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, Globalstar said.
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 of operations.
The company plans to avoid the same problems that have plagued its main competitor, Iridium. 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, another competitor in the global mobile personal communications by satellite (GMPCS) arena, also filed for Chapter 11 bankruptcy in August before beginning service rollout. However, ICO’s board on 31 October approved a US$1.2 billion financing plan. Craig McCaw and his affiliated companies, Teledesic and Eagle River Investments, will provide the financing, potentially paving the way for the company to emerge from bankruptcy and meet its 2001 commercial launch date.
Globalstar 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.
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.
Ericsson, Qualcomm and Italian company Telit (formerly called Telital) have developed handsets. Ericsson and Telit developed GSM-satellite phones, while Qualcomm developed a CDMA-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 US$850 to US$1,500.
Qualcomm and Telit said their phones are currently available, however, because of software adjustments, which required further testing, the manufacturing schedule was set back somewhat, Globalstar said at press time. 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 US$1.50 a minute to US$2.99 a minute for roamers, said Everett.
Analysts have expressed skepticism about the market demand for a GMPCS, 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 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.
In addition, the company said it is in strong standing financially, with US$3.8 billion secured. The company expects to be cash-flow positive by the third quarter of 2000, said Mac Jeffery, senior director of public relations for Loral Space and Communications, a Globalstar investor.
