Open Range Communications, a wireless broadband services provider to rural America, today announced an investment of $100 million from One Equity Partners (OEP), the private equity arm of JPMorgan Chase & Co. In March 2008, the United States Department of Agriculture’s Rural Development Utilities Program (RDUP) approved a $267 million Broadband Access Loan for Open Range (pdf), with the prerequisite that private financing also be secured.
The OEP investment satisfies the RDUP’s loan terms.
The funding enables Open Range to launch affordable high-speed broadband Internet and voice services to more than six million citizens in 546 underserved and rural communities, using WiMAX technology, within five years.
Open Range will lease mobile satellite spectrum from Globalstar under Ancillary Terrestrial Component (ATC) authority granted by the Federal Communications Commission in October 2008. The fixed and variable payments to be made to Globalstar over the 30 year term indicate a present value of between 30 and 40 cents per MHz/Pop. The total amount of the payments made to Globalstar will depend on a number of factors, including the eventual geographic coverage of, and the number of customers on the Open Range system.
The ATC authority allows Globalstar to use 11 MHz of its 1.6/2.4 GHz satellite radio frequencies for a complementary terrestrial wireless service. Using terrestrial ATC base stations and/or repeaters to complement the satellite service, Globalstar said it will be able to offer services in indoor or downtown urbanized areas that have traditionally limited mobile satellite coverage.
Open Range says their service requires no home installation. Customers simply connect an Open Range Simply Easier device to a desktop or laptop computer for instant, portable, dependable and low-cost access to the Internet. In most communities network equipment will be located on existing towers. The service also lends itself to a variety of public safety and commercial applications, including municipal traffic control and automatic meter reading.
The FCC modified Globalstar’s license to permit use of WiMAX, allowing Open Range Communications to deploy their rural broadband service (pdf). Globalstar holds a space station license for the Globalstar 1.6/2.4 GHz MSS system via Low Earth Orbit satellites.
Globalstar applied for authority to operate ATC base stations and dual-mode MSS/ATC mobile terminals with the cdma2000 air interface protocol, assigning the 1610-1615.5 MHz frequency band for Globalstar ATC mobile terminal transmission and the 2487.5-2493 MHz band for Globalstar ATC
Open Range plans to deploy first-generation broadband ATC services beginning in the second quarter of 2009, first to approximately 2,500 customers in 5 markets in a “proof-of-concept deployment. These customers will receive the first generation device with one-way only, low-data rate MSS capabilities, but will be offered an exchange upgrade when a newer device becomes available beginning in early 2010.
The newer device will be upgradeable to include a chipset that is capable of supporting two-way high-speed MSS. This device would be deployed in approximately 189-217 markets. The chipset, to be manufactured by Hughes Network Systems, is scheduled to become available in production quantities in early 2011.
Telecom, Media and Finance Associates, a consulting company based in Menlo Park, CA., analyzes technical and financial issues in the satellite sector, and appears skeptical of the plan (pdf).
More than two million active mobile satellite units are deployed globally, with applications ranging from data-only location reporting to more sophisticated data applications such as temperature monitoring and control. There are six companies that offer mobile satellite communications, three over the Earth’s equator (geostationary) and three companies that offer non-geostationary communications (Low Earth Orbit).
GlobalStar is facing a billion dollar train wreck with degradation of its S-band antenna amplifiers that have reduced substantially all of the Company’s two-way communications services. In November of 2006 Globalstar signed a contract with Thales Alenia Space for 48 second-generation satellites and may start launches as early as Q3 2009.
