The greater US mobile or portable phone businesses have tens of thousands of buyers. Iridium currently (Mar 06) has about 150,000 - 100 times smaller than major cellular phone corporations. The fee of its 66 satellite network is about $6 billion, and while those are all sunk charges, the satellites will have to be replaced at some stage.
A similar equation applies towards the gear. Famous mobile or portable phone models market in quantities of numerous thousands, and the underlying technology changes little from design to design, allowing development charges to be split over numerous units, and with most efficient large quantity production techniques. However the Iridium satellite phones are selling really gradually, and have special technology in them.
And so, whereas your regular cellular cellular phone corporation can likely make money by giving you a free of charge mobile phone and 1000 minutes of airtime for only $30/month; Iridium totally can not.
Lack of competition and price inelasticity
You have lots of selections when selecting a standard cell phone provider. But there is only one fully worldwide satellite cellular phone company - Iridium - and only 1 source of Iridium handsets.
Could Iridium sell its 9505a phone for much less than $1500? Nearly certainly - the underlying variable price per device sold, to Iridium, is likely $50. No need to have to decrease the handset cost, since you'll find no competitors.
Iridium might choose to drop the price tag with the mobile phone handset as being a way of encouraging more individuals to subscribe for their provider, in a similar way to how traditional cellular phone operators give away cell phones, but to date it has resisted this kind of temptation.
Could Iridium sell its airtime for less than the rates it does? That's a far more complex question; for certain, the variable additional charge of accepting 1 more call onto their network is close to zero, but they have large fixed charges that have to be covered. And, a lot like the device value, for folks that genuinely need a satellite telephone, $1.50 a minute can be a bargain. And for those who don't require a satellite mobile phone, even 50¢ a minute is likely as well much. Iridium most likely feels that for your sort of individuals who require and use its providers, its costs are fair.
Long term satellite cellular phone price trends
Considering these problems above, we do not predict main drops in either phone or airtime charges occurring with Iridium satellite program inside the foreseeable long term.
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