Satellite-telephone service provider Iridium

reported July 27 an 11 percent increase in subscribers for the three months ending June 30, suggesting that the company has not yet been able to fully capitalize on the perceived weakness of its principal competitor, Globalstar Inc.

Bethesda, Md.-based Iridium Satellite LLC said it had 203,000 subscribers as of June 30, a 27.7 percent increase over the same a year earlier but just an 11 percent improvement over where the company stood

April 1.

Revenues for the quarter

were $66.7 million, a 26.5 percent quarter-to-quarter increase.

“We have also benefited from spikes in handset sales – which were 56 percent above handset sales in the second quarter 2006 – as we pick up many customers switching to Iridium from competitors with serious network quality issues,” Iridium Chief Executive Matt Desch said in a statement.

The competitor in question is Globalstar of Milpitas, Calif., which like Iridium operates a constellation of low-orbiting satellites. Globalstar in February announced that the ability of its


to provide two-way communications was degrading faster than expected. The company continues to evaluate the problem but to date has found no way to arrest the performance decline.


four new satellites in May and plans to launch the last four of its first-generation satellites as soon as its launch-service provider, Starsem S.A. of France, can resolve a technical issue related to the upper stage of its Soyuz-Fregat rocket.

officials have said they hope to

conduct the launch in September, but it remains unclear whether that schedule will hold firm.

second generation of 48 satellites is under construction but launches will not begin until late 2009, making the next two years a delicate period for the company depending on how its current satellites hold up.

Iridium officials have made no secret of their desire to take advantage of Globalstar’s vulnerability. Desch went so far as to thank Globalstar for its February disclosure.

Both the Iridium and Globalstar

services feature long-term contracts that make it difficult to switch from one

to another on short notice, industry officials said following Globalstar’s February announcement that it would be several months before the effects are felt in customer defections.

The increased handset sales that Desch cited may be the first sign of Globalstar defections, but it will take some time before these newly purchased telephones result in service revenue for Iridium.