Larry, I'm afraid I can't be of real help to you in terms of providing a 'crisp' answer to your inquiry. But if you're willing to listen to a ramble, vis a vis a rant, here are a few thoughts.
I understand that G* is aiming at the "rural telephony" market as one (but only one) of its primary targets. So the question becomes what is rural telephony? My first thought was of some tribal chief calling his bud up the river which didn't exactly sound like a multi-billion dollar opportunity to me. readware says no, dufus brain, rural telephony means simply that there's a zillion places on the planet where it is impractical/impossible to install land lines either because the terrain makes it a construction task of great difficulty and expense (think mountains, rivers, deserts, etc.) or where the population density makes it impossible to amortize the cost of land lines (only a few folks per zillion hectares) or because folks dig up the copper even assuming you have managed to get it installed. Thus satellite wireless neatly bypasses the land line problem, and your real market is millions of people who find themselves in some combination of the above circumstances and now we're talking.
You raise the possibility that some guy in India is probably going to want to talk to some other guy in India vis a vis his Schwab broker in New York and for that a regional sat system will do just fine and be cheaper and be real competition for G* and I*. And you may very well be right: I simply do not know the operating costs comparison for a regional sat constellation vs. a global sat constellation. Doug mentions the latency issue for the GEO regional guys, and I do understand that latency is a real bummer for call quality, but maybe if the price is right . . . .
But it occurs to me that a global system can do both (intra country and international) and provide appropriate charges for each and provide superior service for both. If true, I'd think that would be a superior economic model in the sense that you'd be getting a whole lot more value out of those transponders.
I also have a tendency to think that the little guys are going to have a tough time up against the big guys. One reads almost monthly about the little guys having financial problems, about their launches blowing up, about their birds becoming disfunctional, and so forth. I have already fessed up about my negative notions for MOT, but even I have to admit that if MOT says they're going to put a system in the air and run it, that they will and that it will work, and that they'll just keep hammering away till it does. This is a long winded way of saying that I'm invested in this industry because I think that the barriers to entry are just awesome, and that at the end of the day securing orbiting slots, gettting birds built and launched, and actually operating the resulting system (not to mention playing the international politics and dealing with local telecom carriers in 80 or 100 countries or whatever) means that only a very small number of multi-billion dollar multi-national companies will wind up with dominant positions. Maybe the regionals to which you refer will prove to be potent competitors, but it just runs against my notions of what the sat biz is all about.
Finally, in my personal opinion--and it is only that, an opinion-- I do not believe in a spread your bets/portfolio approach to investing. At the risk of belaboring, I repeat this is just my style. If I decide that I think a given industry segment (satellites, software, or lawn bowling) is attractive, I will only invest in the one company in that industry that I think (hope, pray)is going to bring home all the bacon, has the best management, resources, business plan, strategy to be THE MAN. And if I can't find that company I won't invest in that industry until and unless I do.
In the satellite biz for example, it's a damn tough call between Hughes and Loral. Hughes is just one hell of an outfit, and I leaned pretty heavily in that direction for quite a while. At the end of the day however, I was persuaded that Bernard Schwartz ain't no ordinary dude and that LOR was therefore going to Disneyland. I am well acquainted with the theory of diversification but it is best utilized, IMO, to counter-balance risk ACROSS multiple industries not WITHIN any given industry. If I owned both Hughes and Loral, and Hughes had won SatMex, my Hughes goes up and my Loral goes down which to me is about as thrilling as kissing my sister. Or a zero sum game if you prefer. Doubtless an over simplification, but you follow my drift.
Therefore, I won't (or don't) "buy them all", and I don't see how the regionals can provide worrisome competition for the globals. There are certainly industries where the lean and mean and nimble little guys can outfox the goliaths, but it just doesn't seem to me that the bird business is one of them. I cannot however cite hard facts to substantiate this viewpoint. Mike Doyle |
