Satellite phone companies are optimistic that the extension — and possible expansion — of an Australian government subsidy for the purchase of satellite phones and related equipment will be a boon to business.
Australia’s Satellite Phone Subsidy Scheme, which is intended to help rural customers who live beyond the reach of terrestrial phone lines, is administered by Australia’s Department of Communications, Information Technology and the Arts, which announced May 15 that it would extend the program through 2009.
The subsidy program has been in operation since 2002, according to the program’s Web site. The extension through 2009 will be funded out of the department’s 29.5 million Australian dollar ($22.8 million) Mobile Connect program, which extends mobile coverage further into rural areas. So far, more than 8 million Australian dollars have been devoted to the program for the purchase of more than 7,000 satellite phones.
Major contributors to the program are Iridium Satellite LLC of Bethesda, who is a partner with Australian telecom provider Telstra, and Globalstar Australia of Southport , which takes part in the program through resellers and dealers that must be approved by the Australian government to participate.
“We’ve had a very long and successful relationship with the western Australian government,” said Peter Bolger, managing director of Globalstar Australia. “Back in the early days, we saw a real opportunity to get mobile communications out there to the more rural parts of the state.”
The program works by allowing residents who can prove they live outside the areas of terrestrial and mobile coverage to receive a subsidy of up to 1,200 Australian dollars towards the purchase of a satellite phone. If the individual works, but does not live, in the remote area for a significant amount of time, he or she can qualify for a government subsidy as large as 900 Australian dollars.
Small businesses of 20 or fewer employees can qualify, and a maximum of two phones can be given to any business. Potential recipients of the subsidy must apply through the government for it, and approval usually takes approximately two weeks, Bolger said.
The government will decide July 1 whether to further extend the program, allowing businesses potentially to receive more than two phones under the scheme, and allowing educational institutions to be eligible for the subsidy.
In Australia, about 98 percent of the population lives within standard coverage zones, but these people live in only 20 percent of the country’s land mass, according to Robert Sakker, executive director for Globalstar Australia. This means about 400,000 to 500,000 individuals spread throughout the country live outside normal telephone coverage areas and a great deal more people travel to those remote regions for business.
“Somewhere in the region of about 30 percent of our customers qualify for one of these subsidies,” Bolger said.
The program’s expansion is nothing new, Bolger said, as throughout its history, more people have become eligible for phones, such as emergency workers and those in the maritime industry. This is also the second time the government has extended the program’s timeline.
“The government has always taken a fairly proactive role in probably the last half-dozen years or so, assuring that those in the regional rural parts of Australia are not left behind,” Bolger said. “That’s probably the real genesis of what we’re trying to do, as people in isolated areas can really be at a disadvantage.”
Most individuals who receive phones through the subsidy sign up for a commitment of two years for the Globalstar service, Bolger said.
In Iridium’s partnership with Telstra, Iridium provides all the satellite services to Melbourne-based Telstra, who can resell or re-brand the service, according to Greg Ewert, vice president for sales, marketing and business development for Iridium. Iridium sells hardware equipment directly to Telstra as well, Ewert said. The company’s contract with Telstra, the dollar amount of which Ewert would not disclose, runs through 2010.
“It’s a significant customer of ours; I would say a top 10 customer,” Ewert said.
Ewert said it is not unique for countries to have rural telephony programs funded by a government financed universal access fund, but that Australia’s is particularly compatible with Iridium’s service.
One of the things that makes Australia unique is the vastness of the country’s open space, Ewert said. “A mobile satellite solution is almost the best solution they have.” Iridium currently is working on a similar program that is in development in China, he added.