PARIS — Mobile satellite services providerbrushed aside concerns May 10 that its new maritime communications pricing policy is turning away customers and said its recent reorganization will not put Inmarsat in competition with its global network of service distributors.
In a conference call with investors, London-based Inmarsat specifically characterized as “scare-mongering” the idea that its new broadband services will begin charging customers for access to the Global Maritime Distress Safety System (GMDSS), which facilitates ship and aircraft rescue through Inmarsat satellite signals and internationally approved equipment.
“Our GMDSS services in all cases remain free,” Inmarsat Chief Executive Rupert Pearce said, dismissing as “ill-informed and scare-mongering” the rumors that Inmarsat, as it reorganizes its business, would begin billing for the GMDSS service. “It’s part of our regulatory obligation to IMSO and that isn’t going to change.” IMSO is the International Mobile Satellite Organization.
Pearce said Inmarsat’s new FleetBroadband maritime service, which uses Internet Protocol to transmit higher-speed communications to and from maritime vessels, would be GMDSS-compliant by the end of 2014.
“We are the only satellite operator who has made these investments” in GMDSS, Pearce said. “We see very little possibility that anyone else will ever have that capability.”
Acknowledging that the lack of a certified GMDSS capability may be a handicap in the maritime market, Inmarsat competitorCommunications of McLean, Va., has said it too eventually would offer GMDSS as part of its maritime communications package to customers.
Inmarsat has recently raised prices for some of its maritime services, a move that competitors, including Iridium, have used to try to woo Inmarsat customers. Here too, Pearce said one of the price increases was only an extension of Inmarsat’s gradual discontinuation, since 2009, of volume discounts given to distributors.
A second price increase has to do with FleetBroadband use. Up to now, an Inmarsat competitor could seal a deal with a maritime fleet owner by offering to provide a VSAT — very small aperture terminal — unit linked to a satellite other than Inmarsat’s. The same transaction could include an Inmarsat FleetBroadband unit as a backup that would be used only in emergencies.
This package was feasible because Inmarsat did not charge FleetBroadband unit owners unless they actually used the service.
Inmarsat announced this year that it would no longer accept competitors benefiting from Inmarsat’s presence on the ship and taking Inmarsat customers, who would use the VSAT service at a lower cost per megabit than what Inmarsat charges.
Inmarsat in May began instituting a policy of applying a minimum monthly charge to FleetBroadband owners even if they did not use the service. Inmarsat has said that the vast majority of its maritime customers will see no increase in charges because they can offset the minimum charge against the use of the service.
Pearce said Inmarsat nonetheless is responding to the concerns of small boat owners that use their vessels only at certain times of the year by tailoring a pricing policy for these customers.
Satellite fleet operators operating fleets for mainly fixed communications services are increasingly looking at aeronautical and maritime markets to augment their core businesses. They now represent a growing threat to what once was an Inmarsat monopoly.
Inmarsat is responding by adding to its generally lower-speed L-band services a Ka-band network called Global Xpress, which through three satellites now under construction is scheduled to offer global mobile broadband service, except the polar regions, in 2014.
Inmarsat’s reorganization, which has occurred gradually over the past couple of years, has resulted in permitting the company to compete, through subsidiaries, with other Inmarsat distributors. Pearce said Inmarsat remains committed to “a primarily indirect distribution model.”
“It is not our intention to compete with our distribution channels,” Pearce said.
For the three months ending March 31, Inmarsat reported that its maritime data service increased revenue by nearly 14 percent, to $74 million, in part because the volume discounts were eliminated. Maritime voice revenue was down 11 percent, to $21.4 million, which Inmarsat attributed to price reductions.
Revenue from land-mobile customers, which often surges in times of natural disasters or other broad-scale emergencies, dropped 18 percent, to $33.2 million, for the three months ending March 31. The continued decline in business from U.S. and other troops in Afghanistan is one reason. Another is that the previous year included the Arab Spring uprisings in the Middle East and North Africa, and the nuclear accident in Fukushima, Japan.
Inmarsat in mid-2010 introduced its first telephone handset, designed to fend off competition from Iridium and other satellite-telephone services providers includingof Covington, La., and Thuraya of the United Arab Emirates. Inmarsat pitched the service as a lower-cost alternative to these established satellite-telephone providers.
Revenue growth from the Inmarsat IsatPhone Pro has been slower than forecasted. But for the three months ending March 31, land-mobile voice service revenue increased by 73 percent, to $2.6 million.
Pearce said the satellite telephone service remains a small revenue source for Inmarsat. But he said Inmarsat data suggest that more IsatPhones than Iridium phones were sold in four out of the last five quarters.