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So, there was an AP story about this that I think did a better job detailing the challenges for LightSquared (http://hosted2.ap.org/txdam/7d2a091809034418bf02b9

by mdasen 16y ago

So, there was an AP story about this that I think did a better job detailing the challenges for LightSquared (http://hosted2.ap.org/txdam/7d2a091809034418bf02b94fe7a8c4b9/Article_2010-07-20-US-TEC-Wireless-Broadband/id-88dba65beffd4e908d1881cedbd6eb5a http://hosted2.ap.org/txdam/7d2a091809034418bf02b94fe7a8c4b9...). Specifically, there are a couple of things I'd point out: 1. They have to put at least 1 satellite into service. That's a huge cost for something that you have no intention of making an important part of your service. 2. They're banking on the FCC changing rules surrounding their "satellite" spectrum. Current rules say that it can be used to create a terrestrial network to back up the satellite service, but every device they sell has to be able to communicate with the satellite. That would make it prohibatively expensive to provision customers with devices against companies who don't have that restruction. The $7B contract to build and maintain the network also seems a bit light. Carriers like Verizon and AT&T spend around $7B annually to improve and maintain their networks and they aren't starting from scratch. $7B over 8 years comes out to under $900M per year. Granted, 4G should be cheaper to deploy since the equipment takes up less space and there's no need for a lot of expensive and large things to support legacy phone stuff. Still, Clearwire (who is rolling out 4G WiMAX) had capital expenditure of $690M in the first quarter of this year alone. Although that probably includes more than just network expenditure, Clearwire has yet to cover most people. If they're able to pull it off, it'll be great! If a company can reduce the cost of rolling out a network, it usually means lower prices for consumers (assuming adequate competition). So, hopefully we'll see a great nationwide LTE network from LightSquared in a few years!

signa11 16y ago
> They have to put at least 1 satellite into service. That's a huge cost for something that you have no intention of making an important part of your service. apparently the cost of putting a satellite is only 8k ;)
- zitterbewegung 16y ago
  I see your joke but a communications satellite is a much larger cost than the 8k satellite. We are talking millions of dollars for one simple satellite.
  - lsb 16y ago
    Are we, really? If you can put a satellite into space for 8k, why not put a thousand satellites into space, accept that some of them will fail, and have that much more of a network for the money?
    - ericd 16y ago
      I'm assuming there are some minimum equipment and power generation requirements to communicate with cell phones on earth that go above and beyond what a single $8k satellite can offer. But it's possible that it's just so new that noone has started using them like that.
    - bombs 16y ago
      The $8,000 satellites are put into low-earth orbit (160–1,200 km), where as these would require a geosynchronous orbit (35,786 km). The increased mass and orbit requires a lot more lift, i.e. fuel, i.e. money.
      - someone_here 16y ago
        But if you had a swarm of them...
        chc 16y ago
        If you had a swarm of them, they would still not be viable telecom satellites.
        someone_here 16y ago
        Why not?
        chc 16y ago
        Well, because they'll die in a matter of weeks, for one. Sending up a swarm of them just makes the loss costlier and thus strengthens the case for sending up a proper satellite.
rdl 16y ago
Why can't they just lease Ka (or maybe Ku) band transponders, at least to start? That replaces $1b capex with somewhat-higher opex.
- mdasen 16y ago
  It's an FCC requirement. When the FCC auctions off spectrum, it has conditions attached to it. For example, cellular (800MHz) licenses come with the requirement of 80% geographic coverage, IIRC. PCS licenses (1900MHz) come with the requirement of 80% population coverage, IIRC. These licenses come with the requirement that they're for satellite communication. Now, if you're against government regulation (and I'm not saying that you shouldn't be against it), it's just going to be a stupid requirement. However, the thinking behind this is that the government wants to ensure a diversity of services to the population. One of those services that they thought was important was mobile communication by satellite that would cover where terrestrial mobile services don't. The point isn't for LightSquared to communicate themselves with satellites over spectrum already being used in the 12-18GHz or 26.5-40GHz range (Ku or Ka bands). The point is for new services to be available in the spectrum they bought (1525-1660.5MHz). -- So, LightSquared is banking on the FCC rethinking their conditions and thinking that greater 4G competition (against AT&T, Verizon, T-Mobile, Sprint, MetroPCS, and Clearwire) will be more important than a new satellite communications provider. However, even that's a tad problematic from a fairness standpoint. Most likely, the spectrum that they got was a lot cheaper than spectrum licensed for non-satellite mobile communication. The reason being that it's very expensive to run a satellite service and there's little market for it. They're taking a gamble. They know that they bought spectrum for a satellite service, but they're hoping that the FCC will essentially re-do their agreement to give them something more valuable than a satellite service. And the FCC might do so since there have been indications they'd like more competition in the wireless space. Anyway, that's probably a way longer response than you wanted. Short answer, they have to because the entire point of letting them buy the spectrum was that they'd use it for satellite communications. If they aren't doing that and just using someone else's services, they don't need the spectrum.
  - stcredzero 16y ago

