Feb. 4 (Bloomberg) -- Satellite-phone companies, seeking to expand beyond their niche market, are introducing products that let consumers set up Wi-Fi in remote campgrounds and other places where there’s no cellular signal.
Today Iridium Communications Inc. unveiled Iridium GO!, a portable device that creates a Wi-Fi hot spot, allowing as many as five smartphones to make calls or surf the Web. Low-end service plans are expected to start at about $35 a month, with unlimited plans at about $130 a month, the company said. Globalstar Inc., one of Iridium’s competitors, introduced a similar product called Sat-Fi on Jan. 29.
It’s the first time that satellite companies have made hot spots fully portable, said Jose Del Rosario, research director at Northern Sky Research. Previously, users had to install bulky Wi-Fi hardware at homes, offices or camps to get online. The new gadgets make satellite service accessible to hikers, who can use them while trekking through the wilderness.
“In the past, you’d bring suitcases of equipment,” Del Rosario said in an interview. “The difference now is it’s in an inexpensive platform, so consumers can all afford it. That is the game changer. It’s making satellite connections affordable. Therefore, you have a larger target market.”
Del Rosario predicted that about 150,000 of these portable hot spots will be in use by the end of 2022. That would make them an attractive new market for both competitors. Iridium had 377,000 voice-and-data subscribers at the end of September, while Globalstar had more than 85,000 through direct sales.
Iridium’s new device weighs 10.4 ounces (295 grams) and is about the size of a paperback book. The McLean, Virginia-based company plans to sell it for $700 to $800, Chief Executive Officer Matthew Desch said in an interview. The product will be available in the second quarter, he said.
“A lot of consumers would be attracted to something that allows them to communicate the way they really want to,” Desch said. “What people really want to do is use their smartphone anywhere.”
GO! and Sat-Fi will compete with Thuraya Telecommunications Co.’s SatSleeve, which transforms a regular smartphone into a satellite phone, Del Rosario said. That device works with Apple Inc.’s iPhone and Samsung Electronics Co.’s Galaxy S3 and S4 models.
Globalstar didn’t disclose the weight, size or price of Sat-Fi when it announced the product last week. The Covington, Louisiana-based company plans to start selling the device after getting Federal Communications Commission certification in the second quarter. As many as eight people will be able to use the hot spot simultaneously for e-mail and texting, though only one phone call can be placed at a time, Globalstar said.
Within two years, Sat-Fi should be less expensive than a conventional smartphone, Globalstar CEO James Monroe III said in an interview.
“You could take your Apple phone or your Windows computer or your Amazon Kindle or any device, and have instant access to medical help or education -- or have fun and call a friend,” Monroe said. “Since people want to stay connected, they are all potential customers of ours.” About 2 billion people worldwide don’t have access to normal wireless service, he said.
Both Iridium and Globalstar, which have struggled to turn satellite phones into mainstream devices, are seeking new ways to attract more subscribers.
Globalstar posted a net loss of $205 million on revenue of about $23 million in the third quarter. Iridium, meanwhile, stopped offering a long-range financial outlook in October as it re-evaluates the effect of lower subscriber growth.
Including its reseller arrangements and more limited satellite services, Iridium had 655,000 billable subscribers at the end of the third quarter, up 10 percent from a year earlier. Globalstar reported that it had almost 570,000 total subscribers at the end of September.
While consumers represent about half of Globalstar’s user base currently, they could increase to 80 percent in five years, partly thanks to products like Sat-Fi, Monroe said.
“It’s our mission to drive down the price and increase the utility,” he said. “That will broaden the market very substantially for us in the next several years.”
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