C.E. Unterberg just issued and 10 page report on G* focused on pricing. The gist is that in many cases, a G* call will be more expensive than an Iridium call because of the activation and monthly service fees the various sp's can and will charge. Iridium apparently has greatly simplified their rate structure. For example, an Iridium call within No. Am to a non-Iridium ph will cost 1.78/min, or 2.99/min calling outside No. Am. and only 1.59 if the call is made to another Iridium phone no matter where it is. There are no additional roaming charges. This is somewhat disturbing because depending on who a G* customer signs up with, they may be hit with an activation fee ranging from 0 - 150, a monthly svc fee of 30 to 100 plus global roaming charges if the call is made outside the subscriber's home market, plus local taxes, plus the sp's cost. Complicated? Yup, and I don't like it. Unterberg stated "...we are concerned that distributors are overpricing the service." and then said "... our continued confidence in Globalstar and its distribution channel stems from the system's low cost structure, which allows distributors to still be profitable even at much lower service prices." These distributors need you right now, Maurice.
As I waded through the report, the reasons for the soft rollout became increasingly clear. Despite having the right partners, they are plagued somewhat by the same thing that Iridium faced, different regions, different cultures, different expectations, amongst the various distributors. Globalstar is only the manufacturer and has limited control over the many sp's.
Do I think they will go the same way as Iridium? No. As Unterberg says "Should Iridium ever emerge, Globalstar should still have a considerable advantage, given the company's strong distributors, positive brand identity, light handsets, reliable service and better access to capital."
Demand is still the ultimate question. Is it great enough to support the various distributors current rather complex plans? Will there be adequate handsets? I think the answers will be yes but I see some potholes in the road. As previous posters have noted, this is a very complex venture and giving is not going to be easy. Let's hope the rewards will be worth it. |
