LightSquared’s $7 billion decision to build a 4G network and then wholesale its spectrum and services to wireless carriers and other service providers (including cable) now is in play and could mean a quicker time-to-market business model for a variety of carriers.
Using the accumulated spectrum acquired by the private investment firm Harbinger Capital Partners, which contributed $2.9 million — mostly in spectrum — to the newly formed company, LightSquared will use LTE technology and Nokia Siemens Networks for its infrastructure build.
“We chose LTE because it will provide more speed and spectrum. The debate is closed about LTE for the next generation of services and is the de facto standard of those services,” said Frank Boulben, chief marketing officer at LightSquared.
The company is targeting a wide range of partners, including existing wireless operators either with no 4G or no 4G nationwide. Next is cable, then retailers, netbook and tablet manufacturers, CE manufacturers, Web players and public-safety services, Boulben said.
“We’ve already engaged more than 30 companies in this group and negotiating with 12 of them. Some of the bigger cable companies are on the list,” he added.
Probably not on the list is 4G provider Clearwire, which is expected eventually to compete with LightSquared for the wholesale 4G market. For the time being, however, it insists it can play together in the same sandbox as LightSquared. “The mobile broadband market will be large enough to be served by multiple providers and we welcome new entrants,” said Clearwire spokesperson Susan Johnston.
Translation: Bring it on.
In the near term, Clearwire is preoccupied with expanding its own network that, according to the company, includes 49 states and 51 million people. It recently partnered with CE giant Best Buy to offer 4G mobile broadband service in the United States, making it the first major wholesaler outside Clearwire’s core group of investors that includes three MSOs.
There are some differences between the two, however. Noted Boulben, “We chose LTE (Clearwire is WiMAX but open to using LTE in the future), we’re wholesale only and we operate at 1.6 GHz vs. 2.5 GHz. We’re just the wireless pipe. The brands will price it like they want.”
Nokia Siemens Networks, which has built and operated 3G networks, will take on the challenging 4G network build for LightSquared, and it also will maintain and operate it. “It’s a build, operate and maintain environment for us; and we will support its growth. LightSquared is responsible for their interfaces with customers and Nokia Siemens the infrastructure,” said Susan Schramm, Nokia Siemens’ head of marketing for North America.
For LightSquared, it’s all about time to market, particularly if it wants to catch up with Clearwire, which has a significant headstart into the 4G market. Concluded Boulben: “Time to market is crucial, so the sooner the better.”
Sooner, he said, will be 2012, when LightSquared is expected to hit the market.