Wireless competition in the United States is about to get much more interesting with the entrance of a brand-new nationwide competitor. Or rather, several nationwide competitors. LightSquared announced itself on Tuesday, with plans to use a LTE/satellite hybrid network to cover 92 percent of the U.S. population with 4G by 2015. The network will be a pure-play wholesale platform, meaning that we could see several new national brands emerging shortly after launch, or at the very least more regional players to take on the AT&T/Verizon/Sprint/T-Mobile illuminati.
Resale partners will have a choice of offering terrestrial-only, satellite-only, or integrated satellite-terrestrial services to their end users, making for a variety of customer niches and targets. The company policy will be strictly open access and pro Net neutrality.
Few other details were forthcoming on Tuesday, but LightSquared did say that the network buildout is anticipated to generate more than 100,000 direct and indirect private sector jobs within five years. It has selected Sanjiv Ahuja as chairman and CEO.
The real promise of competition in 4G might just lie in an MVNO play. This is, of course, the approach that Clearwire Corp. has taken with its WiMAX network, signing its investors like Comcast Corp., Time Warner Cable and Sprint-Nextel Corp. as private-label resellers. 4G, whether it be WiMAX or LTE, affords more capacity and more spectral efficiency than its 3G brethren, so as to support a number of operators. The idea follows somewhat the “long tail” concept: Allow an exponential number of players target specific niches so as to provide something for everyone with a rash of innovative services. In the Clearwire example, the brands co-exist easily because of their different targets. Clearwire is aiming to replace home broadband; Sprint is marketing 4G as the next generation of its existing mobile phone service; and the cablecos are looking to WiMAX to sweeten the pot for its residential triple-play customers looking to take their television and other content on the go.
And of course, with a plethora of players driving much more volume than a single operator ever could, economies of scale are more easily achieved. And economies of scale lead to more devices and lower-cost endpoints. Getting to that point faster is a great boon for kick-starting LTE adoption; right now, ABI Research forecasts that only 3 percent of handsets will be 4G-enabled by 2014, with WiMAX devices making it to market earlier thanks to its first-mover advantage in commercial deployments. Relying on laptop users to drive traffic and revenue could be a difficult road to hoe for the fledgling services, making the user experience more business-focused and less differentiated from the Wi-Fi or 3G HSPA+ services.
The wholesale plans are a boon for manufacturers as well; for instance, hot on the heels of announcing its Motorola wireless infrastructure acquisition to ensconce it further in the North American market, Nokia Siemens Networks snags this deal. LightSquared has signed it to a $7 billion managed services deal for the network, which covers approximately 40,000 cellular base stations. The eight-year agreement includes network design, equipment manufacturing and installation, and network operations and maintenance.
