Monday, April 5, 2010

Satellite LTE Network Planned by PE Firm

Harbinger Capital Partners plans to deploy a LTE network over spectrum owned by a few satellite companies which would create an open wholesale wireless network available to anyone who wants to offer mobile broadband. The new network will rely initially on 23 MHz spectrum owned by SkyTerra (which is owned by Harbinger) and could later include spectrum from Terrestar Networks, another satellite firm in which Harbinger holds a stake.

The network could help ensure competition among the major wireless carriers because of the conditions the FCC has placed on the spectrum that the private equity firm plans to use as part an agreement to let Harbinger take control of SkyTerra. SkyTerra would be a wholesaler, and that traffic from the wireless carriers in the U.S. cannot comprise more than 25 percent of the traffic over the SkyTerra/Harbinger network. This means AT&T and Verizon could not buy up huge chunks of the network or spectrum to keep others off of it.

The planned network would launch before the end of 2011 and cover 9 million people (trials initially planned for Denver and Phoenix). Then cover 100 million people by the end of 2012, 145 million by the end of 2013 and at least 260 million people in the United States by the end of 2015. Harbinger said in its statements to the FCC that all major markets will be installed by the end of the second quarter of 2013.

However, the 36,000 base stations that Harbinger plans to use, along with the tower sites, backhaul, etc. with a terrestrial network will require billions of dollars. Verizon and Clearwire have already started building out their networks and are investing billions. It is hard to see how Harbinher could afford to do this. According to SkyTerra, the network will have no less than 23 MHz of spectrum, consisting of 8 MHz of 1.4 GHz terrestrial spectrum, access to 5 MHz of 1.6 GHz terrestrial spectrum and 10 MHz of MSS/ATC L-band spectrum. Through a cooperation agreement with Inmarsat and associated waivers of the Commission’s ATC rules, by 2013 Harbinger will have access to an additional 30 MHz of ATC spectrum.

It will be interesting to see how this turns out.

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