LightSquared’s ongoing GPS issues are now well known and seem to have tripped up the company’s plans to launch a wholesale nationwide LTE network. Sure, the company came out last week with updated plans to use different spectrum bands that would minimize interference, but for a carrier that was already a bit spectrum constrained, losing any of its spectrum assets is not a good sign for future progress.
But, with rumors of a network sharing arrangement already in the bag with Sprint Nextel Corp., LightSquared’s future could still be on track. That rumored deal would see LightSquared rely on Sprit Nextel’s Network Vision plans to build out its LTE network. Those plans are expected to come along with Sprint Nextel announcing its own plans to launch LTE services.
Sprint Nextel has said that such network sharing arrangements make sense for the carrier and were one of the benefits noted for its network upgrade plans. However, with LightSquared’s LTE wholesale plans set to share a network that is also expected to include Clearwire Corp.’s planned expansion into LTE for its own wholesale plans, it looks like LightSquared could be left out as the red-headed stepchild.
While the rumored network sharing agreement does seem to provide some life for LightSquared, the details of that arrangement will spell out how satisfying that life will be.
If it’s just a straight network sharing arrangement, with LightSquared paying Sprint Nextel rent for access to the infrastructure and no other financial or spectrum sharing arrangements, I would think that does not spell a good life for LightSquared. (For the moment we will leave out the concern of where LightSquared will get the money needed to pay Sprint Nextel.) I would guess that Sprint Nextel would have to take into account its own network priorities and those of Clearwire before giving into the needs of LightSquared. And with all three operations using different spectrum bands, that could prove challenging from a coverage perspective.
If there is more involved in the deal, like Sprint Nextel gaining access to LightSquared’s spectrum assets in lieu of a financial payment, then Clearwire all of a sudden looks like the third wheel on this date and LightSquared’s long-term future would seem to be an eventual acquisition by Sprint Nextel.
Network sharing deals have been successful in other markets, but I just don’t see that happening in the United States. Competition is too tough and carriers are still defined at the end of the day by what they own.
Does LightSquared still have a future? That is a question whose ultimate answer is well beyond the bounds of my crystal ball. But, my guess would be that if LightSquared does exist five years from now it will be in a much different form than what was initially planned.
