4G-Satellite Network Planned for US Next Year
An investment company has hired Nokia Siemens Networks to build a hybrid 4G-satellite mobile network, called LightSquared, across the U.S. to go live next year.
Tue, July 20, 2010
IDG News Service — An investment company has hired Nokia Siemens Networks to build a hybrid 4G-satellite mobile network, called LightSquared, across the U.S. to go live next year.
Harbinger Capital Partners, which earlier this year acquired satellite phone service provider SkyTerra, announced on Tuesday it will pay NSN more than US$7 billion over eight years to design, build and operate the network. LightSquared will reach 92 percent of the U.S. population by 2015, the company said. It expects a commercial launch in the second half of 2011, according to the LightSquared website.
Harbinger will not offer a service on the LightSquared network itself but will sell access to it on a wholesale basis, allowing for a variety of service providers that could include mobile carriers, cable operators, device makers, retailers and content creators. Those customers could offer any combination of 4G, satellite or both.
The rapidly growing demand for mobile broadband makes a new 4G network seem promising, especially if it can reach poorly served rural areas via satellite. But Harbinger's fully wholesale business model has never been tested on a national scale in the U.S., nor has the concept of combined cellular and satellite coverage.
Harbinger was founded in 2001 by Philip Falcone, described in the 2009 Forbes list of billionaires as a former junk-bond trader now worth $2.3 billion. Harbinger has contributed $2.9 billion of assets to the project and announced additional debt and equity financing of up to $1.75 billion. Sanjay Ahuja, former CEO of Orange Group, will lead the development and rollout of the network as chairman and CEO.
The deal announced Tuesday is still subject to approval by the boards of both NSN and LightSquared. NSN announced Monday it would acquire most of the assets of Motorola's (MOT) cellular infrastructure business for approximately $1.2 billion.
LightSquared will start by launching commercial service in four cities: Las Vegas, Phoenix, Denver and Baltimore. The company can roll out both terrestrial and satellite service throughout all states except Hawaii, which will have only satellite service.
Analyst Peter Jarich of Current Analysis said he welcomes the prospect of a new mobile competitor. However, he warned that the company has a lot of work ahead of it in carrying out the new concepts it plans to embrace, including the hybrid network, the pure MVNO (mobile virtual network operator) business model, and possibly M2M (machine-to-machine) communications.
"Those cool buzzwords bring a lot of uncertainty," Jarich said.
LightSquared's radio spectrum comes from licenses held by Skyterra as well as from TerreStar (TSTR), another satellite operator, which is partly owned by Harbinger and leases its frequencies to the company, according to LightSquared spokesman Tom Surface. Another portion of the spectrum is being leased from Crown Castle (CCI), an owner and operator of network assets.
The LightSquared frequencies are in the 1.4GHz and 1.6GHz bands, neither of which is a typical mobile telecommunications band. Most of the spectrum had been reserved for satellite services but can now be used for terrestrial cellular networks as well, according to Surface.
With most operators around the world planning their LTE networks for other bands, it may be hard for LightSquared to build up a broad ecosystem of device manufacturers, Jarich of Current Analysis said. It typically takes large-scale manufacturing to bring the cost of client devices down to prices consumers want to pay.