Open LTE network in the US reaches next phase – now find a tenant

Philip Falcone of Harbinger Capital Partners is a step closer to his American dream: a national open access, wholesale-only, net-neutral LTE network. He first unveiled the plans in March and now the venture has a name (LightSquared), a management team (headed by former Orange CEO Sanjiv Ahuja) and a supplier (Nokia Siemens Networks). Falcone brought a number of assets into the company (SkyTerra, Terrestar), giving LightSquared generous spectrum resources of 59 MHz. The assets are valued at USD 2.9 billion, and the company said it has an agreement for another USD 1.75 billion in debt and equity financing.

NSN won the contract to build a network of 40,000 base stations within five years, to cover 92 percent of the US population, with the remaining coverage to be provided by satellite. The project is expected to create around 100,000 direct and indirect jobs. The order is worth USD 7 billion (EUR 5.5 billion) over eight years to NSN. The company’s sales were EUR 12.6 billion in 2009, so the contract adds an average 5.5 percent to sales each year. After acquiring Motorola’s networks business for a nice price, this is another good deal for NSN.

It’s nice to see Falcone hiring an Orange exec as well, given the similarities with the start of Orange (see our commentary: Harbinger pioneers open LTE network in US). And as we’ve said before, T-Mobile USA and Clearwire will be following the developments closely. T-Mobile USA is already struggling with limited network coverage and market share, while Wimax operator Clearwire is thinking seriously about moving to LTE.

The most notable thing about LightSquared is that it will be a wholesale-only network – just as the planned Google FTTH networks in the US (Google Fiber). There is a neverending stream of complaints in the US over high prices, low speeds and limited competition (in fixed as well as mobile), and hopes are now pinned on LightSquared (and Google Fiber) to change the situation. Falcone sees a rosy future with any number of lease customers: existing operators, retailers, cable companies, handset makers, internet companies, content producers and others.

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About Mark Milliman

Mark Milliman is a Principal Consultant at Inphotonics Research driving the adoption and assisting local governments to plan, build, operate, and lease access open-access municipal broadband networks. Additionally, he works with entrepreneurs and venture capitalists to increase the value of their intellectual capital through the creation of strategic product plans and execution of innovative marketing strategies. With more than 22 years of experience in the telecommunications industry that began at AT&T Bell Laboratories, Mark has built fiber, cable, and wireless networks around the world to deliver voice, video, and data services. His thorough knowledge of all aspects of service delivery from content creation to the design, operation, and management of the network is utilized by carriers and equipment manufacturers. Mark conceived and developed one of the industry's first multi-service provisioning platform and is multiple patent holder. He is active in the IEEE as a senior member. Mark received his B.S. in Electrical Engineering from Iowa State University and M.S. in Electrical Engineering from Carnegie Mellon University.
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