Give ’em hell.
What do you think about starting up a new mobile phone company to compete with AT&T and Verizon? Starting from scratch? In frequency bands that were never used for land mobile communications? Sounds pretty risky, right? But that’s the business plan laid out by a start-up called LightSquared.
LightSquared is controlled by Harbinger Capital Partners. Harbinger is a hedge fund that in the past has invested in satellite communications companies Inmarsat, SkyTerra and TerreStar. I wrote about these satellite companies in my May 2009 column.
How much funding will it take to build out a new nationwide mobile network? According to Reuters, $6 billion. That’s a big chunk of change. But not out of line with estimates of Verizon’s cost to deploy a high-speed LTE cellular network ($5 billion) or Clearwire’s cost to deploy its network ($3 billion to $6 billion). And there have been trade press reports that Nokia Siemens, the manufacturer chosen to design and install the network, has provided $7 billion in vendor financing to LightSquared.
What is unique about the LightSquared network is the frequency range it plans to use. The first generation of cellular networks used spectrum around 850 and 900 MHz. Additional land mobile spectrum was allocated in the 1800, 1900 and 2100 MHz ranges. There are cellular phones now on the market that operate on all of these bands. But LightSquared plans to use spectrum around 1500-1600 MHz, leased from satellite companies.
That spectrum was allocated many years ago for mobile satellite service (MSS), such as the services offered by Inmarsat and those proposed by TerreStar and SkyTerra. A customer terminal would communicate with a satellite, and the satellite would communicate with a large fixed earth station. Voice and data communications from the handheld terminals are connected with the public telephone network at that large fixed earth station.
Inmarsat made money by offering service to ships at sea, using terminals mounted on the ships. The others proposed to use smaller terminals, some small enough to be handheld. Those companies believed that MSS could offer telephone service to remote rural areas where there was neither wireline nor wireless phone service. But it became clear that the market for that service was too small – there is almost no place where the cellular wireless signals don’t reach.
So some years ago, the FCC created the concept of Ancillary Terrestrial Component (ATC), which would allow those mobile satellite companies to offer terrestrial mobile service (bypassing the satellites and the large fixed earth stations) using the satellite frequencies.
There are rules that prevent the MSS operator from abandoning an unprofitable satellite service and converting to a solely terrestrial network. For example, the handheld customer terminals must be able to communicate with the satellites, even if the customers don’t happen to be in remote rural areas and don’t need satellite service. That will probably make them more expensive than the cellular phones we are used to today. But since none are being sold today, that’s merely a guess.
If that’s not discouraging enough, a technical issue has come up. The MSS frequencies include the band 1545-1559 MHz, which would be used by the LightSquared base stations. The adjacent band (1559-1610 MHz) is allocated for the service, known as “radiolocation,” and the Global Positioning System (GPS) uses 1575.42 MHz in that band as its main frequency for non-military applications. The concern is that the LightSquared base stations will interfere by overloading the front end of GPS receivers.
Although the GPS industry has traditionally been very conservative in protecting its frequencies against interference – for example, in the fight against ultrawideband technology about 10 years ago – in this case, they have really mobilized the troops. And the troops include the U.S. Air Force, which apparently uses GPS signals for precision navigation.
Test results submitted to the FCC suggest that a simulated LightSquared base station caused interference to a consumer GPS device at a distance of 2 to 4 miles, and an FAA-certified aircraft receiver was jammed at 10 to 14 miles. The FCC has ordered LightSquared to set up a test program, with the participation of the GPS industry, to provide more definitive results. Everything is on hold until then.
Do we in the cable industry care about this interference? Well, GPS signals are not only used for determining location, they also play an important role in precision timing. Is it important to know precisely when to insert a commercial? I think so. And broadcasters use GPS signals to know precisely when to start airing the next program.
I’m all in favor of a new cell phone operator to compete against AT&T and Verizon. I’m not too optimistic about the Sprint/Clearwire linkup as a competitor. So I wish you well, LightSquared – give ’em hell with low-cost phones, or maybe free phones. But if you need someone to invest some bucks, that someone isn’t me (with apologies to the late Phil Ochs).