Sprint, LightSquared Announce Spectrum-Hosting, Network-Services Agreement

 
 
By Nathan Eddy  |  Posted 2011-07-28 Email Print this article Print
 
 
 
 
 
 
 

LightSquared will make payments to Sprint of approximately $9 billion in cash for spectrum hosting and network services.

LightSquared, a wholesale-only integrated 4G LTE wireless broadband and satellite network provider, and network operator Sprint Nextel have entered into a 15-year agreement that includes spectrum hosting and network services, 4G wholesale and 3G roaming.

Under the agreement, during an 11-year period, LightSquared will make payments to Sprint of about $9 billion in cash for spectrum hosting and network services as well as LTE (Long-Term Evolution) and satellite purchase credits which have a current estimated value of about $4.5 billion.

The agreement also provides Sprint the opportunity to purchase up to 50 percent of LightSquared's expected L-Band 4G capacity. The wholesale purchase credits will provide Sprint the option to obtain cost-competitive access to 4G capacity by offsetting Sprint's purchases of 4G capacity from LightSquared, should Sprint elect to incorporate the L-Band LTE capability as part of its 4G offering.

In a joint release, the companies said the agreement is expected to lower network capital and operating expenses for LightSquared by more than $13 billion over the next eight years in comparison with the cost of a stand-alone network build. LightSquared expects the deployment of the nationwide 4G LTE network to be completed more than a year ahead of the Federal Communications Commission mandate to cover 260 million Americans by 2015.

The spectrum-hosting arrangement leverages Sprint's investment in its multi-year Network Vision plan. Under the agreement, LightSquared will pay Sprint to deploy and operate a nationwide LTE network that hosts L-Band spectrum licensed to or available to LightSquared. As a wholesale-only carrier with separate core network operations, LightSquared can sell its 4G broadband capacity produced through this spectrum-hosting relationship to Sprint, other wireless carriers and retail partners.

"This spectrum-hosting agreement with LightSquared allows Sprint to more efficiently use its Network Vision platform," said Steve Elfman, president of network operations and wholesale for Sprint. "In addition to improving our cash flow, it provides additional options and flexibility in how we meet our customers' future capacity needs."

LightSquared has also entered into a 3G nationwide roaming agreement with Sprint. With access to Sprint's 3G nationwide network, LightSquared's wholesale customers will be able to offer combined 4G/3G data services as soon as LightSquared launches its first 4G markets in 2012.

"This agreement gives LightSquared a rapid and cost-effective radio access network build," said LightSquared chairman and CEO Sanjiv Ahuja. "With our next-generation satellite already operational and our independent core network build underway, LightSquared is now well positioned to meet the fast-growing market demand for wireless broadband services with its wholesale-only integrated 4G LTE and satellite network."

The press release noted the agreement is subject to LightSquared's obtaining resolution and FCC approval of certain interference issues involving terrestrial use of the L-Band spectrum. "We believe LightSquared, in cooperation with the FCC and adjacent spectrum users, is taking proactive steps to address and resolve these issues in a timely manner," Elfman said.

 
 
 
 
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.
 
 
 
 
 
 
 

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