Federal regulators appear poised to take actions that could enable Globalstar Inc. to integrate terrestrial wireless facilities in most of its mobile satellite service frequencies and allow Iridium Satellite L.L.C. to share more of Globalstar’s MSS frequencies, possible outcomes that could bolster both companies-as well as the industry sector’s-standings on Wall Street and in the marketplace.
Globalstar last year petitioned the Federal Communications Commission to extend ancillary terrestrial component authorization across the nearly 28 megahertz of licensed spectrum in the L (1.6 GHz) and S (2.4-2.5 GHz) bands. Currently, Globalstar has ATC rights for 11 megahertz of its MSS spectrum.
“This is good news for Globalstar, but we caution investors from reading too much into this in the short term,” stated analysts at Stifel, Nicolaus & Co. Inc. The reason for caution is that the firm believes the FCC will seek public comment on issues raised by Globalstar’s petition in a potentially time-consuming rulemaking proceeding. In contrast, the FCC could issue an order allowing Iridium to share a greater portion of Globalstar’s L-band MSS spectrum.
The analysts noted Globalstar’s petition is opposed by Sprint Nextel Corp., Iridium, Andrew Corp., KMW Communications and CSS Antenna, with objections based on interference and spectrum sharing concerns.
Disasters highlighted benefits
The FCC approved MSS-ATC as a policy in 2003, hoping to revitalize an MSS sector beset with bankruptcies due to failed business models. However, communications failures in the aftermath of the Sept. 11, 2001, terrorist attacks and Hurricane Katrina highlighted the value of satellite technology. As such, policymakers want satellite redundancy communications included in disaster and homeland security plans.
William Adler, VP for legal and regulatory affairs for Globalstar, said expanded ATC authority is essential to providing wireless broadband services to consumers and businesses in conjunction with a second generation constellation of satellites. Globalstar said it is the only MSS player with a global ATC-capable network.
There had been U.S. government-industry discussions about whether to pursue inclusion of MSS-ATC in the family of International Mobile Telecommunications technologies at the World Radicommunication Conference in Geneva, but the Bush administration did not settle on a formal policy position. There is a possibility that a resolution recognizing MSS-ATC could be passed before the conference concludes Nov. 16.
MSS spectrum devalued
Meantime, a new report concludes the value of MSS spectrum is likely to be much less than spectrum auctioned in last year’s advanced wireless spectrum auction and spectrum up for bid in the 700MHz auction early next year.
Tim Farrar, author of the Telecom, Media and Finance Associates Inc. report, said a lot will depend on the business plans of MSS operators. “In 2008, we will see the first new MSS systems for nearly a decade launched into orbit. These satellites, from ICO (Global Communications Holdings Ltd.) and TerreStar (Networks Inc.) have been built on the premise that the use of terrestrial repeaters . or ATC, will allow them to avoid the disastrous fate of Iridium and Globalstar in the late 1990s,” Farrar said. “A key reason why new systems have been able to raise funding is that potential use of their spectrum in terrestrial networks has enabled comparisons with multi-billion dollar terrestrial spectrum valuations.”
The report forecasts MSS backup communications by first responders and emergency workers will make for overall revenue growth.
