bmichaud Posted June 7, 2011 Author Share Posted June 7, 2011 FYI this is from today.... DT launches a fat channel LTE network: Is 20×20 the future? Posted on Tue, Jun 7th, 2011 at 10:50 am by Walter Piecyk — POSTS | DISCLAIMER Twitter RSS Email Phone: 646-450-9258 Chat with wpiecykbtig Categories: Wireless, Equity Research, USA, Europe, Telecoms Last week, Deutsche Telekom launched a 20×20 LTE network in Cologne, Germany as the interest in this higher speed version of LTE continues to increase based on the high download speeds and spectral efficiency of the technology. 20×20 means that 20 MHz of spectrum is used for download and 20 MHz of spectrum for upload so an operator would need AT LEAST 40 MHz of clean spectrum to deploy this version of LTE. The fatter channels, not surprisingly, deliver much faster download speeds than a 10×10 or 5×5 version of LTE. And by faster speeds, we mean 30 MBPS, which many people do not achieve with their wire-based broadband connections. Clearly, not all LTE is created equal. 2.6 GHz could be the fat channel spectrum band of choice Deutsche Telekom deployed the 20×20 LTE system on the 1.8 GHz frequency band in Cologne but it is expected to expand this service to the 2.6 GHz band as it rolls out additional German cities and fills the 1.8 GHz spectrum. TeliaSonera launched the first commercial 20×20 LTE network in Sweden at the end of 2009. Many operators are watching these launches closely as 2.6 GHz spectrum has become available as a “4G” spectrum band in many countries and there are questions about its ability to penetrate buildings. TeliaSonera has a nationwide 2.6 GHz spectrum band in Norway, Sweden, Finland, Denmark and Uzbekistan. In Germany, 3 different operators each have 20×20 spectrum licenses in the 2.6 GHz band. The 2.6 GHz could emerge as the band most used for these type of systems in metro markets where capacity and speed are needed most. 800 MHz for coverage but it wont be fat (20×20) Outside of the cities, Deutsche Telekom will use its 800 MHz spectrum to provide LTE coverage. In those markets, the company will only deploy 10×10 versions of LTE based primarily on availability of spectrum. This is not dissimilar to the scenario that will likely emerge in markets throughout the world, where the ownership of lower frequency bands is far more fragmented than the higher bands. In Germany, no one owns more than a 10×10 license in the 800 MHz band. These German operators could pair the 800 MHz spectrum with 900 MHz spectrum but it would take time and money to clear off existing users before deploying a 20×20 network. Given the drop in infrastructure costs, it might be less costly to increase the cell density in these market to enable higher frequency spectrum usage than incurring the cost of cleaning the spectrum, particularly if you believe over the long term that high band spectrum capacity will be utilized by bandwidth hungry applications. What about the United States? In Europe the availability of spectrum enables multiple operators to obtain sufficient spectrum to deploy fat channel 4G, particularly in the clean 2.6 GHz band. In Germany, T-Mobile, o2 and Vodafone have 155 MHz, 145 MHz and 135 MHz of spectrum, respectively. (Each of them has a 20×20 MHz license in the 2.6 GHz band.) In comparison, there is no operator in the United States that currently controls more than 100 MHz of spectrum other than Clearwire. AT&T and Verizon have roughly 90 MHz of spectrum, Sprint and T-Mobile have 50 MHz of spectrum and Metro PCS and Leap Wireless have even less. AT&T/T-Mobile would simply be gaining parity with global spectrum positions If combined with T-Mobile, AT&T will reach 140 MHz of spectrum. We do not believe the government should require spectrum divestiture but should rather make more spectrum available to Verizon. If the DOJ is concerned about customer concentration, AT&T could sell off a chunk of its customers to TracFone, an MVNO owned by America Movil, which has a large checkbook. If an existing CDMA operator wanted to purchase any required divestitures by AT&T, they would have to factor in the cost of migrating to a new technology, while TracFone could simply assume these customers. Regulatory approval of a sale to Tracfone might be complicated given AT&T’s ownership of America Movil’s stock and its position on the board. AT&T will have its greatest spectrum depth a 1.9 GHz, where it will control 50 MHz. In addition, AT&T’s 10 MHz of AWS (2.1 GHz) spectrum will