Apple already invested early half a billion dollars into its satellite communications partner Globalstar, and now the iPhone maker is upping its payout. This time there are more strings attached, however, as the $252 million investment comes in the form of a loan.
Shortly after the iPhone 14 debuted in September 2022, Apple began providing customers with two years of free emergency satellite service. Emergency SOS allows iPhone 14 users to send location and text data in areas not covered by a cellular connection using satellites in low Earth orbit.
We’re only a few months into the initial phase, so we’re not expecting pricing details anytime soon. However, as Apple pads its hardware revenue with services dollars, the company is expected to begin charging a service fee for Emergency SOS at the end of next year.
For customers hoping the cost of the iPhone would continue to subsidize access to Emergency SOS, that’s increasingly unlikely as Apple spends more on the service. However, Apple’s continued investment in Globalstar, which operates the network of satellites utilized by iPhones, will keep the satellite firm afloat while enhancing its LEO network.
As noted by Caleb Henry, Globarstar’s latest Form 8-K disclosure filing reveals Apple’s $252 million prepayment for future satellite service for iPhones. Apple previously announced a one-time $450 million investment in Globalstar.
Globalstar says it “plans to use the proceeds of the Prepayment to pay amounts currently due and payable, and future amounts due, under its previously disclosed Satellite Procurement Agreement with Macdonald, Dettwiler and Associates Corporation, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of these satellites.”
Prior to Apple’s prepayment, Globalstar planned to secure third-party financing for such costs. Now the satellite operations firm says it will have access to the $252 million through funding “on a quarterly basis, subject to certain conditions in the agreement.”
The agreement with Apple requires Globalstar to make payments over “a period of 16 quarters beginning no later than the third quarter of 2025.” iPhone 14 customers first gained access to Apple’s Emergency SOS feature in November 2022. According to the current arrangement, the earliest adopters of Apple’s service will lose free access in November 2024 when a free will be introduced.
Have you tried Emergency SOS on an iPhone yet? If so, how did your experience go? How much would you pay per month to access satellite communication features?
Emergency SOS is available in these countries on iPhone 14, iPhone 14 Plus, iPhone 14 Pro, and iPhone 14 Pro Max. The service currently operates in the United States, Canada, United Kingdom, France, Germany, and Ireland. Additional countries are expected to gain service throughout this year.