Inmarsat
may have raised prices on handheld satellite telephone services, but
its customers reportedly remain loyal and its maritime VSAT rivals
were supposedly mistaken about the effect of its new pricing policy.
The
London-based satcom company reported that it currently controls a 10
percent share of the handheld satphone market. 65,000 customers are
active Inmarsat subscribers.
Rival
mobile satcom service providers Iridium Communications and KVH
Industries have alleged that Inmarsat is losing customers because of
price hikes and the failure of a new Inmarsat L- and Ku-band product
to win market favor. But Inmarsat declared that its decision to raise
prices on certain services did not have any negative impact on its
core maritime customer base.
In
the last few years, Inmarsat has broadened its business scope in
reaction to two separate threats. The first threat were the satellite
telephone handsets produced by Iridium, Globalstar, and Thuraya,
which took land-mobile communications business away from Inmarsat.
Inmarsat
counterattacked with the introduction of its IsatPhone Pro in 2010.
IsatPhone Pro was a lower-cost alternative to competing satphones,
and Inmarsat intended to take a 10 percent share of the satphone
market with it.
In
an Aug. 3 conference call, Inmarsat Chief Executive Rupert Pearce
said that the company's 10 percent goal had been reached with the
sale and activation of 65,000 IsatPhone Pro handsets. “We have
successfully reinserted ourselves into the satellite-phone sector,”
Pearce said.
The
second threat was directed at Inmarsat’s key maritime market.
Iridium and other companies were selling Ku-band VSATs
that offer far higher throughput than Inmarsat’s L-band satellite
network, for lower per-megabit cost.
Inmarsat
initially responded with its $1.2 billion, three-satellite Global
Xpress program. The company then introduced its Xpress Link dual
package to entice customers to subscribe to Inmarsat while waiting
for Global Xpress.
In
mid-2011, Inmarsat purchased maritime VSAT provider ShipEquip. It
combined a ShipEquip Ku-band VSAT antenna with a separate, smaller
antenna for Inmarsat’s Fleet Broadband L-band maritime service to
create the Xpress Link package.
Customers
who purchased Xpress Link will get Global Xpress hardware once the
latter system is operational. Inmarsat also increased the prices of
earlier-generation Inmarsat B and Fleet products to encourage
customers to migrate to Xpress Link.
Inmarsat
also modified its Fleet Broadband pricing policy so that customers
will pay a fee for Fleet Broadband even if they never use it.The new
pricing aimed to discourage ship owners from using the Inmarsat
product as a rarely-used emergency backup to a VSAT antenna produced
by a rival company.
Iridium
and KVH sought to turn Inmarsat's new pricing policy against it.
Iridium Chief Executive Matt Desch cited Inmarsat as one the main
reasons Iridium’s maritime VSAT business is growing. “Inmarsat’s
helping a lot with their price changes,” Mr. Desch said in an Aug.
2 conference call, claiming that their rival company was “competing
with their customers and a little confusion as to their strategy.”
Similarly,
KVH Industries claimed Inmarsat’s Xpress Link service has failed to
challenge KVH’s TracPhone V-series of Ku-band antenna. KVH
reportedly shipped over 2,500 maritime VSAT systems. Later in 2012,
it plans to offer a new C-band product with a 90-kilogram antenna
with dual Ku-/C-band links and a global reach.
In
comparison, Inmarsat’s Xpress Link is comprised of a
1.7-meter-diameter global VSAT Ku-band antenna that weighs twice that
of the planned KVH product. And that's not including the
60-centimeter Fleet Broadband antenna. Or the refrigerator-sized
assembly that both antenna are attached to.
KVH
Chief Executive Martin Kits van Heyningen opined that Inmarsat's
Xpress Link was “not an elegant solution.” He also claimed “that
doesn’t seem to be getting a lot of traction in the market right
now.”
Mr.
Pearce rejected both assessments by Inmarsat's rivals. “We are not
seeing a material erosion of any kind in the maritime market,”
Pearce declared in the Aug. 3 conference call. He pointed out that
more than 30,000 Fleet Broadband terminals had been installed by now.
Those terminals included the nearly 2,300 units installed during
April, May, and June. “The VSAT incursion,”
he dismissed, “which was never particularly material, has slowed
considerably.”
Mr.
Pearce also made an issue of how KVH’s C-band product would
encounter regulatory issues when used in certain regions less than
200 nautical miles from shore. Inmarsat spokesman Christopher
McLaughlin expanded on Mr. Pearce's declaration by explaining that
terrestrial wireless operators in certain regions generate
interference over the C-band.
