverage.

While technically brilliant, the solution betrayed the weakness of an
ineffective fact-finding stage. Numerous national governments would be
required to provide licences for Motorola to operate its system. Given
that the ‘bypass’ system circumvented the use of landline systems which
national governments tended to own and from which they derived
considerable income, it was naive to expect universal political support in
the licence negotiations. When Motorola weakened its already fragile
negotiating position by announcing the Iridium project to the world in
1990 before even embarking on these licence negotiations, Wired
magazine was moved to criticise Motorola’s actions as ‘a case of geekish
can-do enthusiasm getting ahead of the plodding nuances of global
lobbying and diplomacy’.78 Realpolitik meant that the technical solution
as initially devised was literally never going to fly. The fact-finding
homework had not been undertaken.

Only when Motorola had created the solution in the form of Iridium –
the project took the name of the 77th element of the periodic table to
reflect its 77 proposed satellites – was market research undertaken. To
compound matters, the project engineers led the market research
themselves, making it likely that they would be more receptive to
information which confirmed their assumptions rather than feedback
which challenged them.