Feature Article

November 29, 2012

Growing Danger of 'Too Much' LTE Spectrum

Ironically, given concern about mobile spectrum to support 4G Long Term Evolution networks, there is a growing danger of "too much" spectrum coming to market.

Globalstar is the latest holder of mobile satellite spectrum seeking to “re-purpose” that spectrum in ways that boost equity value, following LightSquared and Dish Network. The reason there is a flurry of activity is that investing in U.S. mobile satellite ventures has never been terribly profitable.

Mobile satellite has for decades seemed like an eminently sensible idea to some, the theory being that mobile satellite service could reach many users out of range of the fixed mobile networks.

But more money has been lost than made trying to do so, with some notable exceptions.

Not to worry; the new idea is to re-purpose such spectrum to build new Long Term Evolution mobile networks. So far, Lightwave has failed, Dish Network is waiting and Globalstar wants to join the party.

But one wonders whether the new efforts will be more financially satisfying than previous efforts, as there is a fairly consistent record of failure in the U.S. mobile satellite business.

Some might remember Teledesic, for example.

But similar efforts to create new national wireless networks have also lost billions. Some will remember Teligent.

In fact, the very fact that there exists mobile satellite spectrum to re-purpose illustrates the general failure of most mobile satellite ventures in the past. But it’s fair to say LTE is not mobile satellite. Neither, on the other hand, is LTE an automatic winner for every potential contestant.

If you accept the notion that four national LTE providers is at least one too many, one will be skeptical about adding three more facilities-based providers. Still, the effort to re-purpose satellite spectrum is the direct result of so many providers having failed to monetize mobile satellite in the past.

LightSquared, for example, can trace its current business plan back to 1988, when it was known as American Mobile Satellite Corporation. That business never took off.

For its part, Dish Network has acquired DBSD North America, formerly called ICO North America. Reston, Va.-based DBSD – whose S-band satellite and planned terrestrial network foundered on a lack of financing – filed for bankruptcy in 2009.

Then there was Iridium, the Motorola-owned fleet of low-earth-orbit satellites intended to provide a range of data and voice communications. It went bankrupt, but not before being purchased by Craig McCaw's Eagle River investment entity.

The Globalstar project was launched in 1991, but never succeeded.

But there is probably a stronger argument that the spectrum ultimately gets used, than that three new networks get built. There would appear to be a potential of destabilizing amounts of spectrum for LTE coming to market.

Edited by Braden Becker

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