Iridium network battles dilemma

The bottleneck for subscribers is over, claims the global satellite network firm. KEITH NEWMAN reports.

No matter how smart the telephone network is, you can't make a call unless you have a phone.

This is the problem with which global satellite network Iridium has been wrestling since its launch seven months ago.

"It's still a slow ramp up and a lot of that is product related - we've not had the full range of Motorola and Kyocera products and accessories. We are now getting that," said Asia Pacific chief executive Carlton Jennings.

One industry source claimed that only 300 phones which could be used on the Iridium satellite network had been sold across Australia, New Zealand and the Pacific Islands. The few phones that have been on the market here have been priced as high as $6000 but have dropped by $1000 in the past three months.

Rocom and Wellington-based Wrights are the only two outlets authorised to sell the phones.

The lack of phones is one of the major factors cited by Iridium in its failure to meet subscriber and revenue targets, resulting in its investors last week filing with the US district court seeking damages.

But Mr Jennings believes the bottleneck is over. Dual mode phones, which operate on existing cellular networks as well as Iridium, are promised for the end of June. A multi-exchange unit, which hooks Iridium into existing PBX systems, is also due for release. New products for the aeronautic and maritime market will be available later this month.

Mr Jennings said Iridium was geared to a niche market, initially people who use the phone as a tool of the trade and need global coverage or to communicate from remote locations. Inmarsat and Mobilsat in Australia were competitors trying to fill that gap, but Iridium allowed global roaming across cellular networks.

The Kyocera dual mode phone, for example, would connect through GSM networks and with Iridium's 300 roaming partners and provide single billing. However, the value of dual mode phones to the market will depend on whether Iridium has the appropriate interconnection agreements in place locally. It is currently involved in prolonged interconnection discussions with Telecom and is believed to be talking to Vodaphone for connection to its GSM network.

Iridium promised its investors it would have 52,000 subscribers by March 31 this year. Last count showed 11,000. According to Mr Jennings the company must now focus on education and marketing to ensure it gets sufficient penetration to prevent its investors jumping ship.

Iridium plans a major new positioning campaign within the next six months designed to build the profile of the network in the sky, however Mr Jennings won't talk discuss what that involves.

Iridium has 17 global investors each responsible for a territory. The South Pacific is "owned" by Battery Communications and Nippon Iridium.