*** Metaphysical Certitude *** GG my giving up was a sad commentary on human nature and nothing to do with the technology or markets. What it meant was that I have had to accept [yet again] that many humans [and especially when formed into corporations, countries or other gangs] are boundlessly stupid, simplistically egocentric, mendacious, avaricious and perversely self-destructive.
I retain an idealized idea of what humans are. I'm aware that it's a false idea, similar to religions which project similar idealized fantasies onto some supernatural deity. They do that because apart from the Pope, Dalai Lama, the Japanese Emperor, Buddha, and the others, they know that people are full of frailty and they need to conjure up something special for the credulous mobs they rule. Of course, their leaders are as full of frailty too; for example, the Pope quietly, or complicitly, stood by as the Jews were carted off to death in Nazi Europe.
Although I know my ideal is false, I cling to it as much as possible and look for the good.
To have ruined Globalstar seems to me like barbarians took over a beautiful little village, then destroyed it by trying to enslave the people. It was such an easy thing to make succeed. Billions of people want phone service. The minutes could have been priced at 10c a minute and the phones at half the price they initially charged, or a quarter. Demand would have been huge.
At 10c a minute, with 10 billion minutes, [or 15 billion if upgraded at the gateways as is possible with some electronic gizzardry], there would have been $1 billion a year to cover the costs and even give a return on capital invested. That's real money.
At 20c a minute, there would have been $2 billion a year. They could have sold all the phones they could produce at 20c a minute since that is cheaper than terrestrial cellphone calls. They would not have been profitable from day one, but that's the nature of large capital-intensive systems which go online worldwide simultaneously when they have vast capacity and need millions of subscribers. They had to be prepared to go for a few years until the money coming in exceeded the money going out. Accountants should know that.
Did they charge 10c a minute or 20c a minute [to the subscriber I mean, not the service providers]? No. They charged $3 a minute. They charged a fortune every direction the customer looked - the car kit, the roaming, the rounded up minutes, the fixed phones, the bits and pieces, the phones [especially L M Ericsson's], the monthly 'you have service' charge.
They refused to give shareholders information. They were 'on plan' when they weren't. They insulted shareholders [disparaged as 7 Minute Investors]. It is a very long list of failure.
Readware was typical of the arrogance. Sure, the Globalstar geeks know a lot. But a lot isn't enough. Customers are always right. Customers wanted cheaper minutes. They didn't care about orthogonal erlangs. I took the trouble to go all over the world to meet Globalstar people, discuss their marketing and see for myself the lay of the land. I didn't like it and have raved in this thread for years about the likelihood of failure given their stated intentions on pricing and marketing.
My failure was to believe that they would, when confronted with the failure of their ideas, change their marketing by slashing minute prices. For some reason they didn't, perhaps because of fighting 'in house' between the different partners about who should cut what in price [the handsets, the retail minute price, the wholesale minute price all being options]. When people start fighting, they often are prepared to die rather than give in. They often do both die, literally. When it's corporate battle, they don't really care because it's only shareholder money and customers don't figure in the equation.
No doubt there was finger-pointing galore. The service providers probably blamed the phone makers for greedy prices. The wholesaler blamed the service providers. QUALCOMM blamed the wholesaler and the service providers for charging too much per minute. Ericy blamed everyone and didn't care anyway [having inherited the Globalstar stuff from Orbitel]. I blame all of them.
Anyway, they failed! I failed as an investor to correctly understand how the people involved with the business would handle it. 'Cellphone operator metaphysical certitude' was not strongly enough in my equation. I should have known they would not relinquish their belief system about how it should be and what was the best thing to do. It's the human way. We will do it again and on a grander scale.
I primarily blame the service providers, which immediately leads upstream to those who foolishly gave them the power to destroy the business with negligible consequence. Maybe the service providers asked for a 10c wholesale price and Bernie refused, so they refused to cut the retail price in a game of chicken. Maybe they wanted cheaper phones, but QUALCOMM, Telit and L M Ericsson wouldn't agree.
For whatever reason, the worst happened. They either did not agree and played chicken into a head-on collision or they simply were clueless about how to succeed; assuming they wanted to succeed, which I think the various parties would like it to have done, despite Machiavellian claims about service providers.
It's annoying that the wise-guys who knew it would fail get to say "I told you so", even though they didn't really have a clue and were right for the wrong reasons. Yes, the 'Told You So' crowd pointed out some problems such as the big phone, high prices, short battery life, limited coverage and things like that. Well duh! We all knew that. Those were NOT the reason it failed. I was the first ranter [for 3 years] about why they would fail [at least for a year or two until they changed their marketing plan]. It failed primarily because the minutes were too expensive. Even the phone prices, excessively high though they were, were not the primary reason for failure. It was minute prices, backed by a very poor marketing effort, with phones hidden in the back of shops and with little advertising done.
The real reason they failed was that they refused to change in the face of reality. Starting with the wrong marketing plan was forgivable. But to continue on and on and on and on with the same failing plan was madness. I had seen their stubborn attitudes up close and personal, so my failing was worse - I gave them credit for more sense than they had. I wanted them to rise above the normal human metaphysical certitudes. Fat chance!
So, I am having an official period of mourning for the Dearly Beloved, even though it isn't actually dead yet. It's more of a personal sadness for what might have been. No, it's not that I've lost money [which I'd much rather not have done but it's not the point]. It's a Graveyard of Love. A passing of Hope.
But there is something good about it. The system is still up and running. The hopes which die are only my own. The system lives on. The Globalstar system is a little piece of the birth of IT. The science and technology which were created in the development of Globalstar live on. Subscribers will talk for another decade on this constellation. There will be $$ billions made and there will be a good financial return on the development cost, though not for the first company which tried to run it. So, it won't have been a waste like a lot of human tragedy where nothing good is achieved. But I would like to have been part of the success, for my own metaphysical certitude egocentric purposes.
I will hang around and see what can be rescued from the ashes.
Since I was about 8 [in 1956] and got books about rockets and other scientific stuff out of the Carnegie Library in Onehunga, I have dreamed of stuff like Globalstar. It became real! That was so exciting. It still is real. But what a waste. Billions of minutes down the drain. Millions of phones unsold. Millions of people still without cheap, high quality phone service. Meanwhile, 1414 km high, a constellation of satellites circles almost unused with their life dwindling gradually. All that work over a decade down the drain for no good reason; so far.
Mqurice
PS: For those who missed it, yes, I sold all my GSTRF shares [at 29c] after being a 6 Year Investor. That's not a 7 Minute Investor. My little Tonka Truck has no more Globalstar shares. Once again, I apologize to the creditors for defaulting on the loans. I think this is the first time in my life that I haven't paid a debt I incurred [albeit via a Bermudan Limited Liability company]. GG, thanks for helping shine the light on Globalstar. Thanks too to all the many people who provided such excellent information and insight into Globalstar over the years. |
