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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: Veiko Herne who wrote (5106)	6/7/1999 6:05:00 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 29987

Veiko, I didn't calculate the breakeven prices for Globalstar and Iridium, the companies and others did it. I'm just reporting it. Globalstar says they have a breakeven around 8c per minute. Iridium's is about $1.20 per minute [but that will be rising as their unpaid interest bills mount]. If sold to the highest bidder, Iridium's operating costs with no debt would still be significant and the new owner's breakeven would be maybe 20c per minute. Possibly as low as 10c per minute. Globalstar's next constellation will be much cheaper than the first since many of the costs have already been incurred - gateways [even though these are service provider costs they are part of the system], handset designs, satellite designs, spectrum, telecomms design, staffing, and all that stuff. Launch costs will drop. Handset prices will drop. Gateway costs will drop. Satellite costs will drop. Etc. So the breakeven for Constellation2 would be [just a guess] 2c per minute rather than 8c per minute. You mentioned capacity not getting to 100% and the need to decrease usage or increase capacity. Actually, there is a far more profitable and far better solution for subscribers. It is variable pricing. "Oh no!" say many readers, "Here we go again!" Yes, stop reading you folks. The idea is that the handset and gateway would have interactive pricing. When a satellite or gateway is nearing capacity, the price per minute would be raised FOR THOSE ON THE "CURRENT PRICE IS ..." PLAN, WHICH WOULD NOT BE EVERYONE [that point seems to have trouble sticking in people's heads]. The price per minute would be raised to such a level that demand and available capacity would stay in balance, no calls would be dropped, all subscribers who want to could accept the charges and get their call through. It would take some simple software to do the job. This would give a huge boost to profits because the peak price would be higher, many more calls would be made than if callers were denied access at lower prices, new capital expenditure to increase capacity could be deferred for a while since customers would be happy, the competitive position of the network would be improved, lower total costs to subscribers could be charged, and all would be well in the world. Nobody would get a busy signal! Imagine that if you were out in the snow with a flat battery and no help for miles. You wouldn't be worried about paying $2 or $3 a minute during peak times. The system would operate at 100% capacity all the time. How about that for the way to make big, big profits and have very, very happy customers? I hope Qualcomm has had the wit to patent that if it's a patentable idea. It would be a joke if Ericy beat them to it. You are quite right that the low usage of capacity is a result of marketing mistakes. In terrestrial networks they think they are clever if they get to 30% capacity overall. Sad but true. Try running an airline like that! Airlines are not bad at filling seats these days, using variable pricing and even auctions at the airport to offload people if overfull! Globalstar and Qualcomm will figure it out, I'm sure. Well, I hope so. Maurice {I'm pleased to meet somebody from Estonia. I think I've only met one other Estonian - well, technically I've still only met one Estonian. What do you do for a crust in Estonia? Telecommunications?}