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

To: djane who wrote (7853)	10/14/1999 2:20:00 PM
From: djane	Respond to of 29987

Satellite System Update. Industry Insight telecoms-mag.com Sue O'Keefe Given the recent financial problems of Iridium and ICO, two satellite-based mobile voice providers, Editor-in-Chief Sue O?Keefe asked industry experts how the initial failures of those systems bode for the other multibillion dollar voice and data systems coming up behind them. Here are some of the responses: Marco Caceres Senior Space Analyst, Teal Group A lot of people have a lot of knowledge about the satellite market and it?s hard for me to imagine that everybody got it wrong. Clearly there is a market for satellite-based communications, be it mobile voice and data or broadband. The question is: Is the market sufficiently developed at this point to support more than one or two systems of either type? Keep in mind that this whole commercial satellite communications market is still emerging. Most of the commercial communication satellites in existence have been launched this decade, so we are still at the beginning. It is possible, seeing what happened to Iridium and ICO and maybe others in the future, that companies misjudged the timing of the market. Perhaps they also misjudged the development of some competing technologies, such as cellular. It may be that satellite-based broadband communications companies misjudged competitive technologies, such as DSL, cable and fiber. But that is a far cry from saying that there is no future for satellite-based communications. I think the satellite communications market--mobile and broadband--is going to be uncertain for the short term, primarily because investors are nervous. I think companies are going to have a harder time than they envisioned two or three years ago raising the billions of dollars they need to develop and launch these systems. Teledesic is still sticking by its $9 billion figure, but my gut instinct is that it could end up costing a lot more. The problem now, obviously, is how are they going to raise funds for that kind of system? For the long term, however, there is clearly a demand for satellite-based services. The key will be whether these providers can come up with ground equipment, phones and receivers that are small, powerful and cheap enough to compete against other systems. On the broadband front, cost is also a concern. How much will customers have to pay for the equipment for their computers to access satellite signals? How much are the services going to cost? Are they going to compete with new ground-based services such as DSL and cable modems, which are already improving Internet access speeds by a hundred times compared to current speeds? Is the ability to access the Internet at speeds 1000 or 2000 times faster than current speeds really that important to consumers? It is possible that you don?t really need that kind of speed. I think a lot of these companies need to go back and see how much speed is really sufficient for the average person. Pascale Sourisse CEO, SkyBridge LP Iridium?s problems have certainly affected the satellite industry in the short term. I would add, however, that the market very quickly differentiated between the business models of constellations providing narrowband mobile services and those giving access to fixed broadband services. Even in the mobile services market, Globalstar is perceived as successful and as having the right system design and marketing approach. One illustration of this is the conclusion of the market report recently released by Gilder Group. With regard to the recent ICO Chapter 11 filing, I would say that they have suffered by trying to raise money through stock when Iridium failed. It?s really a matter of unfortunate timing. From a business standpoint, SkyBridge was conceived and designed after taking into account many factors, including the phenomenal growth in demand for local broadband access. From the beginning, we have anticipated the rapid build out of terrestrial broadband technologies. While Iridium did not anticipate the build out and dropping costs of terrestrial wireless networks, even our most conservative studies and estimates conclude that there will be over 400 million people worldwide demanding broadband communications services by the year 2005. Of those, around 100 million will be unable to take advantage of terrestrial technologies such as fiber, DSL or local multipoint distribution service (LMDS). In some areas of the world, satellites will be the only available means of broadband access. Technologically, we have ?future-proofed? the system by keeping all switching and intelligence functions on the ground where they can easily be upgraded to comply with changing standards and applications. The simple system design affords the flexibility needed to meet changing patterns of market demand and has allowed us to keep expenses down, thereby providing a cost-effective solution. John Mattingly President, COMSAT Satellite Services Each situation is unique. It is premature to draw conclusions about ICO?s viability. The company may well have a bright future. The converse of the turbulence in the mobile satellite industry is that it underscores the intrinsic value of satellite communications systems that are up and running, using proven technology and successfully meeting customer demands for broadband services. As for the immediate impact in the industry, it will be more difficult to secure financing for the new configuration satellite systems. And, as we look ahead, any new entrant in the market is going to have to meet the time-to-market challenge of providing the services customers want on a reliable, cost-effective basis.