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Motorola dodges $4bn damages

Orbital sword of Damocles sheathed

Motorola has settled claims outstanding from the company's involvement in the ill-fated Iridium satellite phone system, ending up having to pay nothing despite creditors' attempts to squeeze $4bn out of the beleaguered technology company.

Iridium was and is a mobile phone system based on connecting handsets direct to satellites, and was one of a few systems announced with great fanfare in the late 90s to provide connectivity anywhere in the world.

The problem is that launching satellites is very, very, expensive, and it takes a long time. This means that calls over satellite are also expensive - as those planning to use in-flight mobiles will soon discover. Also, satellite technology is always slightly old by the time it's in use, so ground-based systems can offer faster speeds based on newer technology.

That combination led to insufficient customers, and bankruptcy in 1999 after less than a year in operation. The assets were then snapped up on the cheap, the system is still operational and used by those people who find coverage more important than cost - as evidenced by the Iridium Flare - reflections from the satellites visible to the naked eye.

Motorola's dispute harks back to that bankruptcy, with creditors accusing the company of "voidable preference, fraudulent conveyance, breach of contract and breach of fiduciary duty" and claiming the aforementioned whacking great sum in damages.

Escaping such a hefty payout must have brought out the little plastic cups of cava at Motorola - it could certainly do with a bit of good news these days. ®

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