Feature Article

Free eNews Subscription>>
November 19, 2012

Globalstar Wants to Launch Another LTE Network

Perhaps nothing is more common in the early days of what investors believe will be “big new markets” than over-investment. Simply, too much money chases the opportunity. Also, historically, one fairly easy way to eventually lose lots of money is to invest in “mobile satellite” services.

Of course, there’s a new wrinkle these days, namely owners of mobile satellite spectrum attempting to repurpose that spectrum for terrestrial mobile networks, at the moment Long Term Evolution.

So far, Lightwave has failed; Dish Network is waiting and Globalstar wants to join the party. Since, ultimately, spectrum is valuable, there is logic to these efforts. But there also are questions.

Assume, for the sake of argument that three new facilities-based Long Term Evolution networks were to launch, in a market where there are five facilities-based national LTE networks. What would happen?

The obvious and nearly immediate likely consequence is a destabilizing of retail pricing for mobile broadband service. And since mobile broadband is the current driver of mobile service revenue growth, that could have unpleasant consequences for incumbent providers.

The other medium-term consequence would be that the original business plans conceived by the new providers would begin to deviate from plan. The very market entry they represent would act to depress market revenue for mobile broadband, the lead application the new providers likely would emphasize.

It might take a few years, but the three new contestants likely would wind up being acquired. In fact, some might argue that is the whole point of launching the new businesses. There being a rather slim chance of actually rising to leadership of the mobile market, the better investment strategy is to create the network, build share, and then sell to one of the other contestants.

Assuming all that new capacity does wind up in the hands of the larger contestants, eventually, you might also ask whether a “spectrum glut,” rather than a “spectrum gap,” would result.

Some might argue from history that the most-likely result is that neither glut nor gap would be the longer-term result, but instead enablement of new demand that soaks up the excess capacity rather quickly.

Veterans of the U.S. cable TV industry will remember this well. Every time it became technologically possible to double bandwidth, executives sort of wondered why any customer needed that bandwidth, and also therefore wondered why a service provider would want to double capacity.

That never proved to be a problem, as new services (networks) arose as the new capacity was made available. “Supply created its own demand,” one might say.

That is not to say “build it and they will come” is always a reliable assumption. One can “overbuild,” temporarily supplying more capacity than can be used. And that might be the case if all three owners of mobile satellite spectrum are able to launch.




Edited by Brooke Neuman


FOLLOW MobilityTechzone

Subscribe to MobilityTechzone eNews

MobilityTechzone eNews delivers the latest news impacting technology in the Wireless industry each week. Sign up to receive FREE breaking news today!
FREE eNewsletter