Iridium and Aireon talk ADS-B

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The full-length version of AW&ST's August 2014 interview with Iridium CEO Matthew Desch and Aireon President and CEO Donald Thoma is below, with web-only excerpts highlighted in green.

Gearing Up

Iridium Communications is preparing to launch the first of 72 second-generation mobile communications satellites in low Earth orbit in June, and spin-off venture Aireon is pursuing support among global air navigation service providers (ANSP) for the fee-based Automatic Dependent Surveillance-Broadcast (ADS-B) service the $3 billion constellation will provide by 2018. Iridium CEO Matthew Desch and Aireon President Donald Thoma recently discussed the status of Iridium NEXT and Aireon’s plans to exploit it with Paris Bureau Chief Amy Svitak.

AW&ST: What technical milestones are coming up at Orbital Sciences Corp. and Thales Alenia Space between now and the June 2015 launch of the first Iridium NEXT satellites?

Matthew Desch: Right now, the first satellite is being tested at Thales in France. The first engineering model just got delivered to be integrated and tested with our existing satellites. The next two are in production and are to be completed by the end of the year. The first five main mission antennas are all done and the ground systems are for the most part updated. We are going to complete that this fall. We’re doing all the high-speed services software developments in parallel, and we just issued a request for proposals for terminal manufacturers. Later this year, we’re going to select some of the initial suppliers because we expect to have some of the terminals complete in 2016 for aviation, maritime and land that will take advantage of both constellations.

What was the issue that delayed the program, has it been resolved?

MD: It wasn’t an issue with the payload, it’s the overall program, which is running a little late. Specifically, it was the software testing program on some of the internal processing systems in the satellite. Given the amount of time looking ahead, they felt they needed to fully validate the design, and that was just going to take a couple months longer than expected. It didn’t really change the end date, the network will still be complete in 2017. This was a six-year development program, we’re talking about being three or four months late, so I think we’re doing really well.

When will you ramp up production?

MD: Early next year. There’ll be a satellite made every 50 days, and that starts happening in earnest because we’ll need enough to start launching the first 10 out of California later in the year.

When does it ship to Russia for launch?

MD About 40 days before launch, so second quarter some time. If the launch is in June of 2015, it would be early May. It’ll ship from Orbital in Gilbert, Arizona. All the satellites are assembled by Orbital in the factory just down the road from us in Arizona.

The first NEXT satellites launch on Dnepr rockets from Russia. Is there a Plan B in the event that relations between the U.S. Russia continue to sour?

MD: There is, but I still am comfortable with Plan A. Everything is continuing to operate as expected. People are crossing borders and technical work is on schedule. The risk will either mitigate itself or we’ll consider Plan B or Plan C. We have to make a decision pretty soon. It’ll be this year.

With Space Exploration Technologies (SpaceX) already under contract to launch the bulk of the Iridium NEXT constellation starting late next year, could you switch to SpaceX for the first launch?

MD: Yes, we could launch anywhere from one to 10 satellites on a SpaceX rocket. We have a lot of flexibility, not just for Plan B or C, but as we look ahead at Iridium Prime and other things that could launch in different configurations.

How long do the first satellites need to be in orbit before you feel comfortable launching more?

MD: About five months. You could launch more than that; you could delay second launch. You could do a bigger first launch. In the coming months we have to decide. But our current constellation is working very well; it’s nothing we need to do immediately.

Given where SpaceX is in their launch manifest, are you worried about delays?

MD: Not from our perspective. They may be slipping at Cape Canaveral, but they’re not slipping at Vandenberg [AFB] in California. The Defense Department could take priority, but that could maybe affect us by a month or two.

You mentioned the health of the current constellation. Your chief rival, Inmarsat of London, suggests all 66 satellites are not operating 100% of the time.

MD: The network has very high availability and performance, and it hasn’t been showing signs of age. Our customers and partners would validate that. Our competition likes to sow doubt about our constellation, in particular with regard to our Global Maritime Distress and Safety System (GMDSS) certification effort. I am very confident that when we are tested thoroughly over the next year on GMDSS, we will meet the technical requirements.

It's just a very different approach and architecture. Our competitors have outages all the time, but with our network, there’s a new satellite every eight or nine minutes overhead. If we had an outage it wouldn’t affect people very long, but it would affect you in their network the whole time, but they don’t talk about that.

What about the Iridium satellite failure in January?

MD: We occasionally have failures or outages. They’re replaced either immediately or over time with spares. Inmarsat has absolutely no knowledge of our network, and this nonsense that they have a partner who knows our network is silly. They don’t use it in the way we’re talking about using it.

What is the timeline for GMDSS certification?

MD: About three years for the authorization with the International Maritime Organization. We’ve been through the FAA process, which is similar and has very high safety of life requirements. We’ll work our way through it and have GMDSS products available in 2016.

