To: ajs who wrote (1600 ) 12/16/1997 9:34:00 PM From: JMD Read Replies (1) | Respond to
ajs, "lack of demand" is of course the key question of any new industry and satellite telephony is certainly a new industry so you have asked the right question as a potential investor. If your ISP is AOL,go immediately to the LOR thread and read every "Readware" post. I assure you that it will be worth your time. Long and short, the telcos lease transponders on the birds and are essentially resellers to telephone users (customers who chat). LOR will therefore derive revenue not from an individual making a phone call but from, for example, GTE, who will actually retail the communication capability to the user at $.75 to $1.00/minute in the case of Globalstar, after buying it wholesale from G* at, for example, $.50/min. So the analysts look to the GTE's of the world since they are putting their $$$$ on the line to gauge the true size of end user demand--and it has been so surprisingly strong (transponders at first generation level are essentially sold out) that the satellite companies have applied for (and paid for)second generation constellations to put more birds in the air. IMO, Wall Street doesn't get this yet cause they're focused on Iridium which I personally would avoid due to technology and pricing and cost, but the low cost provider will be G*/LOR and with that cost structure, the demand is there in spades, IMO. By the way, even at Iridium's pricing, the demand seems to be there which baffles me, but folks just like to chat and in many areas of the world land lines don't work and birds are the only alternative. Warning: this is all my two cents and I'm not an industry professional and it's a complex topic and I'm long LOR and G*. Do your own homework. Regards, Mike Doyle
