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Learn About The Most Recent Story Concerning Iridium Satellite Phone Difference In Cost

Author: Craig

The bigger US cell phone businesses have tens of millions of consumers. Iridium currently (Mar 06) has about 150,000 - 100 times smaller than key cell phone organizations. The cost of its 66 satellite network is about $6 billion, and although those are all sunk expenses, the satellites will have to be replaced at some stage.

A similar equation applies towards equipment. Well-liked cellular phone designs market in quantities of many thousands, and the underlying technology changes little from design to model, permitting development expenses to be split over several units, and with most effective high volume production techniques. But the Iridium satellite phones are selling really slowly, and have special technology in them.

And so, whereas your typical cell telephone firm can probably make money by giving you a free of charge telephone and 1000 minutes of airtime for only $30/month; Iridium totally can not.

Lack of competition and price inelasticity

You've plenty of choices when selecting a regular cellular phone service. But there is only 1 totally global satellite telephone service provider - Iridium - and only one source of Iridium handsets.

Could Iridium offer its 9505a phone for less than $1500? Nearly certainly - the underlying variable charge per handset sold, to Iridium, is most likely $50. No need to have to reduce the mobile cost, simply because you will discover no competitors.

Iridium might choose to drop the price of the mobile as a way of encouraging far more individuals to sign up for their program, in a similar way to how regular mobile phone operators give away mobile phones, but to date it has resisted such temptation.

Could Iridium offer its airtime for less than the rates it does? That is an additional complex query; for sure, the variable added price of accepting one more call onto their network is close to zero, but they've large fixed expenses that have to be covered. And, significantly such as the handset cost, for those who truly have to have a satellite telephone, $1.50 a minute is really a bargain. And for folks that don't have to have a satellite phone, even 50Â¢ a minute is almost certainly too very much. Iridium most likely feels that for that sort of individuals who have to have and use its services, its prices are fair.

Long term satellite phone selling price trends

Considering these issues above, we do not predict key drops in either mobile or airtime costs occurring with Iridium satellite support within the foreseeable future.

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