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Interview: Sanjiv Ahuja of LightSquared

15 September 2010

Ahuja’s wholesale-only LTE network due to go live in US in mid-2011

Read more: LightSquared Sanjiv Ahuja Orange Eaton Telecom Augere Telcordia

LightSquared, Sanjiv Ahuja’s latest telecoms venture, will be launching its wholesale-only LTE service in four US cities in 2011, boosted by satellites to give rural coverage. Ahuja promises it will never go to the retail market, but device makers are a target 

Ex-Orange boss Sanjiv Ahuja: LightSquared is the first in the
world that will provide wholesale-only broadband connectivity 
Sanjiv Ahuja is about to launch the first LTE wholesale network in the US, with a target of 92% population coverage in five years via 40,000 base stations. "It’s an ambitious plan, but a plan we’re comfortable executing on." says Ahuja.
But LightSquared will have no retail customers of its own: it will sell capacity only to other service providers or, interestingly, device makers. The company plans to start building out its network in December 2010, followed by some trial customers at the beginning of 2011.
"We expect the company to be operational in the early second half of 2011," says Ahuja in an interview with Global Telecoms Business. It will launch in four cities: Denver, Phoenix, Las Vegas and Baltimore. "They’re medium-sized cities and we can test different characteristics," he adds.
LightSquared, based in Reston, Virginia, and backed by private investment group Harbinger Capital Partners, has signed a managed services contract with Nokia Siemens Networks to build the network — a deal said in July 2010 to be worth $7 billion over eight years.
"We want to roll out fast and with very high quality, and NSN is really helping us get it done," says Ahuja.
But who is going to use it? "You’ll never know you’re using our network," he says. In some cases LightSquared will be providing additional capacity to operators, "but we may be the sole provider of 4G" to some operators. "We are never going to build a retail presence of our own."
LightSquared will be a pure-play network operator. "Our economies are so compelling," he argues: "First, it is a next-generation network, and second we are heavily leveraging the outsourcing model." Third, LightSquared will be sharing its resources across operators.
And it will be using existing resources wherever possible. "The number of new towers we need to build in nominal," he says. Towers are in place, and they have fibre to connect them, and LightSquared’s spectrum means that their coverage patterns will be similar to the existing patterns for the towers, so there will be little need to build fill-in base stations.
Ahuja is an Indian-born former IBM software engineer, who in the 1990s helped to turn Bellcore into Telcordia, of which he was president. Since then he’s been an inveterate entrepreneur: in 2000 he led Comstellar, a  New Jersey start-up which backed companies in optical and wireless technology and in digital signal processing. "Our goal was to build and spawn technology
companies," he says today. "We had several successful companies that we built out of it, including Leapstone and Mesh Networks. These companies were sold to larger technology companies."
From 2004 he went back to the big corporate world, spending three years as CEO of Orange, and was a member of the group management committee of the owner, France Telecom.
African WiMax project

He became an entrepreneur again in 2007, founding two companies — Eaton Telecom, backed by France Telecom and intended to own passive mobile infrastructure in Africa, and Augere, a project to develop WiMax-based broadband in places such as Pakistan, Bangladesh and east Africa — and Harbinger is a backer of Augere as well as of LightSquared.
Harbinger is an investment company which describes itself as specialising in "event/distressed strategies". Set up in 2001 by Philip Falcone, a Harvard economist who was head of high yield trading at Barclays Capital, the company "seeks to invest in alpha-generating ideas that are uncorrelated to investment cycles".
Harbinger has $9 billion of assets under management, and according to LightSquared it has contributed $2.9 billion worth of assets to Ahuja’s new project. Much of these are in the form of a company called SkyTerra — MSV until late 2008 — which for years has been nursing a plan to build a mobile network using a mixture of terrestrial and satellite services.
It’s not a new idea, though getting it to work has been a challenge. The logic is that urban areas are relatively easy to cover with conventional base stations — but out in the countryside, particularly the wide open spaces of North America, satellite is a better alternative.
In Europe there is a similar project: Solaris Mobile, owned jointly by Eutelsat and SES Astra and headed by former BT executive Steve Maine. But when the Eutelsat W2A satellite was launched from Baikonur in April 2009, problems with the 12-metre diameter antenna created some delays.
LightSquared has inherited SkyTerra’s strategy to use satellites to fill in the gaps across the US where no fixed base stations will ever reach.
"If you’re driving across the US the majority of locations do not have physical wireless coverage," says Ahuja. Satellite service is the only way.
Satellite operations

