LTE Provider LightSquared Joins Race to 4G

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."