GENEVA-Globalstar officially announced at Telecom ’99 a phased launch of its mobile satellite service. The phased launch begins with user trials, followed by a soft launch that will allow the company to work out quality issues. Commercial service should begin in early 2000.
User trials are under way in North America and Europe. Other trials are planned soon for Argentina, Brazil, China, Korea and South Africa. During the trials, service providers will make final adjustments, and marketing, distribution and customer-care systems will be tested, said the company.
“Service won’t be launched until these things are set,” said Gloria Everett, Globalstar’s senior vice president, operations.
The company plans to avoid the same problems that have plagued its main competitor, Iridium L.L.C. Complaints of poor voice quality, dropped calls and availability of satellite phones, among other issues, all affected Iridium, which launched service last November and filed for Chapter 11 bankruptcy in early August. ICO Global Communications Ltd., another competitor in the MSS arena, also filed for Chapter 11 bankruptcy in August before beginning service rollout.
The company is forecasting 1 million subscribers by the beginning of 2001, said Everett. Globalstar has established a network of 19 service providers throughout the world, which will offer the service and set partnerships with franchisees to also provide service. Vodafone AirTouch is the exclusive service provider of Globalstar in the United States.
The service providers also will distribute handsets to users. Providers ordered 300,000 handsets, including 50,000 fixed units, and 50,000 handsets will be available to service providers by the end of the year, said Globalstar.
Handsets have been developed by Ericsson Inc., Qualcomm Inc. and Italian company Telit (formerly called Telital). Ericsson and Telit developed Global System for Mobile communications-satellite phones, while Qualcomm developed a Code Division Multiple Access-satellite unit. The phones can be operated in cellular mode only, satellite mode only or dual-mode, meaning the system will use terrestrial cellular networks if available and, if not, switch to the Globalstar satellite system. Initial wholesale prices for the units range from $850 to $1,500.
Qualcomm and Telit phones are currently available, and Ericsson’s units should be released by the end of the year. Qualcomm said a maritime version of its phone also will be available by year-end, followed by products for other vertical markets.
Service pricing will be set by the service providers and will range from $1.50 a minute to $2.99 a minute for roamers, said Everett.
Analysts have expressed skepticism about the market demand for a global satellite service, particularly in light of the large worldwide footprint covered by cellular providers and third-generation networks on the horizon.
However, a Globalstar press statement said that nearly 90 percent of the world is not served by a cellular network and its service will “effectively expand the reach of the cellular network.”
One of the reasons Iridium didn’t secure necessary additional funding once it launched service was that it didn’t meet subscriber-number predictions. Globalstar said its marketing strategy is focused on vertical markets and providing communications access in remote areas of developing countries, rather than consumers.
For example, Globe Wireless, a company that provides wireless communications to the maritime industry, is a Globalstar distributor.
In addition, the company said it is in strong standing financially, with $3.8 billion secured. The company expects to be cash-flow positive by the third quarter of 2000, said Mac Jeffery, senior director, public relations for Loral Space and Communications, a Globalstar investor.
Of course, that is contingent on subscribers paying for service. But with Iridium handicapped by financial problems, Globalstar may have an advantage in acquiring customers.
Globalstar says another advantage is its technology. Globalstar’s bent pipe architecture is more simple than Iridium’s technology, according to Joel Schindall, senior vice president, systems development.
The 36 Globalstar satellites in orbit are based on CDMA and have a 10-year life expectancy. In addition, multiple satellites can serve users in the same area, so if one fails, another still can establish communications.
Nine operational gateways initially will serve Globalstar customers. Eleven more will begin service during the next year. GSM switches are used at the gateways, allowing seamless connection to local PSTN lines.
Telecom attendees had an opportunity to make free calls using the satellite phones during the event. Voice quality seemed similar to mobile-phone quality. Andrew Radlow, director of marketing for Globalstar USA, took that one step further.
“Voice quality is better than existing cellular technologies available today,” he said.
Globalstar said it plans to overcome its numerous obstacles based on several factors, including marketing and pricing the service as a complement to cellular service, providing strong customer service and ensuring the technology is simple to use and works well.
“We knew simplicity was going to be an important differentiator for us,” said Radlow.
