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Unfair competitive advantage?

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Caradoc Member Level  Saturday, 05/21/05 05:14:23 AM
Re: None
Post # of 157271 
Unfair competitive advantage?

It may sound strange when looking at a recently "highly risky penny stock" which hasn't yet had its first day of trading on a major exchange, but I see the Stratellite has having such tremendous advantages as a platform for everything from cell phones to broadband internet that there's some risk of being perceived as a monopoly or at least a corporation that needs to be regulated (and/or eventually broken up like Ma Bell). For example, suppose GTE invited cell phone companies to an auction, advising that we're putting up 13 Strats (enough to blanket the 48 contiguous states), that the high bidder at the auction will get cellular exclusive use of 7 Strats of his choosing and that the second-high bidder would get the other 6. Only two winners, and the losers go complain to their congressperson. What happens next?

On the other hand, I'm thinking that if GTE provides its own cellular service rather than leasing payload space/weight/power to existing cellular companies, those companies would continue to market their services and we'd simply be viewed as a another competitor during the period it would take before a disproportionate share of new consumer contracts are being written with the one cellular company that happens to offer reliable cellular service without the "dropouts" that now plague cellular technology.

Note that inertia will keep some people renewing their contracts with their current providers even after the smart money has gone with GTE. Even so, after two or three years we start to look like a de facto monopoly.

Same logic applies to broadband internet. Bottom line is that there are longterm implications of however our company chooses to do its marketing.

Important: I'm not saying it would be bad to own stock in a company so big and powerful that it had to be broken up into six or seven smaller companies since we'd end up holding stock in all of them. But I am saying that's not the route that maximizes return for each of us.

Having chewed on this for a while, my suggestion is that we take a two-pronged approach: (1) put up enough Strats to accomodate everybody who wants to lease space/weight/power (i.e., everybody who wants to remain competitive) and (2) put our own gear aboard to provide the GTE version of cellular or broadband or whatever. Under this scenario, nobody can complain that they're being excluded but all the competitors have higher overhead than the GTE service since their lease payments pay for the Strat (plus some!) and we ride for free. Then we price our service just a tad lower than theirs. Not low enough to drive them out of business. Just low enough to retain a competitive edge while making a larger profit than any of them.

Speaking of profit, my hunch is that those buying GTE in hopes that share price will appreciate similar to what certain technology companies achieved during the 1990s will not be disappointed. What may come as a surprise, though, will be the size of the dividend checks that GTE will be issuing in two or three years.

Meanwhile, as the Sanswire One prototype proves our technology is workable and the first production Strat actually begins to make it work, look for buying pressure initially mostly from those looking for share appreciation followed by even greater buying pressure from those fund managers looking for a long hold on the preeminent utility stock of the 21st century.

Just the way I see it,

Caradoc




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