09.23.08
Posted in ICO/DBSD, LightSquared at 10:37 pm by timfarrar
The biggest surprise of the three-way chipset deal announced by Qualcomm, MSV and ICO on Monday was ICO’s involvement, given its insistence last year that it did not intend to develop a handheld satellite phone and that it would focus instead on its Mobile Interactive Multimedia (MIM) service. It now appears that by incorporating support for ICO’s S-band frequencies into Qualcomm’s mass-market chipsets, ICO may be setting the stage for a handheld product launch.
Whether this comes from a lack of confidence in MIM, or simply a desire to address additional segments of the MSS market is hard to discern, but we have been skeptical about the market appeal of mobile video in cars (it seems likely to attract a much smaller number of subscribers than satellite radio for example), and it seems to us that ICO has placed more emphasis on the navigation and roadside assistance components of the MIM package in recent months. We also remain concerned about whether the multiple car antennas needed for the MIM video service will be acceptable to end users and car manufacturers alike (ICO’s trial car has four separate diversity antennas, although it hopes to reduce this to only two antennas in the production version, subject to the results of its technical trials later this year).
Also remarkable is the turnaround from MSV and ICO’s earlier alignment with HNS for development of their network infrastructure. Who would have predicted a year ago that we would see Globalstar aligned with HNS and MSV and ICO aligned with Qualcomm?
Note: In response to our perspectives above, ICO informed us that they have not placed more emphasis on navigation and roadside assistance in recent months, and that their alpha trials along with recent additions of video content, their three year exclusive agreement with Delphi for DVB-SH in North America and their demonstrations in Las Vegas earlier in the year “represent a fairly significant ongoing commitment to mobile video”. The agreement with Qualcomm “brings both economies of scale for the development of chipsets that are S-band capable, as well as capability for the interactivity requirements of the ICO mim service offering”. ICO’s comments appear to leave open the question of whether ICO will ultimately decide to launch a handheld MSS phone, which the Qualcomm chipsets could certainly enable, since they will be compatible with the handheld services planned by MSV.
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08.25.08
Posted in LightSquared, Spectrum at 10:10 am by timfarrar
Investors in MSS-ATC spectrum are hoping to see the value of spectrum assets increase over time, as wireless operators are forced to acquire additional spectrum to serve surging data demand. Some recent benchmarks, such as the Canadian AWS spectrum auction which raised four times what was expected, are encouraging. However, Nextwave has struggled to sell its spectrum assets (including holdings at both 2.3GHz and 2.5GHz), with the exception of a modest amount of AWS spectrum. This sale took place at an average price of $0.25 per MHzPOP, which although it represents a profit on NextWave’s investment, is much lower than the prices paid for AWS spectrum in many major metro areas during the 2006 auction.
Now Clearwire has announced that its investors will receive $1.62B of stock in New Clearwire in exchange for their existing equity. Clearwire owns 15.9B MHzPOP of 2.5GHz spectrum in the US and a further 8.7B MHzPOP internationally (which it values at $0.03 per MHzPOP). Given Clearwire’s existing cash and debt, this places a value of between $0.09 and $0.13 per MHzPOP on Clearwire’s US spectrum (the higher value assumes all of Clearwire’s enterprise value is attributed to spectrum, while the lower value includes its $633M of PP&E). This is also a relatively low value, given that Clearwire paid $300M for the 1.7B MHzPOP of spectrum it purchased from BellSouth in early 2007, equating to $0.18 per MHzPOP.
Thus it seems the current credit crunch may also be putting a damper on spectrum valuations, as NextWave highlighted when explaining its failure to sell spectrum assets. The impact seems to be particularly significant in spectrum bands that have yet to be exploited, which is unsurprising since these bands tend to be the most attractive to new entrants, who are worst affected by the market downturn. As a result, MSS-ATC operators may have to wait a while for the perceived value of their spectrum to increase.
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08.15.08
Posted in Inmarsat, LightSquared, Spectrum at 8:41 am by timfarrar
Harbinger Capital has just acquired a 4.9% stake in Cablevision at a cost of some $350M, only a few days after we suggested that it would have to invest billions of dollars in a wireless operator to facilitate the deployment of ATC.
Notably, Cablevision is not participating in the Clearwire JV with other cable companies and instead has opted to deploy a WiFi network in the New York area with a planned investment of some $300M over the next two years. Most other operators have found the use of unlicensed spectrum less than satisfactory, particularly for providing indoor coverage, which requires much higher power levels. As a result, Cablevision may ultimately find that it needs to move to licensed frequencies for its deployment, and there has been speculation that it would be a potential purchaser of NextWave’s 2.5GHz spectrum. However, to date NextWave’s efforts to sell this spectrum appear to have been unsuccessful.
While Harbinger’s initial stake in Cablevision is relatively small, its past record suggests that it may increase its stake over time and seek to influence the direction of the company. Cablevision could well be a potential user of the L-band MSS-ATC spectrum block that Harbinger is seeking to put together via a merger of Skyterra and Inmarsat. We speculate that Harbinger might even try to engineer a consortium of Cablevision and Leap (and perhaps other companies), similar to the Clearwire JV, to build and sell broadband services on a national ATC network.
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