While Iridium L.L.C. continues work to improve the technical prowess of its low-earth-orbit satellite-based global phone service, the company also must turn its attention to its global sales and marketing effort.
In the first week following the system’s commercial activation, several of Iridium L.L.C.’s international gateway providers announced they are not prepared to offer full commercial service to potential subscribers in their respective regions.
According to news reports from Reuters, Iridium providers in Japan, Russia and India announced they are not yet offering full commercial service to subscribers, although users from other regions will have service when in those areas.
Japanese gateway provider Nippon Iridium Corp., allocated the gateway in Nagano, reportedly is limiting initial sales to 2,000 handsets until it begins full operations Jan. 1. It also is not charging subscribers the monthly subscriber fee. The company only will charge for the cost of the handset and phone calls until technical issues are worked out.
The Iridium-Eurasia gateway, located in Moscow and owned by Khrunichev State Research and Production Space Center, is not launching full service until December, blaming delays of handset deliveries from Motorola Inc. and regulatory approvals. The gateway serves Belarus, Estonia, Georgia, Kazakhstan, Latvia, Lithuania, Moldova, the Russian Federation and Uzbekistan.
Also experiencing licensing and handset delays is Iridium India Telecom Ltd., which said it would delay offering service until the end of November. The India Telecom gateway covers India, Bangladesh, Bhutan, Nepal, Sri Lanka and the Maldives.
The delay was blamed on late regulatory approval from the Indian government, which stalled on license fees and security concerns. It still is unclear whether India’s communications regulatory body has approved licensing for Iridium handsets, an issue which has the initial handset delivery stuck in customs.
During Iridium’s third-quarter-earnings press conference, Ed Staiano, Iridium vice chairman and chief executive officer, said the system still had further licensing agreements to secure.
Iridium did not return calls for comment by press time.
Timothy O’Neil, analyst at SoundView Financial Group, said he expects Iridium to switch from a technology focus to a marketing focus to address these issues.
“There has been such an unbelievable drive and focus to launch that sales and marketing has taken somewhat of a back seat,” he said. “Now that the service has been launched, the engineers can move out of the spotlight and Ed (Staiano) can shift his attention to actual operating results from the sales and marketing channel.”
Some analysts said system quality at the time of launch would not stand up in a mass consumer market with competitive alternatives. But since no other service like it exists yet, quality is not an issue. Iridium’s next closest competitor, Globalstar L.P., is not expected to launch service until next year at the earliest. By that time, analysts expect Iridium’s system to be stronger.
Iridium needed to begin commercial service to gain access to the last installment of its $1 billion loan from Chase Manhattan Bank. That loan was broken into four installments, each payable after Iridium had met certain milestones. The milestones necessary to receive the final $250 million installment were 1) secure the necessary licensing agreements to cover 72 percent of its business plan and 2) launch commercially.
