My point is that Globalstar should offer a rebate in a gesture of good will, It is my understanding that Iridium was selling quite well in Canada.
Exactly. This requires a corporate subsidy, not just hoping the SP's come up with their own program. You touched on a good point as to why reaching out to IRID subscribers is so key. These are the "early adopters" of the technology, and as anyone who remembers Marketing 101 knows, early adopters are key influencers of later purchasers.
Maurice poo-poos the relatively low #'s of Iridium subs as not worth much effort, and I'd agree with him if say we were 18 months down the road with a million plus subs.
But this is a critical juncture for G* to establish both its credibility and the credibility of sat phone service.
Think of the difference it would have made if, when asked about Iridium during the CC, rather than fumbling around and acting surprised that Mot was referring customers to G*, Bernard had said instead:
"Several months ago, in conjunction with our service providers, we started developing a plan to maximize our subscriber take-up if Iridium ceased service. This plan is now in place. Depending upon the market area, it takes the form of either a trade-in or rebate program for Iridium customers, and the amounts are tied to the minutes of use program each former Iridium customer elects.
"The cost of providing the subsidy is roughly equally shared by Globalstar and our service providers. We have budgeted $10 million of corporate funds to implement Globalstar's share of this program with the expectation that we will add in the neighborhood of 30,000 incremental subscribers. This works out to a marginal acquisition cost of around $600 per subscriber, including the service provider's share.
"Some of our service providers have already begun to implement this program. Others will follow shortly with programs in place once Iridium officially ceases service.
"We have been in contact with Motorola regarding this transition. Motorola, to its credit, has their customers best interest in mind. While we would have liked to purchase the Iridium customer list in advance, this is considered an asset of the Iridium bankruptcy estate, and obviously loses value as time goes on. Our legal people have informally advised the Iridium creditors committee of our interest in the customer list, but that we don't see the value in paying any significant amount for it. There are a few other terrestrial assets of Iridium that may have value to Globalstar, but I'm not going to go into this now.
"From a stock price perspective, Iridium's troubles have not been helpful to Globalstar or Loral. Doubts have been raised as to the demand for our vision of 'telephony everywhere.' We know that this is short-sighted, as do our future competitors, such as Craig McCaw, who are pouring billions into systems that will compete with us down the road.
"From a business perspective, the downfall of Iridium is nothing short of serendipitous. Globalstar had always planned on competition from Iridium. Although our approach to the market was different, and might I say superior, to theirs, we always considered them to be a factor in certain market segments. Now, with no real competition in sight for the next two years or so, Globalstar has an historic opportunity to establish a dominant and lasting market share in this high growth business. We are seizing this opportunity to create customer relationships that will be nurtured and strengthened as the Globalstar service is continuously upgraded and improved in the years ahead."
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Too bad he couldn't say all that. Wouldn't be in the 16's. |
