03.27.10

Harbinger’s ATC plans revealed

Posted in Financials, Inmarsat, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 4:01 pm by timfarrar

As we’ve been blogging over the last month, Harbinger is planning to deploy a multi-billion dollar US ATC network which is breathtaking in its ambition. On Friday, Harbinger filed a letter with the FCC summarizing these plans, which it had told the FCC confidentially a month earlier, before the FCC approved Harbinger taking control of SkyTerra and approved its ATC license modifications, both of which were also announced on Friday.

Specifically, Harbinger plans to develop a nationwide terrestrial broadband mobile 4G LTE network, which, without regard to satellite coverage, will provide wireless data on a nationwide basis, through over 36,000 base stations. The network will be operated on an open access basis and will initially use 23MHz of spectrum, including 8 MHz of 1.4 GHz terrestrial spectrum, 5 MHz of 1.6 GHz terrestrial spectrum (1670-75MHz) and 10 MHz of (SkyTerra’s) MSS/ATC L-band spectrum. Through a cooperation agreement with Inmarsat and associated waivers of the Commission’s ATC rules, by 2013 Harbinger will have access to an additional 30 MHz of ATC spectrum (in the L-band).

In addition, Harbinger also is discussing with other Commission licensees (presumably including TerreStar but clearly also including other terrestrial bands such as WCS) the possibility of hosting or pooling their spectrum in order to enable them on the terrestrial wireless network, i.e., the spectrum would be incorporated into the infrastructure of the terrestrial wireless network. The hosted or pooled spectrum then could be integrated with Harbinger’s spectrum to enhance the broadband capacity of the terrestrial network.

Service will begin in two trial markets, Denver and Phoenix, with a commercial launch before the third quarter of 2011 providing service to up to 9 million POPs. All major markets will be installed by the end of the second quarter of 2013. Harbinger has committed to the FCC that it will construct a terrestrial network to provide coverage to at least 100 million people in the United States by December 31, 2012; to at least 145 million people in the United States by December 31, 2013; and to at least 260 million people in the United States by December 31, 2015. By 2015, the company expects to serve more than 40 million connected consumer terrestrial devices on a wholesale basis, which is even more ambitious than Clearwire’s targets.

Just in case it wasn’t clear already, the proposed Harbinger bid for Inmarsat is not going to happen: the emphasis is on the Cooperation Agreement as the means of exploiting the L-band MSS-ATC spectrum. On the other hand, Inmarsat can’t be disappointed with $115M per year of incremental revenue with no cost and no risk.

Oh, and just to throw one more random guess out there, the first thing I thought of when reading T-Mobile’s recent statements that it has enough spectrum for the next couple of years, but that it was looking at various joint ventures to boost its holdings, and correlating it with Harbinger’s commitments not to sell more than 25% of its capacity to the two largest mobile operators, was that I bet I know who is number one on Harbinger’s list of potential target partners to use its new wholesale network.

14 Comments »

  1. PE Firm Plans Open LTE Network To Challenge AT&T and Verizon said,

    March 27, 2010 at 6:37 pm

    [...] My friend Tim Farrar, a satellite industry analyst who saw the Harbinger action coming weeks ago, thinks Harbinger will hit up T-Mobile. I think he’s [...]

  2. xnxtxsx2 said,

    March 28, 2010 at 8:14 pm

    Next step in their plans is a takeover or buyout of Terrestar

  3. timfarrar said,

    March 29, 2010 at 5:05 am

    Very unlikely that a takeover or buyout of TerreStar by Harbinger is on the cards. Harbinger is going to be spending its money (and that of new investors) on the network rollout. That’s why Harbinger is using the cooperation agreement with Inmarsat (a $115M per year lease) rather than pursuing a full takeover. For TerreStar a similar lease agreement would presumably be worth somewhere between the 1.4GHz lease ($24M per year for 8MHz, equivalent to $60M per year for 20MHz) and the $115M Harbinger are paying Inmarsat (for 18MHz). Whether this is sufficient for TerreStar to move forward with its satellite services is unclear (though it won’t be enough to also pay the interest on their debt when it becomes cash pay).

  4. Morningstars said,

    March 29, 2010 at 6:24 am

    Why sell for less than the interest on their debt ? Isn’t this a sellers market in connection with the limited spectrum available ? Would there be no other providers who would be interested to make a higher bid to own a countrywide 10 MHZ wide 4G LTE spectrum ?

  5. timfarrar said,

    March 29, 2010 at 6:34 am

    Its been a buyer’s market for ATC spectrum in the last five years, and we’ve only found one buyer (Harbinger) for a nationwide ATC network so far. Time will tell if there are more buyers out there, but until late April TerreStar must negotiate exclusively with Harbinger.

    As Harbinger state in their business plan conditions, they may seek to host other terrestrial (i.e. non-MSS) spectrum on the new network, so there are presumably other options (for a start NextWave has some WCS spectrum it needs to monetize, and that was one of the bands mentioned by the FCC in the Broadband Plan).

  6. Cue the “Mission Impossible” Theme for Harbinger’s LTE Plans said,

    March 29, 2010 at 4:55 pm

    [...] costs. First, there’s the issue of finding a partner to build out the network. I, as well as Farrar, have fingered T-Mobile as the likeliest source because the FCC has forbidden AT&T and Verizon [...]

