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

To: CMon who wrote (5896)	7/21/1999 10:16:00 AM
From: djane	Read Replies (3) \| Respond to of 29987

Global roaming - the Buck Rogers bust [Tero is the same loser and GSM propagandist who waged war against QCOM and CDMA for years and would have kept you out of the Q* run from $60 to $320. Have to admit, though, that I enjoy his writing style and strong opinions (even if wrong), djane] debry.com The view from Finland Global roaming - the Buck Rogers bust By Tero Kuittinen, Guest Columnist Last Update: 8:30 AM MT July 20, 1999 Winter War 1999 The recent near-hysterical hyping of satellite phone systems exists in a curious vacuum. There seems to be an assumption that buying a 350-gram satellite handset with an 8-hour satellite stand-by time and paying 1200-1500 dollars for the privilege is the only way to get decent international roaming. This overlooks some obvious facts: most of the business and leisure travel from US flows to Europe, Australia, South Africa, Israel, North Africa, China and other GSM markets. Most of the travelers spend their time abroad in areas already covered by land-based digital mobile networks. Most of the target customers for global roaming only travel outside of USA a couple of times a year - meaning that a handset that can handle foreign standards but still function as a replacement for a normal mobile phone would be an optimal solution. Let's not even talk about Europe - GSM cover over European, North African and Middle Eastern travel destinations is so seemless it's not surprising the massive Iridium ad campaign never even registered in EU markets. A handset weighing about four ounces and setting you back by 200-300 bucks can reasonably be expected to appeal to millions of consumers in USA, Europe and Asia. Especially if it offers ten times longer stand-by time than satellite models. AT&T has commissioned TDMA-GSM handsets; CDMA operators have to come out with models offering GSM roaming, even if it takes them longer. But technologically, bundling American GSM-1900 with GSM-900 used in 130 countries around the world is far easier - and the first models are already in the shops. Next winter will pit the land-based worldphones directly against the exorbitantly priced satellite mammoths. The satellite phones are not exactly getting a running start from the manufacturers; all Iridium models were delayed and the word in Stockholm is that Ericsson's Globalstar model is running ruinously late. June 22 press release put it this way: "Ericsson expects to launch the R290 series in limited quantities at the end of 1999 and in volume in the beginning of 2000." Seasoned Ericsson-speak veterans have no trouble translating this into a badly botched Christmas season for a product that was supposed to launch Globalstar in GSM markets this autumn. There won't be another Christmas season for this puppy; the specs are bad enough for 1999, let alone for the next millennium. Note the cute gimmick in the press release: it stresses the 350 gram weight, because that undercuts Iridium models... but the hair-raising Globalstar stand-by time is cloaked in a brooding, Bergmanian silence. Comparing the target consumers groups of satellite phones and land-based multi-mode phones is instructive. Satellite phones are the best option for people who go abroad to visit inaccessible, sparsely populated areas like glaciers and uninhabited desert islands. Worldphones bundling several digital standards are the best option for people visiting cities and villages with more than 2'000 inhabitants. It's not an overwhelming challenge to draw conclusions about the sales potential of these two alternatives. Critical Christmas mass? It's hard to evaluate the future success of GSM operators without assessing the technological progress of GSM handsets. A reference point: the new US version of Ericsson's T28 is expected to pack both American and European GSM bands, internal vibrating alarm, predictive text input and voice dialing into one handset. Here's a kick in the head - it's a three-ounce handset. Not thirteen, which would be the weight of a similar handset trying to offer same features by using some other approach than GSM-900/1900. Miniaturization is the Social Security of the mobile handset market. Touch it and die. We are going to see several 10-12 ounce models in the US market trying to convince consumers to ditch their small, nifty mobile handsets in order to achieve global roaming or internet access. Next winter's introduction of GSM models offering similar benefits for minimum sacrifices in portability, weight and price should make for a compelling spectacle. Among main contenders are Motorola's tri-mode GSM handsets packing all existing GSM bands into a 110-gram handset with an eye-popping stand-by time. US operators have not been keen to capitalize on global roaming yet. The critical mass achieved by the new GSM merger changes that - Voicestream is on