Globalstar>
Globalstar Dares To Go
With enough phones and lower prices, global sat phone provider says it
can make it
John Blau, tele.com
The troubled satellite phone industry is up at bat again. With two outs in the ninth inning, a strikeout
this time could send the industry to the dugout for good.
Globalstar L.P. (San Jose, Calif.) launched a commercial global mobile satellite service yesterday at
Telecom 99. The rollout comes just months after its two main competitors, Iridium LLC
(Washington, D.C.) and ICO Global Communications Ltd. (London), filed for bankruptcy. The
pressure is now on Globalstar to secure customers and revenue fast-or suffer the same disastrous
fall to earth as its predecessors.
Analysts are skeptical. "Satellite phone service is a very niche market," says Philip Kendall, senior
industry analyst at Strategy Analytics Ltd. (London). "I wouldn't want to spend my money on a
service that, essentially, is trying to walk outside the GSM footprint."
The footprint covered by cellular networks based on the global system for mobile communication
(GSM) is big and growing. There are currently 390 GSM operators offering service in 141 countries.
And many of their customers are already easily roaming between and among local networks. There
were 400 million roaming calls in August, up from 300 million just three months earlier, according to
the GSM Association (Dublin), which represents the interests of GSM mobile operators.
On top of that comes a new initiative to promote roaming between the different standards of
terrestrial mobile networks, including GSM, code-division multiple access (CDMA) and time-division
multiple access (TDMA). The GSM Association plans to launch a forum to develop roaming
specifications between different wireless standards, Michael Stocks, the group's chairman,
announced at Telecom 99 on Sunday. "The major thrust of the forum will be to simplify roaming
between different standards." The goal of the world roaming initiative is to make it possible for users
to communicate using a single cellular phone worldwide.
And if that isn't enough, new third-generation (3G) networks are on the horizon. These broadband
wireless networks, providing data speeds at up to 2 megabits per second, will also offer global
mobile roaming capability for high-speed Internet services.
Despite the growth of land-based mobile networks, Globalstar still believes it has a winning strategy
in space. Peter Bacon, director of regional marketing, says the company is pursuing "a soft-launch"
strategy, which involves rolling out service in select regions, gradually establishing distribution
channels and testing back-office systems, such as billing and customer care. "We don't want to be
everything to everybody everywhere," Bacon said. "We want to be a complement to mobile
networks, offering service where terrestrial networks lack coverage."
In the initial phase, Globalstar will provide limited service in the United States, Canada, Brazil,
Argentina, China, Korea, South Africa and parts of Europe.
Unlike its bankrupt predecessors, Globalstar says it has enough handsets available and that these
will be competitively priced. The handsets, 7 inches long (not counting the antenna) and 12 ounces
in weight, will cost between $1,000 and $1,500. This is only about half of Iridium's phone price. And
Globalstar's calling rates will be as low as $1.39 per minute, compared to Iridium's $2.99.
Telital SpA (Rome) and L.M. Ericsson AB (Stockholm) are supplying Globalstar with dual mode
GSM-satellite handsets, while Qualcomm Inc. (San Diego, Calif.) is providing CDMA-satellite
phones.
Telital chief executive officer Giorgio Rosso Cicogna says the company has installed capacity to
produce 10 million handsets a year. "If we need to make more, we can," Cicogna says.
Who's going to buy all these handsets? "We expect to have 600,000 subscribers by the end of
2000, generating revenue of $600 million," Globalstar chief executive Bernard Schwartz said at a
press conference here Monday. In all, he said, there's an addressable market of roughly 40 million
to 50 million people worldwide for the service.
Meanwhile, Telecom 99 is also rife with speculation about a possible linkup between Globalstar and
Teledesic LLC (Bellevue, Wash.), a $10 billion, 288-satellite project for high-speed, wireless Internet
service that is planned for launch in 2004. The speculation has been fueled in large part by
Teledesic CEO Craig McCaw himself. Last month, McCaw said in a written statement that the
company is evaluating "opportunities that incorporate a variety of technologies" to serve a "broader
group of customers."
A company spokesman said the satellite market has changed as a result of the Iridium and ICO
bankruptcies and that Teledesic needs to respond. "We're exploring a variety of ways to get to
market sooner and develop distribution channels," he said. "This could include investing in existing
and/or potential future satellite systems that would allow us to come to market before 2004."
McCaw's strategy has piqued at least some interest. Michael Storey, chief executive officer of
global satellite consortium Inmarsat (London), said he hasn't been in touch with McCaw. But "he is
someone I should certainly put on my list of people to call," Storey said.
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