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The bigger US mobile or portable phone corporations have tens of millions of buyers. Iridium presently (Mar 06) has about 150,000 - 100 times smaller than major cellular phone organizations. 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 comparable equation applies towards the gear. Well-liked cellular phone models promote in quantities of numerous thousands, and the underlying technology changes little from design to design, allowing advancement charges to be split over a lot of units, and with most efficient large volume production techniques. However the Iridium satellite phones are selling incredibly slowly, and have special technologies in them.

And so, whereas your regular cellular telephone firm can likely make money by giving you a cost-free mobile phone and 1000 minutes of airtime for only $30/month; Iridium totally can not.

Lack of competition as well as price inelasticity

You have a lot of choices when selecting a standard cell phone service. But there is only a single fully international satellite telephone service provider - Iridium - and only 1 source of Iridium handsets.

Could Iridium sell its 9505a mobile phone handset for less than $1500? Nearly definitely - the underlying variable price per mobile sold, to Iridium, is most likely $50. No need to have to decrease the handset selling price, since you'll find no competitors.

Iridium may choose to drop the price tag of the mobile as being a way of encouraging more persons to subscribe for their provider, in a similar method to how traditional cellular phone operators give away mobile phones, but to date it has resisted this kind of temptation.

Could Iridium sell its airtime for much less than the rates it does? That's a far more complicated question; for certain, the variable added price of accepting 1 more call onto their network is close to zero, but they have big fixed charges that have to be covered. And, very much like the mobile cost, for those who genuinely need a satellite cellular phone, $1.50 a minute can be a bargain. And for those who do not require a satellite cell phone, even 50¢ a minute is almost certainly as well much. Iridium likely feels that for your sort of folks who require and use its solutions, its prices are fair.

Long term satellite cellular phone price trends

Contemplating these issues above, we do not predict significant drops in either phone or airtime fees occurring with Iridium satellite support within the foreseeable long term.

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