Learn About The Latest News Regarding Iridium Satellite Phone Difference In Value

The larger US cell phone companies have tens of millions of customers. Iridium presently (Mar 06) has about 150,000 - 100 times smaller than main cellular phone companies. The cost of its 66 satellite network is about $6 billion, and while those are all sunk charges, the satellites will need to be replaced at some stage.

A comparable equation applies for the gear. Well-liked cell phone models sell in quantities of numerous millions, and the underlying technology changes little from model to model, allowing development charges to be split over a lot of units, and with most efficient large volume production methods. But the Iridium satellite phones are selling very slowly, and have unique technologies in them.

And so, whereas your normal cellular telephone company can probably make money by giving you a free mobile phone and 1000 minutes of airtime for only $30/month; Iridium absolutely can not.

Lack of competition as well as price inelasticity

You have lots of choices when choosing a regular cell phone service. But there's only 1 completely worldwide satellite telephone provider - Iridium - and only one source of Iridium handsets.

Could Iridium sell its 9505a handset for less than $1500? Almost definitely - the underlying variable expense per mobile sold, to Iridium, is most likely $50. No need to reduce the phone price, since you will find no competitors.

Iridium may choose to drop the price tag of the handset as a way of encouraging much more people to subscribe for their support, in a similar method to how traditional cellular phone operators give away phones, but to date it has resisted such temptation.

Could Iridium sell its airtime for less than the rates it does? That's a much more complicated question; for certain, the variable added cost of accepting one more call onto their network is close to zero, but they have huge fixed charges that need to be covered. And, very much like the mobile cost, for people who truly require a satellite phone, $1.50 a minute can be a bargain. And for individuals who do not will need a satellite cell phone, even 50¢ a minute is probably too a lot. Iridium probably feels that for your type of folks who will need and use its providers, its prices are fair.

Future satellite phone cost trends

Considering these issues above, we don't predict significant drops in either device or airtime fees occurring with Iridium satellite support in the foreseeable future.

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