If you’ve not heard of LightSquared, well, perhaps you won’t. They’re a wholesale-only LTE network operator. But given the capacity constraints faced by the entire WWAN industry, every little bit helps, and a new deal with Sprint bodes well for both the company and LTE overall.
LightSquared has been in the headlines of a number of trade-industry stories in the past few weeks, as the company begins to roll out their wholesale-only LTE network. Wholesale, of course, refers to the fact that you can’t buy capacity from LightSquared unless you’re a carrier – unlike Clearwire, for example, who sell to the general public and via carriers, LightSquared wants to be simply a provider of capacity to resellers alone. This business model actually makes a lot of sense, as it avoids all of the costs associated with end-user marketing, sales, and support. And, of course, there’s no possibility of channel conflict, where wholesale suppliers and their customers end up competing for the same end-users. LightSquared will also be offering satellite-based communications services (they actually got started as a satellite provider, under the name American Mobile Satellite, and later SkyTerra, with a focus on public safety) as well enabling the company to address rural wireless broadband opportunities fairly quickly.
The only problem here, as many see it, is that LightSquared uses spectrum in the L Band (at 1525 – 1559 MHz.), originally intended just for use with satellites. There’s nothing wrong with this spectrum, which is just fine for both satellite and terrestrial use (PCS is up around 1700 – 1900 MHz., for example), and what they’re doing is legal under FCC rules. But many have raised concerns about the potential for interference, especially to GPS – one of the key frequencies used by GPS is at 1575.42 MHz. (and, also to some degree, other GPS augmentation services that share some LightSquared spectrum). OK, this is pretty far from LightSquared’s spectrum, but GPS receivers are designed to work with very, very weak signals and thus could be susceptible to interference from the much stronger terrestrial component (from potentially many base stations, so there’s an additive effect here) mostly because many GPS receivers, for historical reasons, lack good filtering. Both the NTIA and DoD have weighed in here, and neither is happy. The GPS industry, likewise, is very concerned. One might argue, of course, that GPS receivers should have better filtering, but they don’t, and it would regardless be unacceptable to mess with an existing service as vital as GPS.
LightSquared has a plan to solve the problem, mostly by not using frequencies closer to the GPS band for LTE. Experiments are now underway, and I’m pretty confident that a solution will be found, but it will be less than optimal for LightSquared. The importance of this point, though, is that spectrum remains precious, our regulatory mechanisms need revision, and the problem is only going to become more acute as demand for spectrum increases at least at the current dramatic rate. There are also lessons for the industry overall in terms of designing future-proof systems going forward.
For the near term, though, no matter – LightSquared has a deal with Sprint (yes, the same Sprint that has a deal with Clearwire) that actually provides Sprint with $9B in much-need cash, and LightSquared with a potentially-valuable customer, a win-win if there ever was one. I wouldn’t be at all surprised to learn that Sprint is behind the perhaps less-than-gentle nudge required to get Clearwire on the LTE bandwagon, but such would have happened regardless. Bottom line: WiMAX remains dead, and LTE remains unstoppable. And, with new capacity coming on line, the future for mobile broadband looks brighter than ever.
