Yes, and in fact it prob. wouldn't pay the indenture interest. Almost certainly wouldn't.
Which is why I think Iridf is such a vastly riskier investment than is G* /Lor.
The only places were I* MIGHT get competitive is in places where, for regulatory/subsidy reasons only, long distance prices are very, very high.
The actual cost of completing a G* long distance leg of a call will be among the lowest long distance costs anywhere. Each gateway is a concentrated hub of telephony, which can efficiently squirt out long distance to the world wide network.
Long distance costs are coming down all over the world. All a Gateway has to do is get a rational pricing decision from a country on G*'s distinct and very low cost flavor of long distance to be able to blow I* away on costs everywhere. Everywhere. And remember everywhere regional phone companies are getting a piece under the Globalstar wholesaling system.
Moreover, any country that chooses to can prohibit I*'s targeted world business travelers from bringing in their phones. Or more likely, can decide to collect huge usage tariffs. Sure, some criminals will be able to evade such, but is that I*'s prime target market?
This is a real issue. Faced recently in Africa by news orgs. trying to bring in Inmarsat phones to call in from the field during the Congo crisis for example.
G*, from what I've been able to tell, has had a lot more success in signing up lots of foreign countries.
I wish I knew more about each company's success here. I think both are sort of keeping this issue a bit quiet at the moment. My guess.
G*'s model is inherently better on this issue, however. Unlike I*, G* doesn't cut out the locals. It cuts in the locals. Actually regionals, but every country in the world (more or less) has been offered the chance to build a gateway. Lots of regional agreements have in fact developed among offered countries who don't want to start out financing their own gateway, but will instead use a neighboring one. This is the main reason why the expected number of Globalstar gateways has declined from an initially projected 200 or so. That many were never needed technically. Nothing like. It was political.
I wonder how I* is really doing here. I think its a real issue. Esp. once G* is up and running and pumping some $'s into its local partners. Wasn't there some question as to whether I* was gonna be allowed to operate in China? (I.e., its phones allowed in?)
Maybe the result will be that I* will pay off the balking locals in some way. That would only raise their already way too high costs, however.
Doug |
