*ICO should wait* Thanks Formoreagain, John Coates says that ICO is looking totally cool because, for a start, they have a great lineup of backers. Secondly they have cheap service.
Neither of those impress me. Customers don't care who the backers are, they care what service they get and at what price.
The cost of getting customers is significant, but a big bunch of existing customers isn't going to be much help for a specialized service like ICO's. Not even 1% of the backers' existing customers will become ICO customers, so the link is tenuous. It will help, but is a weak reason.
The same for their alleged price advantage. I heard that Globalstar was cheaper, but maybe it isn't. But since Globalstar costs are about $0.08 for the first constellation and will be about 4c for the second, the cost is not going to be as important as quality when the competition gets going.
ICO will have voice delay at pain in the neck levels - John Coates doesn't mention that. Handsets won't be working on Q! CDMA so the quality will be dodgy at best. Dropped calls will be endemic. There will be clear sky calling only. Globalstar will be able to give quite robust service on Constellation3 to the inside of buildings. Handset transmit power will need to be at supersonic levels to travel 10,000 km or 15,000 km [depending on the angle to the satellite] compared with 1,414 to 2,000 or something for Globalstar.
This is not going to be attractive to subscribers.
Fixed phone box sites in unserved areas such as Pitcairn Island, St Helena or the Falkland Islands will be obvious customers for ICO. Same for mobile subscribers to those areas, assuming those mobile people don't use Iridium which will be as cheap as ICO since Iridium will have to sell their minutes at whatever price the market will bear, irrespective of the cost of the system [that will follow the restructuring].
Geostationary services will also compete with ICO for fixed phones since the voice delay might as well be half a second once it is quarter of a second. Geostationary services are SERIOUSLY cheap, so ICO will lose out on the price aspect, which is what is important in the poor quality call segment of the market [to coin some marketing jargon].
Looks as though John Coates is trying to sell some stock!
John says, "...ICO's current valuation implies zero probability that the company will finish its network, which is mind-boggling given ICO's low-cost structure and investor backing..."
That sounds like a reasonable valuation to me!
Maurice |