become more useful when combined with the 25 MHz of AWS spectrum that T-Mobile controls. AT&T could use the 1.9/2.1 GHz spectrum for a 20×20 LTE network deployment but it would first have to spend time and money cleaning up existing users from this spectrum. Clearwire Clearwire is the only operator in the United States with a meaningful spectrum position in the 2.5/2.6 GHz where they control over 150 MHz of spectrum. Increasing bandwidth demands and successful 20×20 LTE deployments throughout the world would increase the ecosystem for this technology and could increase the interest in Clearwire and its spectrum. We believe it would cost Clearwire $600 million to convert its existing WiMax markets to a 20×20 LTE system. We believe Clearwire could start to launch most markets with LTE within six months and could convert all of the pops within a year. We tested a Clearwire trial of a 20×20 LTE network in Phoenix, earlier this year. (Click here for our trial of that system). As we have stated before, Clearwire’s spectrum depth provide an opportunity to deliver differentiated 4G speeds and tha capacity to handle usage from the heaviest applications. Dish Another interesting spectrum holder to watch could be Dish Networks which could aggregate a 20×20 license at the 2.0 GHz band if it is successful in the upcoming auction of TerreStar’s assets which it could combine with the DBSD spectrum it spent $1.5 billion to obtain. The TerreStar and DBSD spectrum do have regulatory restrictions on their terrestrial use but it will be an interesting asset to watch given the spectrum demands that exist in the United States and given its proximity to the AWS band. Click here for our initial examination of his spectrum. There has also been recent movement on incentive spectrum auctions which we will discuss in greater detail later. LightSquared LightSquared spectrum is in the 1.6 GHz spectrum band which is not broadly used globally and could limit its ecosystem. Interference issues could also limit LightSquared’s ability to deploy a 20×20 LTE network. An initial deployment of a 5×5 LTE network by LightSquared would likely deliver speeds that are slower than what existing operators are already delivering in the market today. We are not familiar with any plans that get them to a 20×20 network but suspect they hope to move to 10×10 if spectrum interference issues are resolved. Companies like Qualcomm are also working on new technologies that can allow operators to share spectrum and combine non-contiguous spectrum bands to create pseudo fat channel versions of LTE but its unclear on the timing or performance of those technologies. We don’t believe that wholesale rates for data delivered by a 5×5 4G network should be as high as those delivered from a 10×10 or 20×20 4G network based on the quality of the speed. Cleaning spectrum takes time and money Nextel spent years struggling with non-contiguous spectrum before it committed billions to enter into a re-banding agreement with the FCC in 2004 to clean up its non-contiguous spectrum in the 800 MHz band. At the time Sprint committed to pay all rebanding costs or $2.8 billion, (whichever is higher) in order to achieve 14 MHz of contiguous spectrum at 800 MHz and 10 MHz of spectrum at 1.9 GHz. Nextel (now Sprint) has spent $3.0 billion to date on rebanding and is stilling spending hundreds of millions of dollars per year on additional rebanding activities. So Sprint has already spent over $0.41 per MHz POP to get clean contiguous spectrum in two different bands and what it largely already previously owned. Sprint has yet to offer any service on the 10 MHz of G Block spectrum band but presumably this will be used in Network Modernization program. Is Network Vision planning on launching an inferior service? We would be surprised if Sprint moved forward with a 5×5 deployment of LTE on the G-Block as the speeds would likely trail what AT&T and Verizon are offering to their market with their fatter band versions of LTE. In sprint’s defense, Metro PCS has done a good job selling phones on a 5×5 MHz LTE system but they have raised cash and have admitted to looking for additional spectrum purchases and they charge much less. We suspect that when Sprint reveals its 4G strategy it will likely talk up Qualcomm’s ability to pair this G Block spectrum with other bands but we caution investors to reflect on the length of time it has taken various wireless technologies to reach maturity. Sprint/LightSquared