03.27.16

Finding the poison pill…

Posted in Financials, Globalstar, Operators, Regulatory, Spectrum at 2:41 pm by timfarrar

As I noted after the Satellite 2016 conference a couple of weeks ago, the outline of an FCC compromise over Globalstar’s TLPS proposal has become clear in recent weeks. That would involve increased sharing of the Big LEO L-band spectrum (which led Jay Monroe to use nearly as many F-words about Matt Desch as he did about me at the conference) and a restriction of the initial approval to operate at a power level of not more than 200mW (consistent with, but not specifically limited to, indoor operation). Then testing of Globalstar’s (supposedly all-capable, but apparently not yet contracted from ViaSat or even fully defined) Network Operating System would be required to demonstrate that any interference would be prevented, before any potential increase in power levels would be contemplated.

This mechanism was sought by Globalstar because then it would have an authorization for commercial deployment and, on the back of that, could go and raise $150M to keep the company funded (and avoid Jay having to put in any more money) for the next couple of years, while Globalstar looked for a partner that would attribute value to TLPS. Of course that may well be an endless task, if the cable companies do not “have an interest in leasing or buying Globalstar’s spectrum even if that company received approval by the FCC” and Cisco is unwilling to pay billions of dollars to acquire Globalstar.

I was told that an FCC order would very likely come before the end of this month, because the FCC wanted to get a precedent in place (of non-interference with existing unlicensed services, as recommended by Public Knowledge) before it considered what to do about LTE-U.

However, it seems everyone reckoned without Google’s continued interest in the proceeding, which has now forced Public Knowledge to change its tune, and emphasize that the FCC should impose the “public interest condition” of “authoriz[ing] reciprocal public use of Wi-Fi Channel 14 in locations where Globalstar’s TLPS is not deployed…in return for the auction-free windfall that Globalstar seeks.”

Google’s insistence on the “examination of options for general public use of Wi-Fi Channel 14″ seems like just the sort of poison pill that would prevent Globalstar from raising additional funding after the initial approval, because who would give Globalstar money for spectrum that they could use anyway whenever Globalstar had not deployed in a given location?

So if the FCC does include this condition, it seems highly likely that Jay will reject the deal, just as he did last summer when the FCC tried another compromise that would have involved low power approval only within Globalstar’s licensed spectrum, along with increased L-band sharing with Iridium. As a result, the uncertainty about the eventual outcome of the TLPS proceeding may last a little longer yet.

03.09.16

2001: A Space Odyssey

Posted in Broadband, Financials, Globalstar, Inmarsat, Operators, Regulatory, Services, Spectrum, VSAT at 8:34 pm by timfarrar

The Satellite 2016 conference this week has reminded me of years past. All the talk has been of ViaSat and their new ViaSat-3 1Tbps high throughput satellite (depicted above), just like in 2004 when Mark Dankberg used his Satellite Executive of the Year speech to describe his ambitions to build a 100Gbps satellite. Unlike back then (when most dismissed Dankberg’s plans as pie-in-the-sky), ViaSat’s announcement has already caused some large investment decisions by major operators to be postponed, and re-evaluated or perhaps even cancelled. Indeed the entire industry seems frozen like a deer in the headlights, trying to decide which way to run.

Some competitors, like Inmarsat, have chosen to portray ViaSat-3 as a “mythical beast” and ViaSat’s current offering of free streaming video on JetBlue as a “marketing stunt”. However, its far more serious than that. One perceptive observer suggested to me that its like competing for the presidency against Donald Trump: how do you respond to a competitor who is clearly intelligent and has a plan to win, but deliberately says things that fundamentally contradict your (supposedly rational) world view.

In the satellite industry the prevailing world view is that (at least in the foreseeable future) there is no need to build 1Tbps satellites offering capacity at $100/Mbps/mo, because satellite broadband will never compete directly with terrestrial and capture tens of millions of subscribers. But if ViaSat is determined to blow up the industry, most current business plans for two-way data applications (including essentially all Ku-band data services) are simply no longer viable. And if competitors remain frozen (or worse still dismissive) in response to ViaSat’s plans, then ViaSat will gain a head start on building these new higher capacity satellites.

In addition to this overarching theme, several other nuggets of information emerged: Inmarsat is acquiring a seventh “GX payload” by taking over Telenor’s Thor-7 Ka-band payload in Europe on a long term lease, presumably at a very attractive rate (perhaps even approaching the Eutelsat-Facebook-Spacecom deal price of ~$1M/Gbps/year, given Telenor’s lack of Ka-band customers). And Globalstar now appears to have a roughly 60%-70% chance of getting FCC approval for TLPS in the next couple of months, given the FCC’s desire to set a precedent of protection for existing unlicensed services that can be used in the upcoming LTE-U rulemaking. However, it appears that any deal would require a compromise of 200mW power limits (the maximum level demonstrated to date) and sharing of Globalstar’s L-band spectrum above 1616MHz with Iridium.

Going back to the title of this post, if last year’s conference felt like 1999, with exuberance about multiple new satellite projects, this year felt like 2000, as attendees peer over the edge of the precipice. Following on from that, next year could be like 2001, with pain to be shared all around the industry: a sharp fall in satellite orders, as operators re-evaluate the feasibility of their planned satellites, a continuing fall in prices, and the possibility of stranded capacity, either at operators, who are unable to sell their growing inventory of HTS capacity, or at distributors, who entered into contracts for capacity leases at prices far above current market rates.