GlobalNet is delivering 135,000 PIN cards to the U.S. Department of Defense this week for distribution to the troops. This is expected to lift the spirits of military families, especially those with loved ones serving in remote areas in Iraq with little or no access to telephones. Some of these military personnel have not been able to phone home for many months on end.

"Since there are only a few hundred compatible mobile phones on the military bases at this moment, the most daunting task will be getting a sufficient number of these handheld units into Iraq to meet the anticipated onslaught of demand," according to Robert Thorell, the Chief Operating Officer at GlobalNet.

"We haven't forgotten the troops stationed in Afghanistan either, and hope to extend this mobile service there by Valentine's Day," he hastened to add.

The contract was granted to GlobalNet by Global Telesat Corp., a privately held company that owns the only satellite simplex applique situated anywhere in the world outside of the United States. It is installed in a communications gateway within the region at an undisclosed protected location. Global Telesat recently decided to commercialize this gateway applique.

Growth Enterprise Fund acquired a controlling interest in GlobalNet from The Titan Corporation just prior to Titan's announced merger into Lockheed Martin Corporation. At that time, Growth Enterprise Fund revealed that its purpose in acquiring GlobalNet was to team the company with Ericsson AB, the Swedish telecom giant, in order to bid for the licenses proposed to be issued by the Coalition Provisional Authority (CPA) to construct three GSM regional networks in Iraq.

While all three licenses were unexpectedly granted to Arab companies, GlobalNet now considers that a blessing in disguise, according to Thorell. To date, none of those licenses have been officially sanctioned by the U.S. Department of Defense, although they were awarded by the CPA last September.

During the bidding process, Ericsson began to express serious concerns about the potential dangers of sending its workers into the war-torn nation to install telecommunication towers. This prompted Global Telesat Corp., also an original participant in the Ericsson consortium, to re-evaluate its efforts in the region.

After a brief period of deliberation, it decided that it would be far more practical and cost-efficient to utilize the gateway servicing the 40-satellite constellation owned by Globalstar L.P. for telecommunication transmissions instead of contesting the three regional licenses, which have since been challenged by others and are now in limbo.

By thus altering its strategy, Global Telesat Corp., which already owned the gateway applique servicing the region and has an exclusive contract in place for worldwide digital satellite phone service, could immediately provide economical and superior handheld mobile telecommunications to the entire country of Iraq and the rest of the Middle East while competitors are still trying to install towers there.

Arik Meimoun is the President of Next Communications Inc. Like GlobalNet, it is another telecom company affiliated with Growth Enterprise Fund and one of GlobalNet's rivals which had hoped to land the Iraqi contract.

According to Meimoun, "Their satellite transmission is the clearest and most reliable in existence, and now they're already operational there. I take my hat off to them; GlobalNet managed to get the jump on everybody else who has been scrambling about since Saddam was overthrown.

"It will be virtually impossible for any insurgent to fire a shoulder missile 800 miles into the air to knock out a satellite orbiting the universe at speeds of 17,000 mph. So their system is probably the safest type on the planet."

Meimoun hastened to point out that the coverage of the gateway servicing Iraq extends into the entire land mass of both Iran and Israel, and that he intends to bid for rights to service those countries after having lost out on Iraq.

GlobalNet is also seeking an exclusive arrangement for worldwide termination of voice and data mobile satellite telecommunications originating in Iran and Israel. On December 22, 2003, it contracted with individuals to procure the necessary permits for those areas as a prelude to seeking a license from Global Telesat Corp.

Last week, GlobalNet revealed that it had been granted telephony termination rights for Libya, subject to approval from the U.S. Department of State. It hopes to finalize a contract to service Cuba in the immediate future.

GlobalNet believes that any contract covering Cuba would be a windfall for the 11 million people living on the island because Cubacel, the only cellular operator there, purportedly charges 80 cents per minute to call from one cell phone to another, more than $2.00 per minute to call the United States, more than $4.00 per minute to call Europe, and more than $6.00 per minute to call other continents.

Thorell believes it is obvious that there will be significant demand for a mobile telephone service in Cuba that charges only 50 cents per minute to call almost any destination in the world.

Meanwhile, GlobalNet is confident that nobody can effectively compete with it in Iraq because of the military rates negotiated through Global Telesat Corp. Worldwide standard service for calls into and out of Iraq will start at 50 cents per minute, compared to charges currently ranging up to $4.00 per minute imposed by foreign networks operating in contiguous Middle East countries.

Thorell went on to explain, "An average cell phone owner currently pays $2.00 per minute for calls made from that part of the world. Callers using GlobalNet's network do not need to connect to a cumbersome computer modem or talk into a special microphone attached to their desktop to make a telephone call or receive one.

"Unlike another satellite system operating in the general vicinity, the Global Telesat contract contains unconditional guarantees for service and clarity that is far superior to anything on the market, with call completion rates of at least 96%. I have been in the telecommunications business for a significant period of time, and I can tell you that nothing even comes close to that guaranteed call completion rate.

