MSS: AWS Alternative?

Posted by Sam Churchill on

A mobile satellite consulting firm, today predicted that the exit of Wireless DBS LLC (the partnership of DirecTV and Echostar) from the FCC’s ongoing AWS spectrum auction. Telecom, Media and Finance Associates, (TMF Associates), predicted the satellite consortium will refocus their attention on alternative spectrum bands, and particularly on the spectrum allocated to Mobile Satellite Services (MSS) operators.

The FCC’s International Bureau works the MSS (mobile satellite) band. In recent years, the FCC has moved to permit use of MSS spectrum for integrated satellite-terrestrial services. Deployment of terrestrial base stations, known as Ancillary Terrestrial Component or ATC, will enable MSS operators to provide service in urban areas and inside buildings which satellite signals are too weak to penetrate.

TMF predicts Mobile satellite frequencies will provide a workable alternative to the AWS band (1.7/2.1 GHz) for DirecTV and Echostar. Of course, that also implies a mobile satellite. Neither DirecTV nor EchoStar have announced any plans (yet) for mobile satellite telephony.

TMF Associates updated their report; “ATC: The Future of Mobile Satellite Services?“. Tim Farrar, author of the report, commented, “MSS operators will need to secure major partners, in order to fund the US$3B+ projected cost of terrestrial base station deployment and to secure adequate mass-market distribution channels.

We have maintained that the optimum partner for MSS operators would be a satellite TV operator such as DirecTV or Echostar, because of their compelling need to develop new wireless and broadband service offerings, and the shortage of alternative spectrum options for deploying a nationwide wireless network. Such a partnership could generate as much as US$5.3B in annual service revenues by 2015.

“The exit of Wireless DBS from the AWS auction means that DirecTV and Echostar will now have to focus on alternative sources of spectrum. They could opt for a partnership with either Craig McCaw’s Clearwire, which operates in the 2.5GHz band, or with one or more MSS operators. Although Clearwire’s network is already operational, the national footprint of MSS operators may prove a decisive advantage in the long term.”

TMF seems unconcerned that Wireless DBS put down nearly $1B for bidding rights on AWS frequencies and has not withdrawn from the AWS auction (yet), although Wireless DBS has slowed it’s AWS auction activity the last few days.

The Ancillary Terrestrial Component is a terrestrial repeater. It uses the same (satellite) frequencies but since they are on cell towers, users get stronger signals. They can penetrate canyons and even indoors. Blocked coverage (and cost) has always marginalized satphone use. That may soon change.

When the FCC assigned the 2 GHz MSS band in 2000, they divided the 70 megahertz available into two 35 megahertz chunks (up and down) that would be divided amongst the proposed MSS systems in geosynchronous space. It got nibbled away for the AWS (3G) band. That left 20 MHz each (10MHz up and 10MHz down) for the two MSS satellite providers still standing — MVS and ICO.
The MSS satellite band is next to the new Advanced Wireless Service (3G band) at 1710-1755 MHz and 2110-2155 MHz. It is being auctioned off this month for 3G phone services (see DailyWireless: 3G Band Scam?).

The capital markets have been favorable to satellite phone operators recently:

  • Mobile Satellite Ventures has raised $430M (for MSV and Terrestar) in the last year
  • ICO raised $600M last month
  • Inmarsat’s stock price has appreciated over 30% since its IPO in June 2005

TMF Associates recently launched Mobile Satellite Services (MSS) sector coverage. Mobile Radio Technology has an excellent review of MSS Spectrum issues while Aviation Week reviews the current status.

MSV and TerreStar both plan advanced mobile satellites in North America. SkyTerra will own 70% of MSV, and Motient will own 74% of TerreStar. MSV’s satellite plans a mid-2009 launch with Terrastar’s satellite soon after.

It was DirectTV, EchoStar and News Corp., that made the largest up-front payment (almost $1 billion) for the AWS auction, followed by the Sprint/Cable consortium.

At today’s AWS Auction, RCN Reports it was Verizon Wireless who staked a claim to all six of the largest AWS licenses, bidding $3.5 billion in round 14 of the auction for 20 megahertz of spectrum covering the entire continental United States.

The Sprint Nextel Corp.-cable joint venture appeared to have changed tactics in round 14, switching its focus from large regional licenses to smaller, market-specific licenses. The JV went from bidding on a few regional licenses in the first 10 rounds to bidding on dozens of smaller licenses in more recent rounds—83 in round 13 alone.

Satellite television providers EchoStar Communications Corp. and DirecTV Group Inc. landed just one high bid in the 14th round, for a 10-MHz license in Alaska.

As the FCC wrapped up today’s 12th round of bidding, T-Mobile continued to lead with nearly $1.52 billion in net provisionally winning bids. Verizon’s Cellco Partnership finished the round in second place with $1.04 billion and Cingular totaled $957 million in net bids.

Other companies remaining in the top 10 include the Comcast/Time Warner/Sprint effort Spectrum Co. ($817 million), Cricket ($472 million) and Dolan Family Holdings ($56 million) in no particular order. Discount carriers MetroPCS and Cricket were also active bidders today.

Overall, the AWS auction currently has totaled some $7.3 billion in bids. Observers believe bidding could total some $15 billion when the auction is complete in a few weeks.

Related DailyWireless stories include; Satphones Localize, Spot Beam Satellite Launched, Mobile Satellite Access, Inmarsat Launches Spotbeam Satellite.

Posted by Sam Churchill on Tuesday, August 15th, 2006 at 10:28 am .

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