SALON

Tuesday, Jul 20, 2010 6:44 PM UTC

Wireless broadband network set to launch next year

LightSquared will be third company with 4G and should cover 92 percent of the population by 2015

By

Topics: Wireless,

U.S. consumers and businesses may get more options in wireless service starting next year, with the launch of a new wireless broadband network that aims to provide competition to the incumbent phone companies.

Private-equity firm Harbinger Capital Partners on Tuesday revealed details of the launch of its wireless network, LightSquared, which should cover 92 percent of the population by 2015.

But there are financial and regulatory hurdles to overcome. And in another wrinkle, LightSquared won’t initially be offering conventional cell phone service, just data. It’s possible to send phone calls over data connections, but that technology is not fully mature or standardized.

Still, LightSquared represents a rare new entrant in the wireless market. Only two other companies, Verizon Wireless and AT&T Inc., have firm plans to build nationwide networks using the same, fourth-generation network technology that LightSquared will use. Sprint Nextel Corp., through its Clearwire Corp. subsidiary, is building a third one with a different 4G technology that’s likely to get less support from equipment makers.

Consumers won’t buy service directly from LightSquared. Instead, it will sell access wholesale to other companies that can resell it to consumers. LightSquared hopes to attract cable TV providers, phone companies that don’t have wireless networks of their own and retailers that want to provide wireless service under their own brand.

Dan Hays, who focuses on telecommunications with consulting firm PRTM, said LightSquared “could provide a renewed opportunity for retailers and major brands such as Wal-Mart, Best Buy, and Office Depot to enter the wireless market as service providers to consumers.”

LightSquared plans to start providing service in the second half of 2011 in Las Vegas, Phoenix, Denver and Baltimore.

LightSquared said Nokia Siemens Networks will build, maintain and operate the network under a $7 billion, eight-year contract. Nokia Siemens is a joint venture of Finland’s Nokia Corp. and Siemens AG of Germany.

The contract is an important step for Nokia Siemens, which hasn’t had much of a presence in the U.S. market for wireless equipment. On Monday, it announced a deal to buy Motorola Inc.’s networks business for $1.2 billion, with a view to increasing its foothold in the U.S.

One reason it’s rare for new national wireless carriers to spring up is that it’s difficult and expensive to procure the rights to airwaves across the nation. Verizon Wireless paid $9.4 billion for nationwide spectrum rights in a 2008 auction, for example.

LightSquared is in an unusual position in that it owns nationwide wireless spectrum once set aside for satellite phone use. Harbinger bought SkyTerra, a satellite company, earlier this year.

Placing calls over satellites is expensive and impractical compared with using cell towers, so the FCC allows spectrum holders to back up satellite coverage with towers. That gives LightSquared a “back door” to building out a conventional ground-based network of cell towers.

However, under current FCC rules, all devices that use LightSquared’s spectrum have to come with the ability to connect to a satellite besides conventional cell towers, according to satellite industry consultant Tim Farrar. That would add to the cost of devices and limit the selection.

LightSquared is banking on the FCC changing its rules to allow devices that only talk to towers. Regardless, it needs to launch a satellite later this year to satisfy the FCC’s condition that it be able to provide satellite connectivity.

The launch of the new network would fit into the FCC’s goals of creating more competition in the wireless market. FCC Chairman Julius Genachowski said Tuesday that he was pleased to learn of the creation of LightSquared.

Farrar said it’s also not clear if Harbinger will be able to raise the billions needed to build out the network, and other expenses.

“It’s going to be very interesting to see where this money comes from,” Farrar said.

Tom Surface, a spokesman for LightSquared, said the company “will evaluate our funding needs as we develop and grow our business.”

LightSquared’s CEO is Sanjiv Ahuja, who was CEO of French cell phone company Orange from 2004 through 2007. He then founded a company that started wireless service in Pakistan and Bangladesh.

More .

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations