DJane: I read the Hamman article you posted on bandwidth scarcity, and this one little phrase caught my eye "...satellite bandwidth capacity is much smaller than cable."
Where? Just what does Hamman mean? Satellite platforms are being designed to deliver one terabit/second of data-- everything I have read points to that. Unless, too, then Bill Gates, Craig McCaw, et al are sipping sunrays in the pool and investing their own money in constrained systems (like Teledesic) that have no bandwidth advantage over land systems.
The point to be taken from the Hamman article: man, you have to be careful, as poster Maurice Winn is so careful to point out, what source materials you read, and their authoritativeness.
On an aside, regarding the Marijke Jurgens piece. I, with some non-Wall Street research people, have personally met Miss Jurgens-- she used to work at Inmarsat. I am probably the only one on this board who has met her. An extremely knowledgeable individual, who told me once that Bernard Schwartz "is a brilliant financier".
The Globalstar v. Iridium capacity issue is an intriguing debate. I have been told by another whom I have quoted here at other times the same as what poster Winn wrote just the other day on that issue also. The most that has ever been made public, so far as I know, of both systems is that Iridium can process 72,000 calls simultaneously, Globalstar 66,000. Neither company will go any further into what "variables" affect "break even rates", although I know of no one in the satellite field (though someone might have) who has asserted Ms. Jurgen's claim that Iridium has a capacity of some 7-10 billion minutes/year. Not even EVP of Iridium Leo Mondale, at a satellite conference I attended two years ago in New York, was willing to go over 1.5 billion minutes per year as total system capacity when I asked him directly the question. That means Iridium's break even is $1.40 per call, as opposed to Globalstar's $.08, .09 (not $.14). However, as has been pointed out again to me by another whom I have here quoted in the past, the "four-fold compressibility" that CDMA provides the Globalstar system is what makes it far more cost effective than Iridium.
As to Ms. Jurgen's claim that the gateways for Globalstar have not been factored into the total cost of the Globalstar system ($3.2 billion), she is disingenuous on that. Or misrepresents the case (to be somewhat more frank): Globalstar has put $200 million of its own money into the gateways, and the average gateway costs $7-10 million, not $20-30 million. If you want to quibble about some $130-140 million more as understating the total cost of the Globalstar system, fine. But the comment she made would have one believe that Globalstar has understated its overall construction cost by close to $500 million. I would expect nothing less from a competitor of Globalstar's. The two companies do not have any love lost between them.
Poster Maurice Winn is dead right on the pricing issue (he could not be more right) and there is a lot of misinformation on pricing. Factoring all local mark-ups into the costs of both Iridium and Globalstar, at worst Globalstar is 50% cheaper per call than Iridium--at worst. Commsatman asks for empirical verification of Valueman's claim. While I am not foolish enough to pay $7/minute to call from New York to Tokyo on an Iridium phone while en route to Nicaragua, I know of an individual who did pay just that ($141.13). Sorry I cannot scan his Iridium bill onto this board. Will a Globalstar bill be as high? Not a chance. Want an educated read on the price? $2.53/minute.
Just like the media had all believing last year that the Leonid Showers would sandblast to hell every GEOsat in orbit, now we have claims about pricing that are simply absurd (not to mention the Hamman piece about satellite broadband capacity). An Iridium phone does cost roughly $4 grand, as Valueman notes, with all the gadgets, a Globalstar phone does cost roughly $800. Marijke Jurgens comment on Iridium's "ISL processing" v. Globalstar's "bent-pipe" appears pointless to the real issue in the D. Baker article-- Iridium made a commercial mistake in wanting to capture all the revenues for itself in its "end to end" system, instead of going the more conservative route of keeping the intelligence on the ground. Iridium went that way, as I have written before, because it was fundamentally a US military "last resort" phone system. Iridium will not be allowed to go under because of its necessity for military usage. It will be kept solvent by DoD payments, irrespective of poster Goodfellow's comments to the contrary, however knowledgeable and persuasive his remaining commentaries indeed are.
I am not as optimistic as Ms. Jurgens is on the outcome of a customer base total for Iridium. It is too expensive of a system, as I have thrown out on this board before. Ms. Jurgens' comment that Iridium' capacity is really 7-10 billion minutes is falsified, one has to think, by the price it charges for its calls. The comment that the Iridium model assumes 1.5 billion minute capacity because it only takes into account extra-urban, extra-cell network, regions is backwater. One has nothing to do with the other. If its capacity were so large, the calls would have been cheaper in the beginning to fill that capacity. And in fact they would be lowered now, in the face of its low user turnout, to fill capacity so that a return on capital would be realized. The reason the price has not fallen is because the system capacity, one can only infer, is not what Ms. Jurgens claims it is.
The debate will get more heated as Globalstar moves to start its system in September, and there will be many misinformed comments (hopefully none from me) primarily because of the secrecy these satellite companies have regarding the actual technology of their LEOs. How many calls does a Globalstar "beam" handle Qualcomm, I have been told by those whose research we pay for, outside Wall Street, will not really tell you. What the "Beam Forming Network" on the LEO can do Qualcomm will not say either. On the capacity issue, too much is left to "inference". However, one can make inferences on capacity versus pricing, as I did with Ms. Jurgens, and ask why Iridium's phone calls are at least double Globalstar's if its capacity is what she claims it actually is.
I personally think the point is that in the beginning you have a range of some 35 million potential users of satellite mobile telephony, with at most three systems coming to market, one already there at a heavy price disadvantage. As poster Maurice Winn notes, "the pricing is the thing" and if Globalstar is going to capture the market dead-on, it will let the price fall to where supply on its system is simply gone. That is the way it will fill up a potential 7 million user base quite fast, and force Iridium to then show just how much capacity it does have relative to Globalstar. |
