Under the terms of the agreement, Orbital will make several
non-refundable deposits totaling $10 million in 2011 for a
right-of-first refusal on 20 percent of the network's capacity to host
third-party payloads. The parties also have agreed to the basic terms
of Orbital purchasing this hosted payload capacity on behalf of its
customers. Iridium believes the arrangement with Orbital has the
potential to be worth more than $100 million, including hosting fees
and recurring data service fees once in orbit. Orbital was selected last week by Iridium's prime contractor for the system and the constellation, Thales Alenia Space, to serve as satellite integrator and test partner for Iridium NEXT. Over the next five years, Orbital, at its facility in Gilbert, Ariz., will assemble and test 81 Iridium satellites (66 operational satellites, six in-orbit spares, and nine on-the-ground spares) being built by Thales Alenia Space.
"Orbital's far-sighted move validates the value and importance of commercially hosted payloads," said General Lance W. Lord (USAF-Ret.), who serves on Iridium's Government Advisory Board. "Under President Obama's National Space Policy, it is clear that our government departments and agencies are directed to take advantage of private sector investments to lower the overall cost of space missions, and this new agreement is a great step forward."
Orbital and Iridium are working closely together to market this capacity to specific U.S. government customers to ensure the program can meet the Iridium NEXT deployment timelines and is consistent with other hosted payload programs. Orbital, as the satellite integrator and test sub-contractor for Iridium NEXT, will also be responsible for the integration of hosted payload platforms with the Iridium NEXT satellites. Orbital's role as the satellite integrator is critical to ensuring that multiple hosted payloads, including Orbital's capacity, can be accommodated simultaneously on the Iridium NEXT constellation. At its Analyst Day in December 2010, Iridium described the various hosted payload programs that are being evaluated. The most likely program for Iridium NEXT would be the hosting of a combination of payloads for different customers on the same satellite, most likely not all 66. Based on Iridium's current opportunities, the company expects hosted payloads to provide between $200 million to $300 million in net cash contributions as well as additional service revenues in 2017 and beyond.