Globalstar Canada slashes long-distance/ roaming rates, aims for greater penetration

Globalstar Canada has followed the lead of its parent company and slashed rates on long-distance airtime and roaming rates in a bid to become more competitive in the international market. The international rate cuts follow a decision last year to decrease rates on domestic plans (RoW, Sept. 3/02). Steven Bell, the new GM of Globalstar Canada, tells Report on Wireless that the company can now be more aggressive in its battle against the competition internationally. "Our strategy had always been to concentrate and really own the domestic markets and that was really driven by the fact that we were so uncompetitive in the international market due to the prices we had to pay the various countries around the world for telecommunications backhaul. Now that that has been alleviated, we’re going to take a much more aggressive run at our competition around the world." The company’s ability to compete more effectively on an international scale was bolstered by investment from Craig McCaw. In late April, a U.S. bankruptcy court approved McCaw’s ICO Global Communications (Holdings) Ltd.’s acquisition of 54% of Globalstar LP for US$55 million. Remaining equity in the newly formed company will be distributed among creditors Loral Space & Communications, Qualcomm Inc. and Globalstar LP bondholders. Bell says that not only will a more integrated "new Globalstar" be able to benefit from decreased costs associated with sales, marketing, distribution and customer service, the company will also see a big boost in its top line. Money previously spent on access gateways around the world will now turn into revenue. "What’s really happened (with the restructuring) is each one of those service providers that offer gateway service in a variety of countries - we’ve got 25 gateways around the world - the key gateways for Globalstar will become part of the new company," Bell explains. "Instead of having a middleman, which was the service provider, the revenue will go directly into the new company. Instead of being a wholesale model, Globalstar will benefit at the retail level." Since the investment in Globalstar LP was finalized earlier this year, Bell has noticed a marked shift in companies’ purchasing habits. "(In the past), we’ve done a lot of four to six phone deals and one-off deals, but we’ve seen a real shift to companies purchasing large numbers of product, in the 100 to 200 to 300 unit range. With the stability of the investor coming in, it’s just alleviated a lot of concern with some of the major companies about making large investments in products to fill their needs." It shouldn’t come as a surprise that one of Bell’s primary objectives is to drive revenue growth through subscriber growth and increased minutes of use (MOU). Bell says the company has experienced a doubling of MOU over last year. "The change in strategy of decreasing our prices last year was really meant to take the reluctance out of customers’ hands from pressing the send button on a satellite phone and spending $3 or $4 a minute," Bell explains. "We’re down to as low as 32 cents per minute, North American long distance included, on our high usage plans, so there’s tremendous value there. We think by adding value in we’re going to be able to grow the market a lot quicker than we would have under the old pricing scheme."

Globalstar Canada slashes long-distance/ roaming rates, aims for greater penetration

News | 07/31/2003 4:00 am EDT

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us