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!
> 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 ;)
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.
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?
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.
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.
Not only that a swarm would function like space junk. Imagine NORAD trying to track 100 satellites eventually one will probably hit something important.
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.
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).
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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.
This was biggest single deal of Nokia Siemens ever. This made me thinking if Nokia plans to bring carrier-free phones on the network. That's what I'd do.
And.. LTE (or LTE-A) is all-ip anyway, so who needs carriers?
> And.. LTE (or LTE-A) is all-ip anyway, so who needs carriers?
you do realize that, cell-phones or any other access side equipment that you use, passes all data via the epc-core which is provided by the operator right ?
Yes, but as they said in the article, anybody can set up a virtual operator on the network, be that Nokia or anybody else. My point is that this would make it easy for Nokia to deploy on the US markets which has traditionally been the playground of the operators; i.e. them deciding which devices to support. (They want to be on top of the value chain)
Anyway, LTE provides ground for any VoIP solution which means that traditional carriers might have hard time providing added value with their voice and SMS services compared to just providing data.
You're just not thinking evil enough. They could set data prices such that a VoIP call costs as much as a voice call. Or they could use IMS to impose billing on SMS and VoIP.
and btw for those who don't know, epc stands for evolved packet core, that's the part of the network for setting up the data call session before the packets can be routed to the isp
How are they going to get much money? There are very few 4G devices in existence, are they betting everything on 4G becoming big in the next few years?
> are they betting everything on 4G becoming big in the next few years?
I'm not sure that's much of a bet as it is inevitable. Sprint already has a phone on the market, Verizon will have a large deployment later this year and AT&T plans to deploy next year. That's just the US; I think there's already a small deployment of LTE somewhere in Europe.
Right, I didn't say the Evo is LTE. You might get an argument from Sprint about WiMAX not being 4G (even if it won't be the standard) but the point I was making is that the move to 4G is already underway and deployments around the world inevitable.
I remember when 802.11b was just taking off. Everyone thought because of 802.11a devices in the wild, both standards would cancel each other out and no one would buy it (like the Blu-Ray and HD-DVD war). If the price is right (in both device and service plan), people will come.
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!