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Sprint and LightSquared announced a broad agreement for cooperation yesterday.
There are lots of interesting points for discussion concerning this agreement, but let me start with the first few that come to mind.
LightSquared will pay Sprint to operate an LTE Radio Access Network using LightSquared’s L-band spectrum. Sprint will use the new multi-mode base stations which are part of their “Network Vision”.
This deal is good for Sprint because they will get a significant amount of cash from LightSquared to build the network, which will expedite the roll-out of Sprint’s own network services (to be announced in September). The deal is good for LightSquared because they can depend on Sprint to deploy and operate the network instead of doing it themselves.
LightSquared will deploy an LTE core network from Nokia Siemens Networks. NSN and LightSquared signed an 8-year agreement last year valued at US$7B to install an LTE network. Presumably the total value of the contract will now decrease because NSN will not be providing the Radio Access Network, but NSN should be happy with the core network deployment and services revenue. If NSN provides managed services to maintain and operate the core network for LightSquared, it could be very profitable for NSN. And now NSN does not have the headache of making base stations for the L-band spectrum.
As everyone knows, there are major concerns from the FAA and GPS users concerning interference with LightSquared’s frequency spectrum. The Sprint deal is contingent upon resolution of these issues, at least at a regulatory level. However, the difficult task of implementing base stations for this spectrum without causing interference problems will now fall into the laps of Sprint’s base station vendors Alcatel-Lucent, Ericsson and Samsung.
More to follow . . .