SkyTerra already has a satellite operation, used by public safety, security, fleet management and asset tracking in the US and Canada, delivering slow-speed data, telephony and push-to-talk. Harbinger bought the over-the-counter stock for $262 million in cash in early 2010.
Under the new ownership and with its new name, LightSquared will continue to serve existing customers using its mid-1990s satellites, which it plans to replace with new satellites that have already been built by Boeing and are due to be launched over the next couple of years from Baikonur. Each will have a 22-metre reflector.
"We’ll be launching the biggest commercial satellites anywhere in the world," says Ahuja. "For the first time you’ll be able to go from one end of the US to the other" and say in range: the new satellites will use LTE frequencies alongside those used by terrestrial base stations, so terminals — for voice or data — will be able to hop from the tower down the road to the satellite 36,000 kilometres above the equator.
LightSquared’s wholesale customers will be able to choose terrestrial-only services, satellite-only services, or services that include both, he says. Existing customers will be moved to the new satellites.
For the integrated service, "the terminal devices will be like a regular smartphone", says Ahuja. "The experience at device level will be like that with a terrestrial wireless network."
With NSN in charge of the terrestrial network build, LightSquared is shaping up to be a classic example of the lean organisation that many believe to be the future of telecoms. The company had 190 employees when Harbinger bought it as SkyTerra, and now it has around 250, but NSN is bearing the costs of the network roll-out, thought to be half the $7 billion quoted figure.
Wireline and cable operators

Which operators will use LightSquared? Ahuja remains quiet on the details of any contracts under negotiation, but says the company will be targeting a number of market segments, "including existing market operators with no LTE" or wireless operators without enough capacity. That includes wireline operators and cable companies with no current wireless offering, and a range of other potential providers, such as retailers, device makers and gaming companies.
"We are the first in the world that will provide wholesale-only broadband connectivity," says Ahuja. The US is "the core market", he adds, "because the timing in the US is absolutely perfect". That does not seem to mean that he has a secondary plan to extend the project outside the US: if he does, he wasn’t saying.
"We are taking an existing business model" and completely changing it. Service providers "are today vertically integrated businesses that go from designing the network, providing the network, operating the network to doing the retail and serving the customer. Every single aspect is done by one single entity."
Instead, "we are about providing the network, and that’s all that we are", he says. "Our objective is to take this broadband wireless connectivity and take it to the market place with as many channels as we can," though not with its own retail outlets. "We will never compete with our customers." LightSquared "wants to be a very, very efficient, big wireless broadband data supplier" with a plan to "build a robust, industrial grade, high-quality network and make it available to everybody, and let them take their own brand and what it stands for".
Everybody means device makers as well as network operators. Camera makers are aware that "80% of your digital pictures never see the light of day", he notes. Put LightSquared’s technology inside the camera "and the instant you take the picture, the picture is uploaded — and the camera manufacturer embeds it as part of the service, just like the Kindle. You never see who is behind it." LightSquared "will be providing the transport".
But wouldn’t existing network operators be concerned about LightSquared competing with them for that business? The US providers are experiencing a huge growth in data, he says, implying that there is enough for all.
"We’ve seen a tenfold increase in wireless data demand", and in the next five years it will grow a further 40 or even 60-70 times, he says. "Operators with spectrum will have a hard time keeping up with demand," says Ahuja. "There is not enough spectrum. All we’re trying to do is fulfil some of that demand-supply gap."
Capacity shortages

LightSquared is "talking to separate categories of players", though he does not name any. "There are several discussions with several of them. Some do not have enough spectrum. And the ones with spectrum still expect capacity shortages. We have a model that will truly complement every player in the industry."
It is a US-only business, he confirms. "That’s our focus, that’s our drive, that’s our intent," because of "the demand-supply gap": the US "has more of a spectrum shortage than western Europe", he adds: "In the US it is much more acute than in the rest of the world."
LightSquared is believed to have reached the stage of "significant term sheets with partners" but it is likely that many will be reluctant for information about contracts to be published — though if any start to claim satellite-delivered LTE out in the prairies, it will be hard to disguise that LightSquared is behind it. We’ll have to see. GTB
Further reading:
GTB's NSN/LightSquared contract report
GTB interview with Sanjiv Ahuja about Eaton Telecom Infrastructure
GTB inteview with Sanjiv Ahuja about France Telecom rebranding as Orange  
GTB report on Solaris Mobile
Sites for LightSquared, Harbinger, Eaton Telecom and Augere
Boeing factsheets about LightSquared's satellites, SkyTerra 1 and SkyTerra 2