We hope you’re sitting down, because this next bit of news is not only groundbreaking, but damn right confusing. LightSquared, which right now is nothing more than a PowerPoint presentation bouncing around people’s laptops, is a wireless operator run by a hedge fund who originally planned to contract Nokia Siemens Networks to build out a 4G LTE network using spectrum that was once reserved for satellites. Instead of building out said network, they just announced that they’ve entered into a 15 year agreement with Sprint, who will build their network for them, but not their core operations. LightSquared’s core network, meaning the parts that aren’t the cell towers, will be managed by LightSquared themselves, and Sprint will be able to use a maximum of 50% of LightSquared’s capacity. As part of the agreement Sprint will let LightSquared use their existing 3G network, so should you find yourself in an area without LightSquared coverage, you’ll still be connected to the grid. Financially speaking, over the next 11 years LightSquared will give Sprint $9 billion for hosting their network, and $4.5 billion in “credits” that Sprint can redeem for wholesale access to the LightSquared’s network.
Here’s where it gets confusing: Sprint uses CDMA on the 800 MHz and 1900 MHz bands, nothing new here. They also have a controlling stake in Clearwire, who uses the 2.5 GHz band to deliver WiMAX. LightSquared uses the 1.6 GHz band, or at least will use that band if they can prove that their network isn’t going to interfere with GPS systems. That’s 4 separate bands and 3 different technologies. Can you imagine the moaning and groaning going on right now at Alcatel-Lucent, Ericsson, and Samsung, who have each been awarded contracts to rebuild Sprint’s network?
Something has got to give here, and we’re thinking that Sprint will most likely switch Clearwire to LTE, and quite possibly give up CDMA and become a GSM operator. Watching Sprint execute this plan is definitely going to be one of the most interesting things we’ll be covering over the next few years. Oh and we can’t imagine the Nokia Siemens Networks folks are happy right now, they were supposed to get $7 billion to build LightSquared’s network.