SK Telecom, South Korea’s largest cellular operator, is in talks with Harbinger Capital about a US$100 million investment in LightSquared, reports Reuters. LightSquared uses a huge spot beam satellite for connection when out of terrestrial range, but needs a cellular partner to provide terrestrial towers.
Of course $100 million amounts to a rounding error, when it comes to building an nationwide LTE network in the United States. Perhaps more significantly, LightSquared obtained a $750 million four-year loan from UBS AG, reports Bloomberg. CEO Sanjiv Ahuja said last month he was in advanced talks with 10 potential customers or partners.
In addition to the $2.9 billion of assets already contributed by Harbinger Capital Partners and affiliates, LightSquared hopes to raise additional debt and equity financing up to $1.75 billion and raise a second round of financing in the next two years.
Philip Falcone, founder and chief executive officer of Harbinger Capital Partners, made several investments through the Harbinger funds, including the acquisition of SkyTerra Communications, 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.
SK Telecom is planning to launch LTE in South Korea next year, with the intention of offering nationwide coverage by 2013. SK Telecom, along with Korea Telecom (KT), South Korea’s dominant wire-based carrier, have been WiMAX pioneers.
SK’s previous efforts in the United States included a failed MVNO effort called Helio, which was eventually sold to Virgin Mobile USA. SKT also made a US$100 million investment in Malaysian WiMAX operator Packet One Networks. In August 2008, P1 became the first company to launch commercial WiMAX services in Malaysia.
Nokia Siemens Networks will deliver equipment to LightSquared this year so it can test network services in Baltimore, Phoenix, Las Vegas and Denver in the first half of 2011. Approximately 40,000 cellular base stations are planned, covering 92 percent of the U.S. population by 2015.
LightSquared says it will cover at least 100 million Americans by December 31, 2012; 145 million by the end of 2013; and 288 million by the end of 2015.
While $100 million isn’t much, it could indicate that T-Mobile is going with Clearwire for 4G LTE. Clearwire uses a more traditional “4G” frequency band at 2.6 GHz, while LightSquared would use 10 MHz of its 20 MHz TerreStar satellite platform, as well as other assets, for spectrum.
Satellite phones with terrestrial networks seem to be sprouting up all over:
- The TerreStar satellite, launched one year ago, uses the MSS (2 GHz) band.
- SkyTerra will use the lower frequency L-band at 1.6 GHz. SkyTerra’s giant geosynchronous satphone platform, may launch this December. It uses a 22-m L-band reflector built by Harris.
- GlobalStar, the Big LEO constellation, also plans to re-use their satphone frequencies on terrestrial towers. Open Range will lease mobile satellite spectrum from Globalstar.
- Iridium covers the whole Earth, including poles, oceans and airways at 1.6 GHz. Iridium NEXT, anticipated to begin launching in 2015, will maintain the existing constellation of 66 cross-linked satellites.
- Craig McCaw’s ICO, in the 2 GHz band, launched ICO G1 in April 2008, the largest commercial satellite ever launched at the time. But ICO does not yet offer service, and is in the process of emerging from bankruptcy as DBSD Satellite Services.
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 year involved 90 MHz of spectrum in three different satellite phone bands. It would be capable of supporting terrestrial broadband service.
The TerreStar satellite 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 for terrestrial LTE services.
New York-based Harbinger now owns all of SkyTerra and some 44 percent of TerreStar, as well as 29 percent of London-based Inmarsat, the veteran mobile satellite services provider.
TerreStar-1, using the 2 GHz MSS band, was launched on July 1, 2009. It was constructed by Space Systems/Loral and is the world’s largest and most powerful commercial satellite ever launched, with an antenna almost 60 feet across, and supporting 500 dynamically-configurable spot beams. (Form 8K)
A new 1.6 GHz satellite platform, SkyTerra-1 was scheduled for launch this November with SkyTerra-2 to be launched next year. SkyTerra1 and SkyTerra2 are built by Boeing, using ILS launch services. But Boeing discovered a technical glitch in SkyTerra-1 satellite, postponing the launch by ILS from Kazakhstan to December or early 2011. SkyTerra will implement LightSquared’s Cooperative Agreement with Inmarsat (which also uses the 1.5/1.6 GHz (“L Band”), that will be integrated with SkyTerra’s 1.6 GHz satellite network.
TerreStar’s $799 Windows Mobile-based Genus phone was announced for AT&T, offering a combination of GSM/HSPA and satellite access when far from a cell tower.
The phone costs $799 without a two-year contract, and requires regular AT&T voice and data service plans. It uses the AT&T network where it’s available. The option to be able to switch over to the satellite costs $25 extra per month, and then 65 cents per minute of calling.
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