  7. Morningstars said,

    March 30, 2010 at 6:29 am

    Terrestar-1 is equipped with LTE technology, in orbit and fully paid for. The combination of the Skyterra 10 MHZ MSS spectrum and the Terrestar 10 MHZ MSS spectrum would be logical with the Terrestar-1 satellite be able to handle both spectrums this would mean 2 MSS spectrum networks for the price of 1.

    TMF response: the above is complete nonsense, TerreStar’s satellite is not compatible with the L-band. Neither is it “equipped with LTE technology”. All beamforming is done on the ground, and in any case the satellite air interface is either GMR-3G (Hughes+Infineon) or S-EVDO (Qualcomm+Alcatel).

  8. Morningstars said,

    March 30, 2010 at 7:33 am

    http://mobile-voip.tmcnet.com/topics/mobile-voip/articles/80096-another-national-4g-network.htm

    TMF response: yes I can see that some people like to copy and paste wholesale from my articles without attribution and portray my analysis as their own.

  9. wiser twin said,

    March 30, 2010 at 10:03 pm

    The T-Mobile story only indicates T-Mobile imminent need of spectrum for 4G. What kind of unique service can T-Mobile offer to Harbinger in return?
    T-Mobile does not currently (or in the near future) have a 4G infrastructure in place. Probably not too much T-Mobile can offer that other major players cannot. It makes more sense to work with a partner that has something working already. Why not piggyback on Clear’s backhaul?

  10. Cue the “Mission Impossible” Theme for Harbinger’s LTE Plans | Mobiles Review said,

    April 21, 2010 at 9:18 pm

    [...] costs. First, there’s the issue of finding a partner to build out the network. I, as well as Farrar, have fingered T-Mobile as the likeliest source because the FCC has forbidden AT&T and Verizon [...]

  11. Joe Orref said,

    May 13, 2010 at 12:25 pm

    Finally somebody is doing what I always thought it should have been done before: “One Network” infrastructure where different service providers can tap-in to provide different service to their end-users.

    The present business model of many operators Building, Operating and Maintaining their own separate LTE networks is no longer cost effective, if we are to lower the price for services to the end-user. I am aware that some infrastructure sharing is already taking place (cell towers, CS_Core / PS_Core equipment, etc).
    If you agree with me, I could provide specific examples next time.

    Here is what I would recommend to Phil Falcone of Harbinger capital:

    - Build most of the LTE network in the next couple of years (before a lot of capital is spent by the other carriers). The worldwide labor force is available to do it in this timeframe and the LTE specs are mostly complete.

    - Select 3 or 4 large suppliers to build the infrastructure (say Ericsson/Lucent/Nokia//Huawei). Assign ¼ of the USA infrastructure to each of them to provide competition.

    - Insure that the network:
    > Has different pipes that can be leased to other carriers / non-carriers (Google, etc) who can then manage their own content.
    In other words, think of the LTE network as a “common services platform” that can be used by content providers to reach their mobile customers.
    > Is secure (LTE allows this but is not trivial).
    > Is maintainable (highest availability): NOC, Tier1, Tier2, Tier3 support.

    - Outsource the whole Operation/Maintenance (O&M) of the network to either the equipment vendors (Ericsson/Lucent//Nokia/Huawei) or other companies
    Not easy but doable with proper SLAs.

    Doing the above would be a good start and the price for cellular service to the end user should drop significantly.

    I will have other suggestions later.

    Regards
    Joe

  12. FCC: Satphone Spectrum for 4G | Tech Alps said,

    July 15, 2010 at 11:27 am

    [...] Tim Farrar thinks T-Mobile could be a partner in the terrestrial service. Using satellite phone frequencies on some 36,000 terrestrial towers is expected to enable Harbinger to bring 4G terrestrial wireless broadband technology to underserved areas. Harbinger said in its statements to the FCC that all major markets will have ATCs installed by the end of the second quarter of 2013. On January 13, 2010, the FCC granted the company authority to integrate TerreStar’s 20 MHz S Band spectrum into its next generation terrestrial mobile wireless network. Presumably, that would also result in LTE “4G” service on the satellite’s 2 GHz band. [...]

  13. Mozoot Mobile Site said,

    July 15, 2010 at 1:03 pm

    [...] Tim Farrar thinks T-Mobile could be a partner in the terrestrial service. Using satellite phone frequencies on some 36,000 terrestrial towers is expected to enable Harbinger to bring 4G terrestrial wireless broadband technology to underserved areas. Harbinger said in its statements to the FCC that all major markets will have ATCs installed by the end of the second quarter of 2013. On January 13, 2010, the FCC granted the company authority to integrate TerreStar’s 20 MHz S Band spectrum into its next generation terrestrial mobile wireless network. Presumably, that would also result in LTE “4G” service on the satellite’s 2 GHz band. [...]

  14. Mozoot Mobile Site said,

    July 20, 2010 at 12:18 pm

    [...] to acquire SkyTerra, which plans to launch their huge L-band satellite platform next month. Harbinger will use 10 MHz of SkyTerra’s MSS spectrum to develop a nationwide terrestrial LTE [...]

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