LightSquared has thrown its hat into the 4G LTE ring. Partly financed by Philip Falcone's Harbinger Capital Partners, the firm will combine SkyTerra's satellite assets with Nokia Siemens Networks' newly acquired Motorola technologies.
The investment company, which is pushing an ambitious plan to create a
hybrid 4G-satellite mobile network in the United States, wants to pay Nokia
Siemens Network $7 billion to build and operate it. The network, called
LightSquared, is being planned as the nation's first "wholesale" nationwide 4G
LTE (long-term evolution) network, Harbinger announced July 20.
If the investment group's plans pan out, LightSquared will consist of 40,000
cellular base stations and is expected to cover 92 percent of U.S. mobile users
by 2015. It also will provide wireless broadband capacity to a variety of
customers, including retailers, wireline and wireless communication service
providers, cable providers and device manufacturers. It is designed to allow these
customers to offer satellite-only, terrestrial-only or integrated
satellite-terrestrial services to their end users.
In May,
T-Mobile
was named as one carrier reportedly considering the services of the
then-unnamed LightSquared.
The network will combine assets acquired through Harbinger's March purchase
of satellite-communications company SkyTerra with those of
the
Nokia Siemens Networks-whose eight-year agreement with Harbinger needs the
approval of both companies' boards.
Nokia Siemens Networks is currently in the process of purchasing Motorola's
wireless network infrastructure assets-responsible for building GSM, CDMA,
WCDMA, WiMAX and LTE networks-for $1.2 billion.
"Nokia Siemens Networks is proud to have been selected for the largest ever
outsourced deployment of a wireless network in the United States," Rajeev Suri,
CEO of Nokia Siemens Networks, said in a statement. "Our organization is
prepared and ready to harness our global expertise to enable LightSquared to
meet its aggressive rollout schedule."
SkyTerra
and similar companies have benefited from a 2003 U.S. FCC Ancillary Terrestrial
Component (ATC) Order, which was created to help public safety and law
enforcement officials by allowing for simultaneous satellite and cellular
services over the spectrum-which is additionally capable of supporting 4G
services.
Analyst Ken Hyers, with Technology Business Research, called the
LightSquared plan interesting and full of potential, though he suggests that there's
some uncertainty around whether the business plan is actually workable.
"Essentially, it plans to build out a nationwide hybrid LTE network using
terrestrial and satellite networks to provide nationwide coverage," Hyers said.
"It will use non-traditional spectrum (1.4 GHz and 1.6 GHz bands) and will sell
wholesale access to the network." Because of this, both the network equipment
and subscriber terminals will be more expensive than similar equipment
associated with traditional LTE networks.
"Particularly on the terminals side, [LightSquared] will find it more
difficult to source a wide variety of handsets from different suppliers," Hyers
told eWEEK. "The terminals that it gets will be more expensive than those on
standard LTE networks, since they'll have to be semi-customized to run on the
LightSquared network. That will make it more difficult to wholesale its service
if there are only a limited number of [these] more expensive devices available
that will work on its network."
In its July 21 statement, LightSquared announced that in addition to $2.9
billion in assets contributed by Harbinger, it will have additional debt and
equity financing "of up to $1.75 billion."
If the company can overcome the terminal issue, said Hyers, "LightSquared
may find customers in the MVNO [Mobile Virtual Network Operator] market and
among cable operators."
Sanjiv Ahuja, the former CEO of telecom giant the Orange Group and now
LightSquared's chairman and CEO, described the new company as a "disruptive
force" that will democratize wireless broadband services.
"We're not only delivering exciting opportunities for
manufacturers and retailers, but also real change for consumers, dealers and
service providers," Ahuja said in a statement. "We're providing everyone,
including underserved communities, with a fast, reliable experience regardless
of where they are located in the United States."
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