SAO PAULO, Brazil-Iridium Brasil reports it has 1,000 subscribers and that next month it will
reduce the cost of its Motorola satellite handset to make the service more attractive to potential subscribers, said Pedro
Schvinger, sales manager for Iridium’s Brazilian operation, at the Telexpo ’99 show last week.
Iridium Brasil,
controlled by local company Inepar, is targeting two major client sectors: individual users and
corporate/industrial customers. To attract individual users, it is using avenues such as telemarketing, the Internet and
advertising to get visibility; for corporate customers, it is using marketing agents.
The cost of entry, however, for
both markets remains high. It currently costs $4,000 for the handset, $25 for the monthly fee, and $3 a minute for
domestic calls and $6 a minute for international calls.
“We are in the next month trying to reduce the cost of
entry for subscribers,” said Schvinger. The company plans to lower by 23 percent to 30 percent the cost of the
handset, and it also will begin a leasing program to make the service more attractive.
Iridium Brasil likely is
cognizant that it must reduce its prices in preparation for the launch of Globalstar in the country later this year.
Globalstar has said it plans to launch worldwide with at least 32 satellites sometime in the third quarter. Cost
differentiation will be a major tactic in competing with the incumbent Iridium service.
Jean-Marie Kelly, director of
marketing for Globalstar do Brasil S.A., said he believes Iridium has made a mistake in its launch in Brazil in terms of
its market positioning as well as pricing.
Globalstar do Brazil’s objective, said Kelly, is to be cheaper than Iridium
and at a cost that always will be within reach of the business market.
Currently, the company plans to price its
service at between 2.50 real and 4.00 real per minute. However, Kelly admits Globalstar is not quite sure how to
ultimately set prices for its offering due to the economic situation in Brazil.
Iridium’s Schvinger countered that
although Globalstar’s prices on the surface may seem cheaper, the final costs of the two services will be much closer
when taxes and equipment import duties are included. He estimated 38 percent of its service price comprises taxes.
Besides, he said, Iridium will be able to compete with its additional offerings of cellular roaming and global paging
service.
While Kelly reports that Iridium’s early launch has been positive in that it has made people aware of
satellite communications, he said it also has given Globalstar “the luxury of learning from [Iridium’s]
experience,” said Kelly. “The biggest lesson is to stay in touch with the Brazilian market.”
The
company aims to position itself as a Brazilian company, he explained.
Globalstar do Brasil intends to target
primarily the business market in Brazil and plans a more grassroots approach to getting the word out-public relations
events, exhibitions and getting involved with sponsoring community activities, as well as the more traditional
advertising starting much closer to the launch.
Saul Bascope, applications engineer for Iridium Brasil, said its
satellite customers are reporting high voice quality, but that the main problem is customers are treating the handset as if
it is a cellular phone-expecting they should be able to use it inside enclosed rooms and cars.
“They must look
for a place free of obstacles” to use the Iridium satellite phone, said Bascope. He explained that Motorola offers
special plug-in antennas for specific indoor situations, demonstrating the use of a corded antenna-called a portable
auxiliary antenna-that plugs into the handset, routes out through the window and mounts to the roof of the car with a
small magnet.
Currently, the Brazil operation only has the Motorola phones for the Iridium service, but expects to
have the Kyocera model as early as mid-year, said Bascope. The company next month will begin selling a StarTac
cellular phone that clicks into the back of the satellite phone and can be used for cellular roaming, he said.
ICO
Global Communications, not scheduled to launch its service until 2000, was not visibly present at Telexpo.