Through the U.S. delegation we have submitted our formal technical application, which was reviewed by the Navigation Communication Search and Rescue subcommittee at the end of June, early July. They have now referred it back to the Maritime Safety Committee to identify a group of experts to perform a more robust technical and operational evaluation of the network itself. They are set to meet mid-November, and our expectation is they will identify who that expert committee or organization will be. In January, that group will be assembled, Iridium will enter into the requisite NDAs and begin interacting with them directly through our operations centers, our products, and provide them the tools and equipment to conduct an independent evaluation of the services, of the functionality we’ve put forward with regard to the provision of GMDSS communications. That group will formally report back to the subcommittee in March of 2016 and from there, assuming all is thought to be above board and comprehensive, that will go back to the Maritime Safety Committee in the third quarter 2016 where they could adopt a resolution that would recognize Iridium as a service provider for GMDSS communications.

Is GMDSS a revenue play for Iridium?

MD: Not per se. But there are 60,000 ships that are required to put a terminal on today, and we believe they deserve choices. While Inmarsat doesn’t make anything off GMDSS, those terminals are utilized for other services when they’re not in GMDSS, and it’s a relationship they’ll always have, even in this case where we’re on the ship. We’d like to level that playing field. As Inmarsat has matured their constellation, they’ve also mandated new-generation equipment be procured. It’s playing out in the maritime community, but in aviation as well, where thousands of aircraft will require major capital investments over the next 3-5 years.

On our side, no customers today who have our terminals on ships will see any difference when Iridium NEXT is launched. Right now there’s a big transition going on because people who have older GMDSS terminals now are being forced to put on the next generation of terminals and they have to pay for them. So they constantly have a revenue path by just selling new generations of GMDSS terminals. We’re gong to be a lot more customer friendly in that regard.

There’s another change going on in the maritime world in the last five years that Inmarsat drove themselves. They were like us, they worked through others, had many partnerships across the industry. Even as the sole supplier of GMDSS service there were many people involved in that ecosystem. But over the last couple years they’ve chosen to consolidate all that, consolidate channels, consolidate services, build their own Ka-band system, etc., with a strategy it appears to do everything on behalf of the customer. So in fact they’ve even moved more and more into a surround-the-customer strategy. Nothing wrong with that. But in our case, the rest of the industry has come to us and said we need a dynamic, competitive environment here, so we don’t have any plans to develop ourselves an FSS-based system. We want to complement. These days we’re being put on next to VSAT systems on ships and our partners are saying it’s great working with you but I wish we could also together supply the GMDSS capability. I think we’re creating more balance in the industry and it’s healthy to have a more dynamic environment.

For aeronautical, right now Iridium is being recognized for safety communications in the aviation environment, and we’re finding a lot of interest in not having a finite life for these products and services but expect that they’ll last the lifecycle of the aircraft. So we’re seeing a very positive adoption of Iridium for those types of communications, sometimes for newer aircraft but also for retrofit as these aircraft operators are forced to make these decisions on future equipage.

Inmarsat recently proposed a free, space-based aircraft tracking service using ADS-Contract (ADS-C) as well as black-box data streaming and other solutions. How do these differ from what Aireon will offer?

Donald Thoma: Inmarsat answers one question for a very limited set of aircraft. Parts of the airspace, like the North Atlantic and North Pacific, have very good equipage of ADS-C. But others do not. Malaysia Airlines Flight 370 had the equipment, but they didn’t pay for the Inmarsat upgrade to have it turned on. It’s very expensive to have both FANS (Future Air Navigation System) and ADS-C services.

MD: As purveyors of FANS and ADS-C, we don’t think it’s that expensive.

DT: Well, no, Iridium isn’t. But the airlines are very price-sensitive.

MD: The numbers touted by Inmarsat are self-serving in terms of who is already equipped as legacy customers. To Don’s point, this doesn’t represent the many large business aircraft that might be in their airspace, or increasingly the number of narrowbody aircraft operating in these areas.

DT: The market share numbers they quote now are the largest they’ll ever be, they’ll only go down from here.

MD: I think the only disservice it does is it implies they have the answer to the issue and you should stop thinking about what it would take to track long-haul aircraft when in fact, given the costs involved in implementation and all the transition that still has to go on, it’s not the answer to the problem. And our answer officially by the way is Aireon will provide you a real-time track, but we think you should implement ADS-C, you should implement black-box streaming over our network, or anyone’s. It’s all part of the mix, so to throw it out there like it’s the answer is disingenuous in some sense.

DT: There are a lot of interests here, the regulators, the airlines, the equipment manufacturers, so we just thought it was strange to preempt the work that’s going on. We’re taking a more comprehensive approach. The airlines, they’ve already paid to put ADS-B onboard in places where the ANSPs like the north Atlantic are going to be using the service. They’re going to have a real-time track using Aireon anyway, so they’ll have the data and they can use it with no incremental cost to their operations. It’s really a question for the operators and the ANSs and the regulators to work through and not for us to preempt.

How are your ADS-B payloads and ground systems progressing?

