*Globalstar vs Terrestrial* Tero's argument is that terrestrial networks, particularly GSM networks, provide so much coverage, with cute, highly functional little handsets, at low cost, that few will want large, expensive, low standby time, functionally illiterate handsets which you can use in few places.
debry.com
He is right that very few people will buy Globalstar service. There are 6bn people on the planet. There are a few hundred million cellphone users. Globalstar needs 6 million subscribers. That's about 1 person in a thousand. Of cellphone users, it's about 1 person in 100 [in a year or two].
That is very few people. There is no space competition at the moment [forget Iridium with about 10,000 customers and ICO is still wishful thinking, others are insignificant].
The key to demand is regional coverage and small numbers. Yes, GSM and other cellular systems provide excellent coverage of populated centres, but they provide rotten coverage of unpopulated areas. There are people who want coverage in those unpopulated areas at some balance of price and functionality.
The big question is just how many. Sure, 80% of people are now urban. That leaves a lot in rural areas. Many of the urban dwellers travel to rural areas. Even in urban areas, there are coverage gaps which Globalstar car phones would fill.
Tero says that Globalstar is off to a stumbling start. True enough. Zenit crashed and delays have been a year now. Airtouch is thinking $2 a minute and $1500 a phone, hardly likely to set off a buying frenzy.
Gateways are not being installed in peripheral areas such as New Zealand because the economics are unjustified at the high minute prices while the customer numbers are small. Without discounts, they'll have to wait until core regions have enough subscribers who want roaming to justify marginal gateways.
Ericsson is late with their handset according to Tero. That means cdmaOne areas will be the only ones served initially other than single mode applications such as fixed phones and where dual mode is not essential. Yes, that's bad and will delay things until next year in GSM areas.
Tero makes the good point that satellite phones are in competition with terrestrial phones. That seems so self-evident that it makes one question the judgement of people who think it untrue. People make a choice - will they get a terrestrial handset or a Globalstar one? They compare the competitive elements of each and if the cheaper and better one does what they want, near enough, it's a sale. It is total and direct competition.
Globalstar now has a defined system, so the variable they control is price per minute. Globalstar can do marketing blather, fancy plans, positioning, advertize to vertical and horizontal people, segment and give free trips to every 10th caller but it is only price per minute that they can manipulate. Handset functionality and handset price are outside their realm now. Qualcomm, Ericy and Telital will introduce functionality as market demand and constellation configuration allow.
It's all about price per minute for Globalstar. The service providers can do fiddly things like include the handset in the minute price, charge fixed rates or whatever stunts they like, but the variables are quite straighforward, and the competition is with terrestrial service.
<One of the biggest spectacles of next winter will probably be watching the 1990-vintage business plans of satellite phone companies collide with the reality of the modern mobile markets>
I agree with Tero on this, his final sentence and summary. Globalstar is not on a cakewalk [whatever a cakewalk actually is - do people walk the cake like they walk a dog or what?]. But I disagree with his idea that the fact that nearly all the 6bn people won't want Globalstar service means there won't be enough customers. The number will depend on price. Let's hope Globalstar doesn't sit there fat, dumb and happy like Iridium did, behind the corporate gates, behind the security guards, behind the marketing plans and MBAs, multimillion dollar advertizing campaigns and wishful thinking, only to find a smelly, money-short, conservative and mistrustful crowd of customers don't know about or don't buy an expensive, limited, phone service.
Tero is right that the competition with terrestrial is on. he is wrong that the numbers are too small - as long as Globalstar prices the minutes right and does it soon.
Place your bets. Tero seems to think Globalstar too will fail. I think that while they'll make a few fumbles, they'll be able to move their pricing to the right level in time to generate the demand needed to make a fair bit of money. Not the maximum they could, but a fair bit.
Iridium was stuck with an expensive system. Globalstar has a cheap one. That's the difference.
Maurice
PS; This repeated from Loral thread - talk about fumbles, I thought I was posting in the Globalstar thread. Lucky I'm just running rants instead of the overall Globalstar deal = happy to leave that to them. So far they have got some really neat bent metal pipes up in space and the phone works on them really well too. [Not under trees, in a high speed train, under an underpass, blah blah blah]. |