by mdasen 16y ago

signa11 16y ago

> They have to put at least 1 satellite into service. That's a huge cost for something that you have no intention of making an important part of your service. apparently the cost of putting a satellite is only 8k ;)

zitterbewegung 16y ago
I see your joke but a communications satellite is a much larger cost than the 8k satellite. We are talking millions of dollars for one simple satellite.
- lsb 16y ago
  Are we, really? If you can put a satellite into space for 8k, why not put a thousand satellites into space, accept that some of them will fail, and have that much more of a network for the money?
  - ericd 16y ago
    I'm assuming there are some minimum equipment and power generation requirements to communicate with cell phones on earth that go above and beyond what a single $8k satellite can offer. But it's possible that it's just so new that noone has started using them like that.
  - bombs 16y ago
    The $8,000 satellites are put into low-earth orbit (160–1,200 km), where as these would require a geosynchronous orbit (35,786 km). The increased mass and orbit requires a lot more lift, i.e. fuel, i.e. money.
    - someone_here 16y ago
      But if you had a swarm of them...
      - chc 16y ago
        If you had a swarm of them, they would still not be viable telecom satellites.
        someone_here 16y ago
        Why not?
        chc 16y ago
        Well, because they'll die in a matter of weeks, for one. Sending up a swarm of them just makes the loss costlier and thus strengthens the case for sending up a proper satellite.

rdl 16y ago

Why can't they just lease Ka (or maybe Ku) band transponders, at least to start? That replaces $1b capex with somewhat-higher opex.

mdasen 16y ago
It's an FCC requirement. When the FCC auctions off spectrum, it has conditions attached to it. For example, cellular (800MHz) licenses come with the requirement of 80% geographic coverage, IIRC. PCS licenses (1900MHz) come with the requirement of 80% population coverage, IIRC. These licenses come with the requirement that they're for satellite communication. Now, if you're against government regulation (and I'm not saying that you shouldn't be against it), it's just going to be a stupid requirement. However, the thinking behind this is that the government wants to ensure a diversity of services to the population. One of those services that they thought was important was mobile communication by satellite that would cover where terrestrial mobile services don't. The point isn't for LightSquared to communicate themselves with satellites over spectrum already being used in the 12-18GHz or 26.5-40GHz range (Ku or Ka bands). The point is for new services to be available in the spectrum they bought (1525-1660.5MHz). -- So, LightSquared is banking on the FCC rethinking their conditions and thinking that greater 4G competition (against AT&T, Verizon, T-Mobile, Sprint, MetroPCS, and Clearwire) will be more important than a new satellite communications provider. However, even that's a tad problematic from a fairness standpoint. Most likely, the spectrum that they got was a lot cheaper than spectrum licensed for non-satellite mobile communication. The reason being that it's very expensive to run a satellite service and there's little market for it. They're taking a gamble. They know that they bought spectrum for a satellite service, but they're hoping that the FCC will essentially re-do their agreement to give them something more valuable than a satellite service. And the FCC might do so since there have been indications they'd like more competition in the wireless space. Anyway, that's probably a way longer response than you wanted. Short answer, they have to because the entire point of letting them buy the spectrum was that they'd use it for satellite communications. If they aren't doing that and just using someone else's services, they don't need the spectrum.
- stcredzero 16y ago