Wholesale 4G Service To Launch In U.S.

By Joseph Palenchar -- TWICE, 7/20/2010

New York - A new 4G-LTE wireless network to be built by hedge-fund-backed LightSquared will provide terrestrial- and satellite-based voice and data service on a wholesale basis to retailers, cable operators and other companies that want to offer service under their own brand.

LightSquared called its planned network model the "first truly open and net-neutral wireless network."

Companies reselling LightSquared service would be allowed under Federal Communications Commission (FCC) regulations to offer a terrestrial-only service or an integrated terrestrial/satellite service in which VoIP calls and data sessions could be handed off between the terrestrial network and satellite. Satellite-only service would be available in Canada and Mexico.

LightSquared called its planned network model the "first truly open and net-neutral wireless network," which it said would spur the development of new types of wireless devices, applications and services. The company also said its planned wholesale-only business model would assure its customers that LightSquared won't compete with them under its own brand name.

The launch, if successful, promises to bring added competition to the wireless industry and potentially more wireless brand names.

In the second half of next year, the service will be available on a wholesale basis in four markets -- Baltimore, Denver, Phoenix and Las Vegas -- as part of a national rollout that will expand service to at least 100 million people by the end of 2012, a spokesman said. By the end of 2013, the company will expand service to 145 million people, and by the end of 2015, service will be available to 92 percent of the U.S. population by the end of 2015, based on an agreement with the FCC.

The company behind the 2GHz-band service was founded by New York hedge fund Harbinger Capital Partners, which just awarded a $7 billion contract to Nokia Siemens Networks to build, operate and maintain about 40,000 terrestrial cellular base stations. Boeing will build the satellite, which will launch be operated by Telesat.

Integrated satellite/terrestrial services will be competitive in price to current terrestrial 3G and 4G service prices because of the capacity of Long-Term Evolution (LTE) 4G technology and the LightSquared's satellite's "very efficient reuse of spectrum," which is enabled by spot beaming, the spokesman told TWICE. Satellite data rates will be similar to terrestrial 4G data rates because of the satellite's high power and spot beaming, the spokesman added.

Harbinger contributed $2.9 billion in assets to LightSquared. Those assets consist mainly of 59MHz of 2GHz L-band radio spectrum owned by Harbinger. That includes spectrum previously owned by satellite-phone operator SkyTerra Communications, which Harbinger purchased in March. SkyTerra offers satellite-phone service direct to vertical markets and through wholesale arrangements with dealers and service providers.

LightSquared also announced its obtained additional debt and equity financing up to $1.75 billion.

Besides retailers and cable operators, LightSquared sees regional cellular carriers as among its prime targets, although companies such as mobile-device makers, content companies and websites could offer service as well.

Regional carriers could use LightSquared's network to expand service within their region or expand service to new regions, the spokesman said. Major national carriers could also utilize the service to expand network capacity, although the FCC restricted the company from offering more than 25 percent of its capacity to the two largest national carriers, AT&T and Verizon Wireless.

For his part, FCC chairman Julius Genachowski said the network launch had the potential to create more than 100,000 new private-sector jobs within five years.