Not all new wireless operators and would-be disruptors have an overnight impact like that of Reliance Jio or Free Mobile (see separate item). For others, it is a long, painful process, nowhere more than in the USA, where Ligado has been trying to build its wholesale-only cellular network, in mobile satellite spectrum, since 2010.
Then, it was called LightSquared, and set out an ambitious vision of building a neutral host mobile broadband network, combining terrestrial and satellite operations, which would support a variety of service providers and MVNOs – including specialists in enterprise markets – without any of the conflicts of interest that the MNOs often face when supporting virtual operators (see separate item on MVNOs). Almost a decade ago, when Verizon and AT&T were snapping up many other operators, a platform to support alternative providers seemed even more necessary than it is now – at least, in 2018, competition levels in the USA are rising again, and new wireless deployers, such as large cablecos, and perhaps Dish, are seeking new models in the enterprise and IoT.
For LightSquared, though, it was not to be. Its plans were derailed by claims from the GPS community, that terrestrial signals in the L-Band satellite spectrum would interfere with their services in adjacent bands to LightSquared’s. The core mobile satellite business was inadequate to cope with the many delays to the 4G plan and the company filed for bankruptcy protection in 2012, emerging in early 2016 under the new brand of Ligado.
Even so, a new business model, more focused on the IoT, was not very clear, and progress has still been slow, even though most of the issues with the GPS players have been addressed at last. But now, Ligado has announced one step towards commercial reality, signing deals with Ericsson, and with device chipmaker Sequans, to supply equipment and chips for its planned network.
In a strategy that sounds similar, in some ways, to that of Dish – also building a low power LTE network in former satellite spectrum – Ligado will roll out LTE-M and NB-IoT technologies in its 40 MHz of nationwide spectrum in the L-Band (Ligado has a nationwide block in 1525-1559 MHz and wants to combine terrestrial wireless with its existing mobile satellite activities). Also like Dish, Ligado described these decidedly 4G IoT network standards as “5G technologies”, saying its plan would help the USA “win the race to 5G”.
The company said it would be taking “advantage of the broad ecosystem that is developing around LTE-M and NB-IoT specifications” and that it would work with its two suppliers to “aim to conduct several 5G demonstrations in the near future”.
Referring to low power 4G technologies – already rolled out, without 5G labelling, by AT&T and Verizon – may play into the US government’s rhetoric about making the country the world leader in 5G. But it is unlikely to sway partners, or the FCC, in reality. Both Dish and Ligado are presumably focusing first on NB-IoT and LTE-M because there are more opportunities for a new entrant to target untapped opportunities in industrial sectors and IoT, rather than trying to take on the majors in consumer mobile broadband. Also, these low power technologies require limited capex investment, since they are based around large cells and low bandwidths.
The two standards are developing in parallel – NB-IoT for very low power, wide area applications and LTE-M for rather higher power, more consumer-focused IoT services. Both have a roadmap to 5G, but are not standardized in the current Release 15 specifications. Indeed, it is likely to be some years before true 5G is available for the IoT – since the latest versions of NB-IoT and LTE-M are brand new, there will be little motivation for operators to move to 5G for machine-to-machine applications until they have sweated their new 4G assets a little, and until future 5G standards support the very low latencies that are promised – but not delivered in Release 15.
Whatever the labelling, Ligado could finally be bringing a new option for enterprise and vertical industry services to the USA, and that might, in turn, kick the bigger operators to redouble their own efforts, creating a more competitive landscape outside consumer services (though what the enterprise market really needs, more than low power networks to support emerging and unproven IoT use cases, is better indoor coverage. An operator which built a neutral host network to penetrate deep within corporate and industrial buildings really would change the landscape.)
Before Ligado can go fully commercial, however, it still needs some final approvals from the FCC for terrestrial authorization in its L-Band airwaves. Bitten by the LightSquared fiasco, which arose partly because the FCC was over-eager to enable a new mobile player, the regulator has been cautious this time around, though most of the issues with GPS, or other satellite, providers appear to have been resolved at last. In May, Ligado filed an amendment to its pending licence modification to reduce its operating power levels considerably, and that brought some powerful influencers onto its side, including American Tower (which may be hoping for a new customer); the Competitive Carriers Association, which represents smaller operators, some of which could benefit from a new wholesale IoT network; the Wireless Infrastructure Association (WIA), which is campaigning for better smart building and smart city networks; and satellite operator Inmarsat.
