Globalstar Canada chops satellite service prices to drive subscriber additions

Globalstar Canada has taken dead aim at driving subscriber additions north by chopping its satellite phone service prices to as little as 32 cents per minute for high-use packages, which includes long distance. The company credits the ongoing reorganization at its parent company Globalstar LP, which also announced rate decreases last month, as the primary reason for being able to cut rates and prices on handsets. Globalstar’s New Price Plans Timeline 30Skyline 150Skyline 350Powerline 1250Monthly Access$49.95 $99.95 $149.95 $399.95 Included voice or data minutes30 150 350 1,250 Additional minutes$1.59 $1.19 $0.99 $0.89 Enhanced servicesVoicemail & SMS $9.95FreeFreeFree SMS Only $4.95FreeFreeFree Source: Globalstar Canada, August 26, 2002 news release As part of the reorganization, Globalstar acquired gateway and marketing operations in North America from Vodafone Americas Inc., which gave the company complete control over sales, marketing, distribution and pricing (RoW Update, Aug. 26/02). Earlier this year, the company acquired 50 per cent ownership in the Canadian outfit. Globalstar LP is currently in bankruptcy protection (RoW, Feb. 19/02). Peter White, GM of Globalstar Canada, explains that as Globalstar LP consolidates its operations and as different levels within the company are eliminated, it is able to pass along those savings to its subscribers. "As part of our ability to maximize efficiencies and to come up with better cost parameters, the idea was to pass it off in getting more customers (on the network)," he tells Report on Wireless. "From our standpoint, we’re not limited by capacity at this point. What we’re trying to do is to get customers on the network and get them using the service, and find that we’ve offered some great value." White also notes that the company is benefiting from the significant amount of over-usage from its customers. "They tend to buy packages that they think they’re going to use. They don’t buy bigger packages," he says. "A lot of times, we see significant usage where they go over the minutes in their price plan." Despite the significant struggles of late for Globalstar LP, subscriber additions are on the rise. It now has more than 4,500 companies as customers up from 2,500 last year. The companies’ rate decreases put it in a good position to compete with the per-minute prices offered by Iridium Satellite LLC. Iridium offers a simpler plan of $1 per minute for calls to other Iridium users and $1.50 for calls to the publicly switched network. Not only will the per-minute rate decreases make the service more affordable, the company will be able to take advantage of less debt load once the reorganization is complete. Just as the new Iridium was able to capitalize on the purchasing of US$5 billion in assets for a mere US$25 million, Globalstar will also get a similar advantage moving forward without the weight of a large debt. Both companies will also have a significant advantage over competitor New ICO Global, which has yet to launch any satellites in its planned constellation. Satellite gaining credibility White says that while the lower prices will help bring more subscribers to the service, it also demonstrates that satellite is a viable way of communicating. "(Many people) have viewed satellite communications as being something that is extremely expensive and something that only news organizations and polar explorers used," he explains. That’s just not the case, White says, adding that Globalstar Canada even counts users on the outskirts of Toronto because of poor PCS coverage and service, besides users in Thunder Bay, Sudbury and in the northern territories. "We think this pricing allows us to go to people and say ‘look, with this type of pricing this is just not something to be considered as a satellite communications product. If you’re working in some business in areas north of Peterborough where cellular service drops off, this becomes viable’," he says. "What we’re trying to say is we’re not just a satellite telephone, we’re actually a wireless communications device," White says. "It just happens that we do that communication over satellite."

Globalstar Canada chops satellite service prices to drive subscriber additions

News | September 3, 2002

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