Despite all the recent press, there is still no announcement of a Sprint/LightSquared network sharing deal. It has been perceived by investors as an “imminent” deal since late last year including research notes that predicted it’s announcement as early as the CES conference in the first week of January. While the sources of these stories are never cited, the lack of announcement has eroded the credibility of LightSquared management team even though Sprint is likely largely to blame for the delays. It’s been 6 months of “imminent”. Sprint’s slow movement on completing the network sharing deal has already appeared to delay LightSquared’s roll-out, although LightSquared insists they are on track. While many (including us) believed that LightSquared planned a commercial launch in a few markets in 2011, the official line is that it has always been 2012. This report (click here) from Light Reading showed how LightSquared changed their FAQ to support that company line. Here is LightSquared’s stated current time table: “LightSquared is currently conducting technical testing of its network which will run through the third quarter 2011. Once this phase is complete, starting in the fourth quarter 2011, we will conduct commercial tests with select users. The LightSquared network will be ready for commercial service during the first quarter 2012, followed by commercial launch with customers who have completed their IT integration with LightSquared network and have sourced devices compatible with LightSquared network. “ We look forward to hearing about Sprint’s 4G strategy but it does not appear that time to market is a top priority. With Smartphone penetration crossing the critical S curve threshold of 30%, slow movement could cause Sprint to miss the massive growth in the market that is likely to occur over the next two years. Read more: http://www.btigresearch.com/2011/06/07/dt-launches-a-fat-channel-lte-network-is-20x20-the-future/#ixzz1Oby0CMnZ Link to comment Share on other sites More sharing options...
brker_guy Posted June 7, 2011 Share Posted June 7, 2011 Mankap, if you don't think CLWR has any value to its spectrum, I invite you to look at this petition by Sprint of the T/T-Mobile merger. Page 69 of the PDF file: http://lammgl.files.wordpress.com/2011/03/11-65-05-31-2011-sprint-nextel-corporation-2-of-2-7021675883.pdf Link to comment Share on other sites More sharing options...
mankap Posted June 7, 2011 Share Posted June 7, 2011 I do think that CLWR spectrum has value.My issue is with the risks with the investment. The whole premise for investment in Clearwire is that they can sell the spectrum at a price which is rewarding to shareholder.Is it $5B,$10B or $50B.If it is $5B shareholders do not make much. I do not know when the sale of spectrum will happen and at what price.Meanwhile they will be burning more cash during that period and taking on more debt. What will be the AT&T's and Verizon's requirement of spectrum in 2 year or 3 year time. How technology will evolve in 2-3 years which will determine the need of spectrum. Will AT&T and VZ have other options to buy spectrum in future.(I know Light squared will sell anytime if they get good price.) Where will Sprint be in future Link to comment Share on other sites More sharing options...
bmichaud Posted June 8, 2011 Author Share Posted June 8, 2011 Brkr_guy, Your insight is tremendous - thanks for the pdf. Only question is regarding pg 69. I've only been on mobile devices today so I don't have traditional access to pdf files so I'm not sure what pg ur referring to...is it the one with the graph of each spectrum holder? The actual pg 69 of the doc IMO isn't too bullish on CLWR but I may be looking ay the wrong thing... Link to comment Share on other sites More sharing options...
brker_guy Posted June 8, 2011 Share Posted June 8, 2011 For those who doubt the value of CLWR's spectrum: http://www.gsmworld.com/newsroom/press-releases/2011/6274.htm Note these words: "any governments have yet to allocate the 'digital dividend' spectrum in the 700-800 MHz band, which will be freed up from the switchover to digital television and the 2.5-2.6 GHz band, which has been identified globally by the ITU as the '3G extension band'." Link to comment Share on other sites More sharing options...
mankap Posted June 8, 2011 Share Posted June 8, 2011 What is your valuation for CLWR spectrum and who are the likely buyers in your mind Link to comment Share on other sites More sharing options...
