Mobile Industry Poses Challenges for Service Providers

Amid continuing change in the MSS sector, distributors are looking for new strategies to remain profitable, officials said during “The Changing World of MSS Distribution: Views From the Front Lines” session.
   “It is a great business, but you have to think on the fly and be much quicker than you did before to survive,” Peter Liberi, vice president of business development for SatCom Global, said during the session, part of the MSUA-8 conference held in tandem with SATELLITE 2011. “We have to see a lot more volume to make the same money we made years ago.”
    Situated on the value chain between mobile satellite operators and the government and private customers who use MSS services for voice and data transmission, mobile satellite resellers need to innovate in order to attract business, said Jon Klein, vice president and general manager of GMPCS.
    Klein said GMPCS has been able to sell satellite phones for more than its competition by providing comprehensive customer support in addition to hardware and service plans. GMPCS sells service on networks operated by firms including Inmarsat, Iridium and Thuraya.
    “It is a box. You have to add something to that box, or else it will all go down the tubes,” he said, referring to the handsets and other equipment GMPCS and its competitors provide their customers. “You can sell a phone at a higher margin and make a profit if you add something.”
     A key challenge for companies that resell mobile satellite services is the encroachment of the VSAT industry into a niche of the telecommunications market that traditionally has belonged to MSS operators, said Liberi. VSAT operators typically have provided satellite networking services on land, while MSS operators and their partners have enjoyed customers at sea.
     One way for MSS service providers to compete is to focus on the service they offer customers more than on the technology they employ, said Lawrence Paul, vice president of business development and portfolio management for Vizada. Formed by the merger of Telenor Satellite Services and France Telecom Mobile Satellite Communications, Vizada centers its business on relationships with multiple MSS operators.
     “We try to pull together solutions that meet our customers’ needs. To us, that is an engineered, managed network solution,” said Paul, adding that Vizada uses hybrid solutions when putting together a system for a client. “We try to be fairly agnostic about frequency band.”
     Another way to remain viable is to be ready to move quickly when customers call, Klein said. GMPCS keeps hundreds of satellite phones in stock so it can ship equipment on short notice. He cited the sudden spike in demand for MSS as a result of the earthquake and tsunami that struck Japan as an example of the kind of unpredictable events that lead to urgent demand for satellite communications equipment.
     Members of the panel predicted that their business will be affected by the impending resurgence of Globalstar, which has suffered from widespread problems with its satellite fleet that have sharply degraded its service. Globalstar is rebuilding its system and will need to compete aggressively on price to re-establish a foothold with users, Klein said.
    “We’re going to have a pool of turbulence over pricing,” he said, with Globalstar likely to focus on low-cost handsets to attract business.
     Klein noted that many Globalstar users on the GMPCS client list are showing signs that they will gravitate toward the company’s new system when it is ready. Many Globalstar users have maintained their accounts with GMPCS as they wait for the operator to launch its next-generation services.
    A critical issue for Globalstar is the limited amount of business for MSS industry to tap, Paul said. “They may be viable, but how much market opportunity is there? I’m still scratching my head” about where they will fit in.
Brian Aziz, sales director at MVS USA, agreed that Globalstar will face a tough climb as it seeks to return to prominence in the mobile satellite market. “They have a reputation that needs to be repaired.”