The telecommunications market in the United States is increasingly divided between two camps: carriers with national networks and those without. But one company’s unique business model may change all that.
Virginia-based LightSquared will begin rolling out its national 4G broadband network later this year, putting it in a category occupied by only AT&T, Verizon, and Clearwire. And on Tuesday, the company inked its first contract with a customer, Leap Wireless, the parent company of Cricket phone service.
But don’t expect to be able to buy a LightSquared cell phone or subscribe to a plan any time soon. Instead of offering traditional service plans, the company will offer the use of its broadband network on a wholesale basis to other service providers.
“This obviously opens up opportunities for many other companies,” said Jeff Carlisle, LightSquared executive vice president for Regulatory Affairs and Public Policy. “This will enable dozens of others to lease our capacity, with the potential to turn regional or rural carriers into a national player rather quickly.”
By contracting to use LightSquared’s technology and spectrum, carriers that are currently limited by their own small networks could potentially offer national coverage that could compete with the top-tier carriers like Verizon and AT&T, Carlisle said. The company specifically plans to offer no retail service that could conflict with clients.
LightSquared has launched an eight-year, $14 billion effort to create the first network that combines both terrestrial technology with satellite coverage.
In November, a private rocket carrying LightSquared’s SkyTerra 1 satellite lifted off from Baikonur Cosmodrome in Kazakhstan. The satellite, which successfully completed post-launch testing in February, features a 7-story antenna—the largest of any commercial satellite and the key to the company’s plans. With that one satellite, Carlisle said the company can cover the entire United States.
Cell phone users who connect to the giant antenna will be able to get service anywhere in the country, according to LightSquared, a feature that no other wireless carrier can yet offer. And other companies are taking notice.
AT&T’s general counsel Wayne Watts specifically cited LightSquared during a webcast to announce the merger with T-Mobile on Monday morning.
“This impressive and intensive competition is only increasing with the entry of new and advanced networks like Clearwire and LightSquared,” he told reporters, while asserting that the telecommunication market remains highly competitive.
While LightSquared’s plans were approved by the Federal Communications Commission a year ago, the company has come under fire from the GPS industry, which has worried that the network’s technology could interfere with GPS systems that would operate at similar wavelengths. A lobbying group, with members like Garmin, TomTom, and the National Association of Manufacturers, has already been formed to oppose LightSquared’s proposals.
Testifying on behalf of the Coalition to Save Our GPS, Jim Kirkland, vice president and general counsel for GPS manufacturer Trimble, told the House Commerce, Justice, Science Appropriations Subcommittee earlier this month that “LightSquared's proposal to build 40,000 terrestrial base stations operating at 1 billion times the power levels of GPS signals as received on earth represents a tectonic change in the use of this band.”
The FCC is still looking into those concerns and has ordered LightSquared to submit a report in June outlining the results of interference tests, but Carlisle said his company is working with the GPS industry to alleviate any problems.
LightSquared, which has offered satellite-communications services under various names for about 20 years, has no plans to exclusively partner with any one carrier, Carlisle said.
“We will sell to anyone who wants to buy from us,” he said. “We have no preconceived limit on who we will work with. This is absolutely a game-changing network.”