LightSquared is putting together the complex web of elements supporting its plan to build a national wholesale LTE network across the US, in mobile satellite spectrum. The venture, backed by Harbinger Capital, is relying on the licenses it owns via Harbinger property SkyTerra, but also needs additional capacity. Some of this would come from a leasing agreement with MSS operator TerreStar, though this is facing hurdles as that firm struggles to avoid filing for bankruptcy protection. Another important partner is UK-based satellite giant Inmarsat, and LightSquared has triggered a $337.5m spectrum cooperation agreement with the firm this week.
This deal increases the amount of contiguous spectrum available to both companies and should help accelerate the build-out of the LightSquared LTE network by Nokia Siemens. LightSquared CEO Sanjiv Ahuja said the activation of the pact, originally negotiated in late 2007 with SkyTerra, was a “significant milestone” for his firm’s plans.
This is because contiguous spectrum is vital to maximizing capacity and efficiency for data services, when using an OFDM-based technology like LTE or WiMAX. LightSquared has received FCC clearance to use its 59MHz of L-band satellite spectrum for terrestrial services, but these interlaced L-band licenses are not optimal for wideband OFDM systems. These use sub-channels to spread a single carrier over any amount of spectrum, and the more contiguous spectrum in that channel, the more capacity can be harnessed (hence Clearwire’s trials of paired 20MHz LTE channels). In its scattered L-band frequencies, LightSquared could only deploy a single 5x5MHz carrier, chief network officer Drew Caplan explained to ConnectedPlanet. By swapping frequencies with Inmarsat, it could eventually deploy LTE in two separate 10x10MHz carriers.
‘We and Inmarsat are the big dogs in the L-band,’ Caplan told the publication. ‘When we were awarded our spectrum, though, it was interlaced to reflect our status as satellite providers,’ but for broadband it needs to be ‘defragged’.
After phase two is complete, LightSquared will have 40MHz devoted to 4G, more than any other operator apart from Clearwire. It will keep 6MHz of its 59MHz devoted to satellite services. The remaining 13MHz is not well suited to large channel LTE, but 5MHz may be used in future for a TD-LTE deployment, which would not require split channels, while the remaining 8MHz is in the 1.4GHz band, part of which will be leased to Airspan Networks, which in turn will create and manage networks for smart grid customers, using a modified version of WiMAX.
LightSquared has made an initial payment of $81.25 million to Inmarsat and will make further payments of $40 million every three months for the next 15 months during the first phase of the agreement, which is expected to last 18 months as Inmarsat transitions to a modified spectrum plan to increase spectrum contiguity. After the first phase of the agreement is completed, LightSquared will pay Inmarsat an additional $56.25 million. It has the option to add further capacity under a second phase, which would go into effect at the beginning of 2013. This would see Inmarsat making additional spectrum available to LightSquared for $115 million a year over 30 months.
Harbinger holds a stake in Inmarsat, and also in TerreStar, which is now working with advisors from Blackstone Group to try to avoid filing for bankruptcy protection, according to Reuters. Harbinger owns $150 million of TerreStar’s debt, which is estimated to total nearly $1bn. It has lease deals with Terrestar and would have hoped to use that firm’s spectrum and partnerships ‘ such as one with AT&T for rural services ‘ to boost its LightSquared proposition. TerreStar is in the midst of launching an all-IP, hybrid satellite/terrestrial network.
Earlier this year, Harbinger/LightSquared entered into a series of leasing deals with TerreStar that totaled nearly $70 million in fees and gave LightSquared access to minutes for voice and data transmission on TerreStar’s satellite.
More broadly, Terrestar’s problems could reduce confidence in MSS, and weaken Harbinger’s ability to find further backers for LightSquared. Another satellite/terrestrial operator, DBSD North America, filed for bankruptcy protection last year.