Satellite Phone Communications Suddenly Booming

Iridium, (which was a catastrophic failure just over a decade ago as Motorola's $5 billion satellite went down in flames and was sold to an investor for just $25 million), has established itself as a solid business.

ZoomThe network has grown under our radar to more than 500,000 subscribers over the past 11 years and posted $146.1 million of revenue and $11.7 million of profit for the third quarter.

For the satellite phone industry, this is a stunning result. It is not exactly the 10 million people user base that was predicted by Dataquest for the original Iridium back in 1999, but it is more than many times the user base Motorola was able to attract back then (about 30,000). It is still not a consumer service as Iridium says that it has around 451,000 billable subscribers in the commercial space (and industries such as maritime, aviation, oil and gas, mining, leisure, forestry, construction, transportation and emergency services) and 49,000 billable government users, which leaves about 8000 users for the non-billable space and the consumer market. According to Iridium, an average government user spends about $140 per month on Iridium voice services and $19 on data services. The commercial space spends about $50 and $19 on voice and data per user, respectively.

Even if Iridium cannot boast a user base as typical cellular providers, it just lifted its subscriber growth forecast for this year from 20 percent to 25 percent. Revenue growth is expected to be between 10 and 13 percent. At $1000 per handset and about $1 per minute calling cost, Iridium's service is still way too expensive for the consumer. However, it seems as if it is just a matter of time until Iridium will expand into a much bigger consumer market to follow the vision Motorola once had.