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Learn About The Most Up-To-Date Story About Iridium Satellite Phone Difference In Price
The bigger US cell phone corporations have tens of millions of consumers. Iridium currently (Mar 06) has about 150,000 - 100 times smaller than main mobile phone firms. The cost of its 66 satellite network is about $6 billion, and while those are all sunk costs, the satellites will have to be replaced at some stage.
A similar equation applies for the equipment. Popular mobile phone models promote in quantities of many thousands, and the underlying technology changes little from model to model, allowing advancement costs to be split over numerous units, and with most efficient high volume production methods. But the Iridium satellite phones are selling incredibly slowly, and have special technology in them.
And so, whereas your normal mobile phone business can probably make money by giving you a cost-free phone and 1000 minutes of airtime for only $30/month; Iridium totally can not.
Lack of competition and price inelasticity
You have lots of choices when choosing a regular cell phone service. But there is only one completely worldwide satellite phone supplier - Iridium - and only one source of Iridium handsets.
Could Iridium sell its 9505a mobile phone handset for less than $1500? Nearly certainly - the underlying variable expense per device sold, to Iridium, is probably $50. No need to reduce the phone selling price, because you will discover no competitors.
Iridium might choose to drop the cost of the device as a way of encouraging much more persons to sign up for their program, in a similar way to how traditional mobile phone operators give away mobile phones, but to date it has resisted such temptation.
Could Iridium sell its airtime for much less than the rates it does? That is an additional complex question; for sure, the variable added price of accepting one more call onto their network is close to zero, but they have big fixed costs that have to be covered. And, a lot like the device price, for folks who truly require a satellite cellular phone, $1.50 a minute is a bargain. And for folks that don't will need a satellite mobile phone, even 50¢ a minute is possibly too a lot. Iridium likely feels that for the sort of individuals who will need and use its providers, its prices are fair.
Future satellite phone cost trends
Contemplating these issues above, we do not predict main drops in either device or airtime charges occurring with Iridium satellite service within the foreseeable future.
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