LightSquared quietly preps to add to US 4G mix

(Feb 2 2011)

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   A few days in the D.C. area last week included a stop at LightSquared (formerly named SkyTerra; before that, MSV; before that, I forget). The company’s history has been in satellite communications, but its current assets include licenses for wireless radio spectrum to augment its satellite network - scarce spectrum that is extremely valuable in the push towards fourth-generation wireless networks (ironically, called “terrestrial networks” in satellite industry lingo). I posted on this development last year as part of an interview with the CEO of TerreStar, its most direct competitor in the satellite space.
   
   While TerreStar, battling financial woes that seem to dog all companies tackling the extraordinary costs of satellite networks, stays focused on its satellite network operations in an offering via AT&T it terms “satellite-augmented mobility”, new ownership at LightSquared has refocused this firm on a pure 4G wireless network provided as a wholesale-only offering. With MCI’s and Nextel’s histories in the D.C. area, there’s no shortage of local leadership talent, and the company’s new management includes several execs who have led large-scale wireline and wireless network rollouts.
   
   I can’t say we learned much in our visit last week; since the re-launch of the firm as LightSquared, it’s been more focused on building out its network and talking to potential early customers than in media and analyst relations. VP Marketing Blair Kutrow did discuss how broadly the wholesale model can work for the firm, giving it the opportunity to support six categories of re-branders: wireless carriers lacking adequate funds or coverage for the 4G services they’d like to offer, wireline or DBS service providers that want to augment their brands with a modern wireless component, retailers and other brands that believe consumers would value a wireless service provided through them, consumer electronics manufacturers that could use a branded wireless network as part of their customer service platform, satellite-centric operators that need the terrestrial network augmentation, and, she concluded, “everyone else.”
   
   That’s a pretty big world of clientele; the main challenge might be determining how robust and elaborate a network conduit these varied concerns might require. I’m never fond of the phrase “dumb pipe”, because besides a high-capacity network I’d like to see a high-IQ one as well. Blair’s team confirmed one of their key strategic questions now is, how much of that intelligence should be provided by LightSquared, versus supplied by the client?
   
   When I wrote about this last year, I said that re-purposing satellite operators’ wireless spectrum licenses would, at the very least, keep the nation’s largest mobile networks moving forward on their own 4G plans. Whether you could attribute any of Verizon Wireless’s hard push on LTE to the threat of a national LTE network from LightSquared provided to a variety of new competitors, we’ll probably never know. Yankee Group looks towards Anywhere - the day when a global, seamless, high-capacity and intelligent network connects all of us and the things we care about. We don’t have ubiquity yet - not in the U.S. or elsewhere. But I think LightSquared will help get us there faster.

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