track to reach 2 million subscribers next winter even if it doesn't gobble up Aerial or some other minnow in the meanwhile. Next winter looks likely to become the big test for the consumer appeal of global roaming. The first substantial ad campaign in Europe for roaming in USA has just begun in the wake of the Voicestream merger. The first mainstream GSM-900/1900 models are now hitting the market after the tentative initial models from Bosch and Ericsson, which suffered from lack of decent operator support. Since then, a rapid increase in international roaming agreements has changed the market situation drastically. Perhaps the key feature in the Voicestream merger lay in the 950 million dollar investment Hutchison made in the company, boosting their stake to 30%. Hutchison already owns a serious chunk of Orange, which is perhaps the premium mobile operator brand from a global perspective - Orange is expected to extend their current roaming agreements to 200 operators in 100 markets by next Christmas. Gaining more access to Hutchison expertise and capital may finally whip the current confused patchwork of US roaming agreements into shape. And that's the goal of Hutchison, of course - they have now built stakes in a formidable array of European and Asian operators and want to finish their global footprint with the crucial North American component. Hutchison possesses exactly the kind of experience in handling global roaming and selling advanced data features to consumers that is currently lacking in the North American market. Pushing roaming rates under one dollar should be doable by next spring - especially now that this will present a golden opportunity to stick a fork in the satellite phone industry. Orbital decay There may be a market for satellite phones: people hunting for ancient artifacts in the jungles of Bolivia or seeking spiritual insights in the deserts of Outer Mongolia. Whether satellite phone companies can reach 5-10 million of these kooks within five years (as the wildest projections predict) seems highly questionable. And whether the average Indiana Jones will cherish the experience of recharging his phone three times a day in the middle of Amazonas is another fascinating topic. Now that the earlier dream scenario of Iridium phones retailing for around 3'000 dollars and Globalstar offering 1'000 dollar models for the budget crowd has been scrapped the companies face a strange situation. The high-end player is offering 65% discounting in a bid to avoid bankruptcy - and Globalstar, which was supposed to undercut Iridium ends up with initial phone prices that offer no price advantage over Iridium - even though the stand-by times of Globalstar handsets are much worse. I expect the pricing plans to change as these companies scramble in search of a viable customer base. But even a hysterical discount slapfight won't bring the price/performance ratios of these models anywhere near the ratios of worldphones hooked on land-based mobile networks. If they avoid bankruptcy for the next 12 months or so, the next big headache for satellite phone firms is going to be the lack of data and other advanced features worldphones can offer on top of the roaming possibilities. The bold claim that satellite phones are not in direct competition with mobile phones is an absurd prevarication of über-Clintonian dimensions - after the consumers have been conditioned to demand advanced features and compact size at low prices there's no turning back. People who buy a futuristic satellite gadget and wake up with a phone that offers the size and the stand-by time identical to a 1991 analog museum piece are not likely to suffer future shock. The world moved on while the satellite phone consortia were absorbed in their decade-spanning quest for developing global communication devices. The global footprint and technological sophistication of land-based digital mobile standards are now way ahead where they were projected to be when Iridium and Globalstar were conceived. The straw man satellite phones were designed to battle was an expensive, heavy mobile phone that only works in urban areas. Nowadays even Inuit reindeer herders in the arctic wastelands of Lappland are packing pocket-size mobile handsets - and the areas not covered by some network are shrinking every day. One of the biggest spectacles of next winter will probably be watching the 1990-vintage business plans of satellite phone companies collide with the reality of the modern mobile markets<TK>. I appreciate any feedback and try to address issues you raise on the Q&A page. Tero Kuittinen Tpkuitti@operoni.helsinki.fi Tero Kuittinen is a Finnish-based writer with a passion for telecom stocks. The opinions expressed are his own and should not be construed as investment advice. Readers should assume that both Mr. Kuittinen and associates of DeBry.com have positions in some or all of the securities mentioned, and may change their opinions and positions at any time.