However, one major player still remains to be convinced. A group led by satellite provider Iridium, and also including weather data players, still claims Ligado’s network will interfere with their services.
Last year, Iridium claimed, in an FCC filing, that Ligado’s IoT services would “pose a far greater interference concern” to Iridium’s airwaves than satellite operations. “Far from being concerned about any competitive threat as suggested by Ligado, Iridium objects to Ligado’s proposal because of the potential for significant harmful interference to Iridium’s operations in violation of the FCC’s rules if Ligado is permitted to deploy a terrestrial service in the adjacent frequency band as currently proposed,” it wrote.
Recently, the group reiterated its concerns in a letter to the FCC, signed by 27 organizations, claiming “serious unresolved concerns over harmful interference from Ligado’s proposed terrestrial operations”. It detailed concerns held by the aviation industry, Iridium, and the weather data community, and noted recent filings from multiple GPS manufacturers, disagreeing with Ligado on the appropriate standard for determining the potential for harmful interference to GNSS devices and applications. The letter claims the settlements reached between the GPS sector and Ligado do not equate to an endorsement of Ligado’s licence amendment application.
“The coalition stated our view that the substantial economic, public safety and consumer benefits of existing services provided by the GPS, satellite communications, aviation and real time environmental satellite data communities are too important to jeopardize, especially for the speculative benefits of Ligado’s constantly evolving proposals, details of which continue to be lacking,” the filing said.
Iridium specifically claims the Ligado IoT devices are sure to come into contact with its own terminals and interfere with services supported by its new Iridium NEXT constellation. Ligado responded to the original filing, saying: “We have confidence that the Commission can distinguish between fact and fiction and between the license modification and 1675-1680 MHz auction proceedings. We are also certain that the Commission will make a decision that is based on facts, science and the public interest rather than on rhetoric.”
If Ligado remains tied up in disputes and possible litigation, the onus will fall on Dish to provide an alternative IoT network to those of the major carriers. However, it is far less clear that Dish has a real business model for its NB-IoT network. It has been uncertain, ever since the satellite TV provider started to acquire mobile satellite licences – and later added conventional cellular airwaves bought at auction – whether its primary goal was to amass tradeable assets, or to build a cellular network. If the latter, would that exist mainly to add wireless services to its own portfolio and allow it to compete with AT&T and the cablecos in the quad play? Or would it also seek new revenues, potentially by supporting smaller service providers and vertical MVNOs with a wholesale network?
It missed the boat on building 4G, which intensified speculation that Dish was mainly interested in waiting to cash in its assets when the market was right. It then started laying out 5G plans, but its only tangible efforts have been to start building NB-IoT and labelling it 5G – and that effort seems mainly designed to meet FCC deadlines for building out some of its spectrum, and avoid fines or confiscation.
However, Dish, and its unpredictable chairman Charlie Ergen, remain mysterious. Dish does now hold a large portfolio of spectrum in various bands, but may have missed the window to sell many of them. This summer, analysts at MoffettNathanson downgraded Dish shares (from neutral to sell), on the basis that the company had missed its opportunity to sell its airwaves.
Craig Moffett believes a spectrum sale is the only good outcome from Dish’s “bewilderingly complex” decision tree, which also includes assorted network build-out scenarios – but that this will now be impossible for a key portion of the portfolio, in the AWS-4 band.
“A spectrum sale (and at a price above that which is already implied in Dish’s stock price) is the ONLY positive scenario for the stock,” Moffett wrote in a research note earlier this month. “Whether by choice or by necessity, it now appears Dish has no alternative but to build a network. For all intents and purposes, the window for a spectrum sale before Dish’s March 2020 AWS-4 build-out deadline has already closed.”
This is because, in Moffett’s view, there would not be enough time for a buyer of the spectrum to clear FCC regulatory hurdles, including a public interest review, while also satisfying the build-out conditions associated with the band. Even Dish has acknowledged that the FCC may not find its phase one build-out in the band, focused on NB-IoT, adequate. That would push Dish to accelerate its far more expensive phase two plan, based on actual 5G – or risk forfeiting its most valuable spectrum back to the FCC.
Moffett calculates that there might be a “fleeting” opportunity to sell these airwaves, in which case they would be worth about $26.4bn. But if Dish were to forfeit the spectrum, its equity would be worth zero. He believes that a full acquisition of Dish – much mooted a few years ago – is now unlikely, as the potential acquirers have moved on to other things (Sprint owner Softbank and T-Mobile in particular).
