Mike, the answer is no. This is a constellation that was designed for a very specific use. It was not designed with the internet or broadband communications in mind, but only sat phone and pager use. The intersatellite links make for a very complicated software solution for both satelite station keeping and call completion. These sats would also not have any great utility to other providers or in orbit constellations. The intersatelite links benefit only this constellation. With an average life of about 6 years (I believe it is much shorter, probably 4 years), the current satellite array will likely be left for dead sometime in 2002 or 2003. It will become prohibitive to replace the failing birds at this point, especially if a second generation system is not planned (it is likely that the next generation system may be part of one of Motorola's new projects, which will have nothing to do with Iridium).
Globalstar has many distinct advantages on the satellite side. They put their birds up higher, thus they will probably have a longer average life (less drag, still below Van Allens). Station keeping requirements are less stringent than the intersatellite linked Iridium system. As the solar cycle peak climaxes later this year, the differences between Iridium and Globalstar will become very clear. As we know, when the earth's atmosphere heats up from the solar peak, it creates severe drag, especially at the polar regions (known as trapping zones) where walls of charges particles can send sats well out of their orbit. As we all know, the Iridium birds cross the polar region and are on average up only about 500 or so miles. The drag effect will impact them greater than the Globalstar birds.
It should be noted that the Iridium sats were designed with minimal fuel for in orbit manuevering. In the coming enviornment, it will become very difficult to keep the Iridium array in place. Over the course of 12 months, many birds will run out of fuel and remain outside their assgined orbit, potentially becoming useless or of limited value. Performance will suffer greatly. We also must not forget that the Iridium satellites are not exactly durable. I believe a total of 10 have failed in orbit (maybe more) as acknowledged by management. There is at least one or two more failures (I am very sure that Iridium 48 has failed). Technology will be the final nail in the coffin for the Iridium system. It is for that reason that I would still be nervous as a bondholder of the company, never mind a shareholder. Those still long stock are simply giving away their money. It is sad.
In fact, the equity holders seem to be disconnected to reality. The bonds tanked 5 points today after the conference call to 45 cents on the dollar. The stock traded higher. The bond investors are sophisticated and well connected high yield analysts and the stock investors are almost 80 percent retail investors. As Cramer pointed out today on the Street.com, you can't find a borrow to short more Iridium common stock. The puts are out of sight expensive.
I plan to make my money on buying Globalstar equity and bonds within days or weeks of the Iridium restructuring and the financial carnage of that event. Of course, the media will take a bow for being ahead, rather than in back of the event. Globalstar will suffer unjustly, I will buy and profit nicely. That is how I see the lay of the land. |
