Globalstar's reply to my follow-up questions ... biff
Sorry for the delay in replying....in answer to your questions:
1) Regarding the 5 cent costs, we have said that, at about 50% capacity, our own cost-per-minute is about 5 cents. This is a good indicator of the kind of economics that fundamentally underpin Globalstar's operations, although one should remember that it is reflects our costs in full operation, not our incremental costs during
our start-up period now.
2) I have no further information on the handset leasing program right now, since this is handled entirely by GlobalstarUSA and other service providers. I am not sure if GlobalstarUSA has initiated this program yet, but I believe they are close to finalizing it.
3) Regarding the "devil's advocate" comments you forwarded, I'm pleased that someone believes we can compete anywhere, but realistically, we know that we will never be able to match some of the prices now available in cellular services. But that's OK -- that is why our phones give people the option to choose. If the user is in range of a cell,
the call is put through in cellular mode at cellular prices. It is only when the user is outside the range of cell where satellite costs would be incurred. And that's why we feel it is a very viable business -- outside the range of cell, who are we competing against?
4) Regarding the comment pointing out the increased build-out of cellular, I cannot disprove the premise that cellular will -eventually- cover most of the world. But it is very clear that such a situation is still many years....more likely decades....away. Where population
density is low and/or terrain too rough, it may -never- be economically sensible to build cells. Furthermore, many cell operators today have said that they actually intend to slow down the expansion of coverage in
the next few years because they wish to devote more investment to expanding capacity in the areas they already serve (too many customers still can't get a line during busy periods). Finally, bear in mind that we are only addressing a relatively small slice of the world's population -- we are not trying to offer a service that would appeal to
the entire world. It's true that many people live within the range of cellular, but it takes only a very tiny percentage of the world's population to fill our entire capacity. Even if you accept the comment below that we address "only" 5% of the world's population, that's 300
million people.
Hope that helps.
Mac |