In July, the head of the FCC’s wireless bureau, Donald Stockdale, contacted Dish “to request updates and more detailed information on your build-out plans for the 53 MHz of low- and mid-band spectrum that is apparently lying fallow in these bands”. This suggests that the FCC is considering action against Dish for buying spectrum and then not using it. Dish told the FCC earlier this year that it had not met the interim build-out deadline for its licences in three bands – AWS-4, 700 MHz Lower E Block and H Block.
As a result, Stockdale has asked Dish for more details on its build-out timelines (and potential extra delays), technology, coverage plans, and handset strategies. Dish chairman Charlie Ergen has said the company will spend $500m to 1bn between 2018 and 2020 on its NB-IoT deployment and at a trade show in May, he offered some additional details, saying: “We’re not going to spend at least $10bn or more on a 5G network. We don’t have that kind of capital on our balance sheet today.” Instead, Dish would operate like a start-up, building to meet specific opportunities, much as it did when it entered the satellite market.
At that time, the FCC had offered a summary of Dish’s proposed two-phase plan, saying that “in phase 2, Dish would deploy using its other spectrum holdings, and would ‘upgrade and expand network to full 5G to support new use cases in addition to mobile broadband services.’ They also discussed plans to: (1) take delivery of network equipment and begin installation of the network this year, and (2) delay the completion of its phase 2 deployment in low- and mid-band spectrum until after 600 MHz spectrum is cleared on a nationwide basis in July 2020.”
As with the cablecos and other new entrants to the wireless market, Dish’s opportunity to behave like a start-up will lie in targeting enterprise and wholesale business cases which have been neglected by the major MNOs. Verizon and AT&T have significant programs for certain verticals, such as automotive, but there are many other, smaller IoT and enterprise segments which will be better met by specialist service providers, which could ride on a neutral host, IoT-optimized network.
Amazon – which is trying to increase its position in the wireless industry, especially by championing shared spectrum options – would be a key strategic partner for Dish, or another new entrant. The thinking behind a tie-up between Dish and Amazon, according to reports which surfaced last year, is that the retailer would help fund the build-out of a network in Dish’s spectrum. For Amazon, that would bring it a mobile network which could be optimized for its own ends, from internal IoT usage to AWS services to supporting mobile Prime services.
This would come at far lower cost than seeking its own spectrum, but with better control than an MVNO or WiFi approach. For Dish, the investment and the anchor tenant would make the economics work at last, and it could also launch mobile options to its TV customers in bundles, to make it more competitive with AT&T’s DirecTV and with cable providers.
One way in which such a venture could deliver more than the sum of its parts would be in the IoT. Dish already plans an NB-IoT roll-out, and while this looks largely designed to address FCC build-out demands associated with some of its spectrum, it could be expanded in scope to provide the first US network fully optimized for machine-to-machine purposes, rather than bolted onto a mobile broadband platform and business model.
The resulting network could be used by Amazon, as the anchor customer, for its own logistics purposes (it is an increasingly heavy user of wireless delivery and tracking, including drones); and to offer IoT services to enterprise AWS customers. AWS could layer new services onto a wireless network over which it had significant control. The recently launched AWS Greengrass edge cloud platform could be an effective way to address low latency IoT requirements, for instance, if integrated into the mobile network via ETSI MEC (Multi-Service Edge Computing).
Ligado sets out a new model:
Ligado (which means ‘closedly tied together’ in Spanish) emerged from Chapter XI last March under the ownership of several investment groups, having won approval for its restructuring plan. Its owners are now Fortress Investment and Centerbridge Partners (34.3% between them), JPMorgan, and LightSquared’s original backer, Philip Falcone’s Harbinger Capital (44.45%).
It went on to sign agreements and settle litigation with the three GPS manufacturers (Deere, Garmin and Trimble) which had made its original launch impossible with claims that high power LTE signals would interfere with their transmissions in neighboring spectrum. The deals see Ligado committing to reducing out-of-band emissions from its planned LTE services, and avoiding spectrum adjacent to the GPS airwaves.
However, Ligado insists that its mid-band spectrum will be optimal for emerging IoT applications. It said in a recent interview: “In order to accelerate delivery of innovative services in such verticals as healthcare, automotive, industrial, shipping, home and municipal sectors and to more broadly fulfill the promise of next generation mobile networks, more mid-band spectrum is needed. Mid-band spectrum is part of the solution to deliver ultra-reliable, highly secure and capacity-rich connectivity.”