New LTE network embraces the 'dumb pipe'
JUL 20, 2010 1:02 PM,
By Kevin Fitchard
Harbinger selects NSN to build and manage the first wholesale-only LTE network, promising 92% coverage by 2015.
connectedplanetonline.com
Harbinger Capital Partners has formalized its plans to create the first wholesale-only 4G network in the U.S., announcing today an ambitious plan to build out a nationwide long-term evolution footprint covering 92% of the population in five years, supplemented by satellites that will increase its population penetration to 100%.
Nokia Siemens Networks (NYSE:NOK, NYSE:SI) not only won the infrastructure contract for the project but was also selected to manage network operations, creating a deal it estimates will be worth $7 billion over eight years.
Called LightSquared, the new operator will sell 4G and satellite broadband connections by the gigabyte to national and regional wireless, wireline and cable operators; retailers; device-makers; and Web-content providers. “We will be the first quote-unquote 'dumb' wireless pipe,” said Frank Boulben, its chief marketing officer, who has joined the new company after previous executive stints at Orange and Vodafone. “As we’re not [launching] our own brand, we’re not competing with our customers. We can only make money if our customers make money.”
Though other operators have nominally embraced wholesale business models for the 4G networks — 2G and 3G networks as well in the case of machine-to-machine applications — Boulben said there is an inherent conflict of interest in supporting retail and wholesale access side by side. Services like voice over IP (VoIP) compete directly with carriers’ legacy voice services, and operators are increasingly competing on advanced services like video and distinguishing themselves through device exclusivity. Allowing wholesale customers offering any manner of competing services and devices on their networks could cannibalize commercial operators' own retail businesses, Boulben said.
To counter those protectionist tendencies, LightSquared will be 100% open, allowing VoIP, streaming video, peer-to-peer applications and any other conceivable service over both satellite and 4G, Boulben said. Its business model will also be extremely simple, Boulben said: LightSquared will meter its capacity, charging its customers for the aggregate of gigabytes their customers consume. “We’ll have no gatekeeping rules on our network,” he said.
Harbinger and its affiliates are funding LightSquared through a $2.9 billion direct investment as well as backing debt financing up to $1.75 billion. It plans to conduct technical trials late this year and early next year in four markets — Baltimore, Denver, Las Vegas and Phoenix — culminating in a commercial launch in those markets in the latter half of 2011. From there LightSquared will grow its footprint until it has reached its goal of 92% coverage. The rest of the population will be served with satellite services, though the LightSquared’s customers don’t necessarily have to use the satellite component. A SkyTerra satellite is already in orbit, but LightSquared plans to launch two next-generation satellites with very large collector dishes, adding the sensitivity necessary for the creation of satellite radio devices in the same form factors as 4G-only terrestrial devices.
LightSquared will use L-band mobile satellite service spectrum (MSS) originally licensed to SkyTerra, the satellite broadband operator Harbinger acquired in 2005. The 59 MHz of paired 1.5 GHz and 1.6 GHz frequencies don’t match the 700 MHz and advanced wireless service frequencies U.S. operators Verizon Wireless (NYSE:VZ, NYSE:VOD), AT&T (NYSE:T) and MetroPCS (NYSE:PCS) are using for their LTE networks, but Boulben said LightBridge customers will have no problem securing chipsets and devices for its network. The 3GPP has identified the L-band as a global 4G frequency, Boulben said, and LightSquared plans to unveil several chipset partnerships this fall, which will lead to the development of dual-radio LTE and satellite devices.
The satellite element would normally be an enormous cost-prohibitive factor for device development, as the radio silicon to support orbital connections would cost exponentially more than stand-alone LTE chips. The FCC, however, has eased requirements in much of the MSS frequencies, allowing satellite spectrum holders to offer what are primarily terrestrial services.
But the beauty of LightSquared’s wholesale business model allows it to bypass whatever satellite restrictions remain. Boulben said that LightSquared is selling the combined LTE-satellite package to its customers, but it’s up to each individual customer which elements they use. Customers are then free to procure LTE-only devices, dual-radio devices or even satellite-only devices.
Philip Falcone, founder and CEO of Harbinger, has brought in several industry heavyweights to run LightSquared, starting with chairman and CEO Sanjiv Ahuja, former CEO of Orange. Other executives have been drawn from the ranks of Time Warner, Nextel, Clearwire and Ericsson. |
