LightSquared Announces LTE Network

LightSquared, a new nationwide 4G-LTE wireless broadband network with integrated with satellite coverage, was announced today. LightSquared is first wholesale-only wireless broadband network coupled with a satellite network. LightSquared will deploy LTE using spectrum from Skyterra’s satellite network, along with other terrestrial and satellite spectrum.

LightSquared says their network, consisting of approximately 40,000 cellular base stations, will cover 92 percent of the U.S. population by 2015. Nokia Siemens Networks signed an 8-year, $7 billion agreement, says the company, for network design, equipment, installation, and network operations. Wholesale customers are expected to include retailers; wireline and wireless communication service providers; cable operators and others.

The network will allow these partners to offer satellite-only, terrestrial-only, or integrated satellite-terrestrial services. LightSquared says they control 59 Mhz of nationwide spectrum in an advantageous frequency position.

The new LTE entrant will use a mixture of spectrum in the L-band, 2GHz band, 1.4GHz band and 1670-75MHz band, along with substantial vendor financing, according to analyst Tim Farr of TMF Associates.

Farrar expects the network will initially use 23MHz of spectrum, including 8 MHz of 1.4 GHz terrestrial spectrum, 5 MHz of 1.6 GHz terrestrial spectrum (1670-75MHz) and 10 MHz of (SkyTerra’s) MSS/ATC L-band spectrum. Through a cooperation agreement with Inmarsat and associated waivers of the Commission’s ATC rules, by 2013 Harbinger will have access to an additional 30 MHz of ATC spectrum (in the L-band).

In the 2 GHZ (MSS band), ICO and TerraStar each have 20 MHz (10MHz x 2). Skyterra uses the lower 1.6 GHz satellite band and has another 20 MHz.

Because LightSquared’s network will be a combination of satellite and terrestrial LTE, it will need new dual-mode devices to run on it. The company will announce in the fall a “series of partnerships” with mobile device chipset manufacturers, which will integrate both satellite and LTE support at 1.6GHz in their silicon for the LTE devices, Frank Boulben, LightSquared’s chief marketing officer, told Light Reading Mobile.

“LightSquared could provide a renewed opportunity for retailers and major brands such as Wal-Mart, Best Buy, and Office Depot to enter the wireless market as service providers to consumers,” said Ken Hays, partner at global management consulting firm PRTM. NSN previously announced a deal with TerreStar, to provide its I-HSPA technology. So far not much has happened with the TerreStar/Nokia deal.

Satellite phones with terrestrial networks seem to be sprouting up all over:

SkyTerra coverage includes the continental United States, Canada, Alaska, Hawaii, Puerto Rico, the Virgin Islands, Mexico and the Caribbean.

Several years ago FCC regulations were changed to allow satphone companies to deliver service over terrestrial towers – re-using their frequencies. This change was made because satellite phone providers were going bankrupt. Satphone service was unpopular, among other reasons, because the signal couldn’t penetrate indoors or in vehicles and devices couldn’t fit in pockets. Terrestrial reuse, it was thought, would make satphone providers solvent. Against the objections of cellular carriers, the new rules were passed by the FCC.

It meant that a nationwide terrestrial network could be created without buying spectrum.

The FCC’s Notice of Rulemaking earlier this month involves 90 MHz of spectrum in three different satellite phone bands. It would be capable of supporting terrestrial broadband service. TerreStar and ICO (at 2 GHz) and SkyTerra (at 1.6 GHZ) all have 20 MHz available for satphone services. Terrestrial service via Ancillary Terrestrial Component (ATC) towers could take about half that spectrum.

According to industry guru Tim Farrar, Iridium, Globalstar, Inmarsat, Orbcomm, ICO/DBSD, SkyTerra and TerreStar are playing in an industry sector which only generated $1.1B in wholesale service revenues in 2009, and it doesn’t appear poised to breakout.

ATC could be the secret sauce that creates a bigger pie.

Harbinger Capital Partners was one of the first to put together a plan. In late March, the FCC approved an application by Harbinger Capital Partners to acquire SkyTerra, which plans to launch their huge L-band satellite platform next month. Harbinger will use 10 MHz of SkyTerra’s MSS spectrum to develop a nationwide terrestrial LTE network.

Their wholesale-only business model, says Lightspeed, ensures the company has no conflict of interest with its customers. Harbinger has committed to the FCC not to sell more than 25% of its capacity to the two largest mobile operators (Verizon and AT&T). That shortens the list of carriers that might partner with Harbinger.

T-Mobile would seem to be good potential partner. Lightspeed, presumably, might combine T-Mobile’s towers and PCS/AWS spectrum with Harbinger’s “free” satellite spectrum (for LTE). Lightspeed isn’t talking about carrier partners yet.

The LightSquared deal was the second major deal for Nokia Siemens Networks (NSN) in as many days. Yesterday NSN announced a US$1.2 billion acquisition of Motorola’s networks business.

In addition to the $2.9 billion of assets already contributed by Harbinger Capital Partners and affiliates, LightSquared is announcing additional debt and equity financing of up to $1.75 billion.

Philip Falcone, founder and chief executive officer of Harbinger Capital Partners, made several investments through the Harbinger funds, including the acquisition of SkyTerra Communications, Inc., now part of LightSquared.

Falcone has partnered with Sanjiv Ahuja, who will lead the LightSquared team as chairman and chief executive officer. Ahuja was chief executive officer of the global telecom giant Orange Group from 2004 through 2007, during which Orange’s customer base grew from 48 million to more than 100 million subscribers globally.

“LightSquared will be a disruptive force in the U.S. wireless landscape by democratizing wireless broadband services,” said Ahuja.

As many as 24 million U.S. citizens have no access to broadband Internet service and are unlikely to get it, the FCC said yesterday in its annual report to Congress (pdf).

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Posted by Sam Churchill on .

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