Yesterday Nokia Siemens Networks (NSN) announced that they’ve purchased Motorola’s network division for $1.2 billion. Today Harbinger Capital Partners, a bunch of dudes who manage a hedge fund, also known as the kind of people who grew up watching the 1987 cult classic “Wall Street“, have announced that they’ve awarded NSN a $7 billion contract to build a LTE network that will be turned on by the end of next year. It’s going to be called LightSquared, and it’s going to work a whole lot like Clearwire in the sense that you as a customer are not going to be buying service directly from LightSquared, but instead you’ll purchase it from one of the many resellers who are will be offering the service under some obscure brand name that fits their marketing lingo.
Unlike other mobile phone networks, this one is going to use satellites. What exactly travels to space and back is not yet certain. If it’s data, then expect some insane ping times. If it’s voice, then expect coverage to be non existent the second you step inside a building. There are way too many unknown variables for me to produce any meaningful analysis of today’s announcement.
What’s good is that AT&T and Verizon will have some competition and that will only help the industry since America sorely needs additional players. Verizon’s LTE network is due to be turned on by the end of this year and it will cover roughly 100 million people. By 2013 Verizon says they’ll have the same LTE coverage that they have with their 3G footprint today. AT&T says they’ll bring LTE to customers in 2011, but … well, when was the last time you believed anything coming out of their mouths?
Back to LightSquared, this is a perfect example of what the industry calls a “hollow operator”. NSN’s $7 billion contract lasts 8 years and during that time they’ll design the network, deploy 40,000 cell sites with the goal of covering 92% of the American population by 2015, and they’ll also be managing said network. Harbinger will just be sitting on their butts and collect a paycheck. LightSquared will be led by Sanjiv Ahuja, who was once head of France Telecom’s (Orange) mobile business.
Rajeev Suri, The CEO of NSN, said he was “proud to have been selected for the largest outsourced deployment of a wireless network in the US”.
[Via: Financial Times]