When US carrier LightSquared’s LTE network goes live it will represent the biggest shake-up of the US wireless operator market since the break-up of AT&T. Ahead of his speaker slot at the Broadband World Forum in September in Paris, we talk to Martin Harriman, EVP of LightSquared.
LightSquared’s plans are ambitious – what will its new operating model bring to the US market and to what extent will it be a boon to MVNOs and consumers?
You’re right, our plans are ambitious. We are building the first, wholesale-only integrated terrestrial and satellite network in the world. And with our wholesale business model, we are democratising the US wireless industry. Any company – wireless operators, wireline carriers, cable companies, retailers, device manufacturers – wanting to sell wireless services to their customers can buy capacity from us – at extremely competitive wholesale rates.
And our network is completely open. So if our partners want to offer VoIP, P2P or video streaming, we still charge them only for the amount of data they use on our network. So not only are we opening the market to competition, we’re enabling innovation by creating a vast ecosystem around our network.
What does the tie-up between LightSquared and Sprint mean and why does it make sense for both companies?
Sprint Nextel will deploy and manage a next generation radio access network that will operate in LightSquared’s L-band spectrum. We can sell our 4G broadband capacity produced through this spectrum hosting relationship to Sprint, other wireless and wireline service providers, and retail partners, such as retailers, device manufacturers, web players and others. The agreement also provides Sprint the opportunity to purchase up to 50 percent of LightSquared’s expected L-Band 4G capacity.
We also have a 3G nationwide roaming agreement with Sprint. With access to Sprint’s 3G nationwide network, our wholesale customers will be able to offer combined 4G/3G data services as soon as we launch our first 4G markets in 2012.
Our agreement with Sprint will allow us to complete the deployment of our network more than one year ahead of the FCC mandate to cover 260 million Americans by 2015. And we will realise more than $13 billion in savings as compared to building a radio access network from scratch.
What is the latest state of play concerning the issues with GPS and how confident are you that they will be suitably resolved for all parties?
We are very confident that we will resolve the GPS issue. LightSquared has proactively decided to move the launch of its network to a lower slice of spectrum that resolves the GPS interference issue for 99.5 percent of all commercial GPS devices. We are committed to finding a solution to resolve the GPS disruption issue for the relatively small number of GPS devices that would still be affected after our frequency move. Our 4G services will launch commercially only when there is a comprehensive solution in place that satisfies federal agencies and protects millions of consumers who use GPS every day.
What are the biggest challenges facing the mobile broadband market as a whole right now?
Smartphones, tablets and new applications are all contributing to a massive increase in mobile demand. In fact, research shows that wireless data traffic will grow 4,000 per cent in the next four years. Given the current lack of spectrum capacity in the US this means there is a critical imbalance between supply and demand. The wireless industry has an opportunity to embrace transformational business models that will address the spectrum crunch and help meet this exploding demand.
To what extent do you see next generation wireless technologies such as LTE a threat or a complementary opportunity to fixed line?
The two technologies are complementary. While more and more people are relying on wireless connectivity, this connectivity is not always cellular. There is a great opportunity for cellular and wifi to coexist.
What are the challenges and opportunities for operators on the backhaul side?
Backhaul has proven to be a significant bottleneck for networks. Current networks were not architected to cope with the level of throughput that we’re seeing. This offers an opportunity for operators to look at sharing arrangements. Fibre has unlimited capacity; there is no need to run multiple lines. Network-sharing agreements, such as the one we recently announced with Sprint, are viable solutions to this challenge.
Is there a genuine demand for faster speeds such as 100Mb and beyond?
I’ve been in the broadband industry for over fifteen years and our industry has never been able to accurately predict what speeds users will need. You can’t make networks fast enough now. Instead of “ if you build it, they will come”, it’s more like, “if you build it, they’ll want it faster”. And we’re just at the tipping point with real-time video streaming, which will force the design of even faster networks.
Alternatively, will carriers be able to meet demand from businesses and consumers for data over the next five years?
This goes back to the issue of spectrum capacity in the US. It’s going to be tough to meet the predicted growth in data demand. That’s why operators around the world are bringing on LTE so quickly. It’s not just about LTE’s increased speeds; it’s just as much about LTE’s increased spectral efficiency.
Beyond spectrum, the explosion in data demand highlights the need for the wireless industry to be more creative in how we meet this demand. MVNOs are thriving nearly everywhere around the world except the US. The predicted growth in data demand offers an excellent opportunity for MVNOs to succeed in the US. LightSquared not only has valuable spectrum, we’ve also created a wholesale model that will enable a variety of new players to enter the US wireless market.
There’s clearly demand and pressure to continually upgrade a network to keep pace with technology developments. But how does this relate to creating a business model that delivers a strong ROI?
Let’s look at Sprint’s Network Vision plan as an innovative blueprint for network management. Network Vision is not just about technology; it’s also about a new business model. Not only will Network Vision enhance coverage, quality and speed for Sprint’s customers, the plan will also deliver network flexibility and reduce operating costs. This flexibility created the opportunity for LightSquared’s recently announced spectrum hosting and network services agreement with Sprint, which will allow us to build our network more than a year faster than our FCC mandate and to save more than $13bn.
Is it likely that the days of the unlimited data bandwidth bundle are numbered and how will you deal with the customer fall out?
While I believe that the era of the unlimited data plan is probably drawing to a close, this doesn’t mean that consumers are getting a bad deal. Consumers value quality as much as quantity and newer tiered plans will help ensure the highest level of service. New thinking around pricing also creates the opportunity for new business models that can ease consumers’ transition to this new era. The Kindle is one example of how pricing for connectivity was completely re-engineered.
In Finland a broadband connection is a legal right. To what extent do you think the state should be involved in the roll-out of mobile broadband, and what’s your view of the need to reach remote areas?
LightSquared’s plan to deploy a nationwide integrated 4G-LTE wireless broadband and satellite network supports the Federal Communication Commission’s National Broadband Plan and the US government’s commitment to making high-speed wireless service available to at least 98 per cent of Americans. As stated in the FCC’s National Broadband Plan, “Broadband can and must serve as a foundation for long-term economic growth, ongoing investment, and enduring job creation.” The LightSquared network will demonstrate the reality of this policy goal.
Could you provide an overview of the key challenges you particularly expect to face in the next 12-18 months?
Well, we’re deploying a new technology, on a new frequency band, on a dual-mode network – something no one has ever done before. So we clearly have some challenges. But we are also very comfortable that we’ll be more than able to meet these challenges. We have the chipset, we have the devices, we have an accelerated deployment plan, we’ve announced eight commercial customers to date and we’re in serious talks with more than twenty others. So clearly our business model is addressing the pent up demand for extremely competitive, wholesale network connectivity.
With Amazon and Google launching smart home initiatives, have the telcos missed out on their chance to cash in on this market?
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