MD: We’re seeing that it’s going to be more sensitive and reliable. The area of the biggest technical concern is discerning traffic in extremely dense environments. Frankly, we had decided Aireon wasn’t going to operate in the northeast corridor of the U.S., between Washington and New York. But the latest Harris/Exelis simulations show that area has been shrinking as our ability to pick stuff out is getting better.

DT: It really shows we spent a lot of time in the procurement process selecting both the payload vendor as well as the ground system provider. The first thing was sign an agreement with Exelis, the group that’s building the ground-based ADS-B system. So we had the architect of the FAA’s 634-station system provide us the capability to design the Aireon system and write all the specifications, to flow them down through the payload to the ground systems, etc. Then we went through the process with eight or more companies bidding on the payload, at that point, and chose Harris Corp., first for their expertise in signal processing from space, which is unparalleled, and second for their ability to grasp the idea behind this new program: Iridium is unique in that it is building constellations, and Harris embraced the concept and took to heart the concept of doing this on a production-line basis.

Is Aireon fully financed?

DT: The existing commitments are enough to get the payloads to orbit, build the ground system and fund operations through launch—including spares and the full ground system—and to fund operational service to 2018.

MD: What they don’t have enough money for yet is to pay us our hosting fee, but that’s fine; we’re financing that for them until they’re in operation, and then we’ll get paid back.

Iridium values Aireon at more than $600 million, including $300 million in data fees?

MD: That’s the potential long-term value of Aireon to Iridium, plus a share of our 25% long-term stake in Aireon, which should be profitable. That includes the $200 million hosting fee they owe me, which they’ll pay in the 2016-17 timeframe.

DT: That’s right.

MD: (laughing) I just want to make sure he says that. Then the data fee is really an accumulation over 15 years, because the constellation will work until at least 2030. Another piece is our residual interest, and also redemption. When those European investors came in, to keep Nav Canada as a 51% owner, we struck a deal to sell $120 million in shares back in 2018 to dilute ourselves.

DT: Nav Canada was an early partner in Aireon, and an essential component as an early adopter of ADS-B. They knew how to use it, they knew what it could do in the oceans, they had responsibility for the largest volume of traffic there, so they saw right away they should not only be the first customer, but thought they could add a lot to the program in terms of implementation on a global basis.

And the new investors in Europe help complete the north Atlantic piece?

DT: Yes. That, combined with the contract we signed with NATS in the UK back in February, gave us customers committed to use the service across the entire north Atlantic, as well as ENAV in Italy, who is interested in using this in the Mediterranean and potentially their own airspace, and working with their partner ANSPs in north Africa and the boot Mediterranean area.

What about Asia and the Middle East?

DT: We're working with both the IATA regional coordination groups as well as the ICAO working groups and individual ANSPs on how they would implement space-based ADS-B on a regional basis. Each ANSP is different and we're hearing how we could complement a variety of scenarios, whether it’s pure oceanic service, or as backup for ground-based ADS-B systems, or as a replacement for radar.

When will the FAA become a customer?

DT: They’ve indicated that they plan to continue to engage in space-based ADS-B and be ready to use it, but they still have to get through their investment decision later this year before it’s clear.

MD: It's unfathomable that we would offer efficient space-based ADS-B everywhere in the world and somehow when a plane arrives in FAA airspace it would go back to provisional 30-mile-plus separation airspace. It will happen.

What can you say about the fuel-savings that Aireon will enable?

DT: We don’t set the pricing to the airlines, that’s done by the ATC organizations. But in the north Atlantic, with the work done with the airlines and Nav Canada, you’ll save about 450 liters of fuel per flight just in the oceanic portion of the north Atlantic. Depending on the price of fuel, it's about $400 per flight.

MD: It’s on that order of magnitude, but that's a very conservative figure. In general, they want to allow a majority of that benefit to accrue to the airline. It’s really up to the ANSPs and the airlines to negotiate their own rates.

DT: There are additional benefits, too, for example, going over to Europe there are always holds on the ground, and you see a lot of vectoring around to get onto the tracks, so you could actually relieve congestion out of the New York/Boston area by getting planes out on the tracks quicker if you knew that there were slots opened up by going to 15 nm. These are things the FAA and Nav Canada are thinking about that they haven’t before and that don’t typically fit into an oceanic business case because they fit the national airspace.

The other aspect is that while that’s one business model that fits very well in the north Atlantic, as we start talking to other ATC organizations we learn more about how this can help their organizations, like in the Caribbean, for procedural airspace, VFR [visual flight rules], for approaches into the islands, having real-time surveillance can help quite a bit and could actually maybe add additional flights, at the right times.

If MH370 had had Aireon ADS-B tracking, at what point would we have known that we’d lost contact with the aircraft?

DT: We would have been able to pick up every couple of seconds a signal from the aircraft up to the point where the transponder was no longer functioning.

MD: There’s a circuit breaker for every piece of electrical equipment, including that ping you know about. If there was a mechanical problem, that’s always going to be a concern. You can’t build a whole system around that, although there’s probably someone working on something. But you would have set up something in the Aireon system where the software would have an alarm and you’d know within seconds that it had turned off.

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