"In contrast to the inferior system operating there, which has a call completion rate of only about 65%, GlobalNet's customers won't have to bounce signals from one satellite to another as does the other system operating in the Middle East which is purportedly subsidized by the Saudis, so they're not going to need to charge up to $4.00 per minute to the caller into Iraq from the USA, as is the current practice of the Arab satellite system operating there.

"There is simply nothing available in this market that provides mobile telephone service at 50 cents per minute. Also, our system is entirely mobile and we can provide car kits and cordless phone adapters for residential and office use at very reasonable prices," Thorell stated. "I expect GlobalNet to be the Microsoft of mobile telecommunications in this region for at least the next year or two," remarked Next Communication's Meimoun.

Clearly, GlobalNet is anxious for the GSM cellular network to be built now, because the same SIM cards used to operate any standard 900-megahertz GSM mobile phone purchased anywhere in the world can be used in the satellite mobile phones, which are not much larger than current standard cell phones due to recent technology breakthroughs.

"We certainly expect cell phone subscribers will purchase a handheld mobile satellite phone since all GSM network cellular SIM cards are compatible with ours and, most importantly, because we're up and running already. Our actual cost for each SIM card is about $4.80, on top of which another $5 in monthly tariffs is levied by regulatory authorities once that card is activated.

"These charges are actually the only ones we pass on to the consumer. The SIM cards can be recharged with airtime by friends and family using any major credit card from anywhere around the globe, or the user can add airtime minutes to the SIM account directly by dialing '611' toll-free from the handset of any satellite phone using our network. The user can also purchase prepaid recharge cards from GlobalNet or from a distributor.

"Anyone can buy the phones from us at 10% above our cost plus shipping and handling charges, and we'll charge up the phone, insert the SIM card and ship the unit anywhere," Thorell declared. Once the GSM networks are finally built, those subscribers can easily insert their SIM cards into our mobile phones for local calls, and then quickly replace them with one of our GlobalNet SIM cards for international calling at a fraction of the cost to the consumer," he said.

"Our relatively low profit margin was made possible because almost all new equipment expenditures on the Iraqi project were funded through Global Telesat Corp. at no expense to GlobalNet. So we didn't need to pass any high equipment costs on to the end user. Moreover, since both Global Telesat and GlobalNet are controlled by Growth Enterprise Fund, a half-billion dollar private investment company, our working relationship is a symbiotic one, and part of the overhead expense is shared," Thorell remarked.

"This exceptionally minimal overhead is one of the reasons we can offer such incredibly low rates relative to any other operators in the entire region," he explained. "The low profit margins won't hamper us, though, since we expect to service millions of minutes in the Middle East alone. In fact, Global Telesat's contract provides for up to 75 million minutes of call time per month through enhancing the gateway that GlobalNet will service in the region," according to Thorell.

There is good news for the Iraqi citizens, as well. Global Telesat recently agreed to enter into a non-exclusive arrangement with VoEx Inc. to distribute satellite mobile phones and SIM cards to the general population after a sufficient supply has been shipped to the military bases. VoEx, whose principals are from Iraq, had a 5% interest in the original GlobalNet/Ericsson consortium. Global Telesat is conducting on-going negotiations with other distribution channels, as well.

"The Iraqis will be able to send and receive crystal clear voice and data calls at the same exact rates offered to members of the armed forces," Thorell said. "Initially, VoEx plans to distribute handsets and related options to the locals through shops and kiosks situated in Iraq.

A number of portable, generator-powered 'call trailers,' each containing a dozen phone booths, are slated for deployment. For the time being, all calls will be made on a prepaid basis because of the general economic disarray in the region. That arrangement might change after one of the proposed GSM cellular networks is finally constructed, which is estimated to take at least a year after the process is initiated.

Those cellular licenses were being granted by the CPA for a term of only two years, and it was projected to take nearly that long to construct enough towers to extend cellular coverage throughout the whole country. In marked contrast, Global Telesat obtained exclusive usage and control rights for eight consecutive 7-year terms, totaling 56 years. And its satellite coverage area already encompasses far more territory than the mere boundaries of Iraq.

In fact, their exclusive usage-and-control ground station rights cover the entire Leo constellation, excluding service originating in Russia and China for strategic and diplomatic reasons. Saudi Arabia had also been excluded, but Global Telesat managed to negotiate an option to place a new ground station in Qatar that would overlap the Saudi gateway footprint and thus enable it to service the entire Middle East region," according to Thorell.

"Iraq is a country with over 130,000 American troops presently protecting 16 million citizens. It has less than 2% land line teledensity, and mobile phones were strictly prohibited under Saddam Hussein. After 35 years of oppression, state-of-the-art telephone service at international rates drastically less than anywhere else in the region should mean that GlobalNet will be welcomed there with open arms," Thorell noted.

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