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Satellite2012 Feature Articles

March 15, 2012

Satellite 2012: Globalstar and the Era of Consumer Satellite Phones

Washington DC - This week Globalstar (News - Alert) announced it reached profitability for the first time in four years, generating $1.6 million of adjusted EBITDA in the fourth quarter of 2011. But it is CEO Jay Monroe’s vision of providing high quality, reliable mobile satellite voice services for the masses that provides the more interesting story.

Monroe’s vision is to sign up millions of customers, utilizing the full capacity of Globalstar’s new second generation satellite network. Eighteen of the 24 satellites are already on orbit, with the final launch of the last six satellites to complete the new constellation taking place later this year.

“It’s a 15 year asset,” Monroe said, referring to the expected on-orbit life of the satellites. “I want to be able to use that asset to its fullest as soon as I can, otherwise it’s just a waste.”

Globalstar is aggressively pricing its voice service in comparison to competitors Inmarsat (News - Alert) and Iridium. The GSP-1700 satellite phone lists at $500, with a one-time activation fee of $50 and a monthly fee of $40/month with unlimited voice and data on a one year term under the company’s Evolution II Plan. SMS text messaging and voice mail are included in the price, but there are roaming and international long distance charges if you make calls outside the home area of North America and the Caribbean.

Inmarsat resellers offer the ISatPhone Pro for a list price of $599 with plans starting at $20 per month just to keep the phone on and $3.00/minute to “discount” plans of 400 minutes for $300/month with a $1 per minute after that -- plus $5 per month for voice mail. New Iridium (News - Alert) phones are more compact, but start pricing at $1200, with the entry level plan starting at $60/month including 40 minutes of service with $1.60 per minute for extra minutes along with the $5/month for voice mail.

But it’s more than just price points in play when comparing services. Monroe says Globalstar’s new network delivers the best quality voice service -- “like a regular [landline] phone,” he boasts -- due to the use of Qualcomm (News - Alert) codecs and 8K worth of bandwidth, plus less than 60 ms of latency due to the lower orbits of the 24 satellite constellation. Inmarsat voice calls suffer from delays introduced by placing calls using a relay station 22,500 miles above the earth, while Iridium’s existing satellites have a data rate of around 2,400 bits per second if you’ve got good signal, meaning there’s a lot of compression going on for a voice call.

Monroe is also aiming for a much wider set of distribution channels, including Big Box stores. Inmarsat and Iridium phones and service are only available through more specialized resellers, while Globalstar plans to leverage its existing relationships with names like Best Buy (News - Alert), Cabela’s, and REI to make its phones available as off-the-shelf items.  Globalstar already sells its SPOT satellite messaging and rescue hardware through retail channels, so it isn’t a big leap to start to put phones in those channels.

In this mass market model, a Globalstar phone would be the “other” device kept around for use by people who are in or frequently travel to places that don’t have good cell phone coverage -- Monroe cited the ski areas around Colorado -- as well as part of an emergency preparedness strategy for people in natural-disaster prone areas.

Edited by Jennifer Russell

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