brker_guy Posted June 8, 2011 Share Posted June 8, 2011 Mankap, roll back a few pages, and you have seen what kind of valuation I have put on CLWR. May be you should start reading this thread at the top? Link to comment Share on other sites More sharing options...
bmichaud Posted June 10, 2011 Author Share Posted June 10, 2011 Wsj article today about LS gps interference. http://online.wsj.com/article/SB10001424052702304392704576375951185697140.html?mod=ITP_marketplace_1 Link to comment Share on other sites More sharing options...
brker_guy Posted June 10, 2011 Share Posted June 10, 2011 The WSJ article doesn't do you justice, bmichaud. It's a lot worse than you realize. The farmers in Iowa are pissed! And the US military is really pissed! So, good luck LS. Hope your pocket is deep to get you to Plan B and Plan C... http://www.gpsworld.com/survey/test-data-shows-lightsquared-slams-medium-and-high-precision-gps-receivers-11726?utm_source=GPS&utm_medium=email&utm_campaign=Survey-Scene_05_31_2011&utm_content=test-data-shows-lightsquared-slams-medium-and-high-precision-gps-receivers-11726 Link to comment Share on other sites More sharing options...
bmichaud Posted June 10, 2011 Author Share Posted June 10, 2011 Unreal!! brkr_guy - please tell the board how this unfortunate turn of events for LS underscores how critical CLWR is to not only solving the spectrum shortage/the need to migrate to 4G/LTE, but to Sprint's ability to compete with the big guys! Link to comment Share on other sites More sharing options...
brker_guy Posted June 10, 2011 Share Posted June 10, 2011 If LS wants to be a 4G LTE network wholesaler, these test results from Holloman AFB just threw a wrench into that plan. I think it might better if LS just uses its CASH and go into some kind of a JV with CLWR. That might cost them a lot less than try to sit on the GPS frequency band. Link to comment Share on other sites More sharing options...
bmichaud Posted June 14, 2011 Author Share Posted June 14, 2011 Good article detailing LS's interference issues: http://www.fiercewireless.com/story/seybolds-take-why-lightsquareds-proposed-system-will-interfere-gps/2011-06-14 Link to comment Share on other sites More sharing options...
bmichaud Posted June 14, 2011 Author Share Posted June 14, 2011 yesterday's drop was due to this: http://www.fiercewireless.com/story/lightsquared-ceo-ahuja-confirms-talks-sprint/2011-06-13 Link to comment Share on other sites More sharing options...
brker_guy Posted June 14, 2011 Share Posted June 14, 2011 Guys, looks like relief is on the way. Like all beach front properties, everyone wants to own a piece of it. Today, it's the Public Safety folks. So, it looks like taxpayers is about to foot the bill for a nationwide public safety network on 700MHz. This can only be good for us: http://urgentcomm.com/policy_and_law/news/senate-committee-approves-dblock-bill-20110608/ http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/052511/Johnson.pdf http://rockefeller.senate.gov/press/record.cfm?id=333128& Hello real estate relocation!!!! ;D Mr. Burke, just be patient. "Spectrum real estate" appreciates slowly. :D Link to comment Share on other sites More sharing options...
bmichaud Posted June 14, 2011 Author Share Posted June 14, 2011 brkr_guy - how is this plan going to jive with the push to release ~300MHz of spectrum for mobile broadband? In other words, is there room for both plans (safety network and mobile broadband)? Link to comment Share on other sites More sharing options...
bmichaud Posted June 17, 2011 Author Share Posted June 17, 2011 CLWR continues to get hammered. Perhaps I am the fool at the poker table, but I believe this is a case of Mr. Market's distaste for uncertainty. Sprint is not helping things by being less than transparent regarding their ultimate plan for CLWR, but given that CLWR is one of a select few players with large enough "real estate" holdings to roll out a 20x20 LTE network, and Sprint needs a 4G LTE network in order to compete with ATT and VZ, I think the current price is unjustified. I would go so far as to say equity holders would be made whole and then some if CLWR was to shut down and liquidate right now.... Link to comment Share on other sites More sharing options...
finetrader Posted June 17, 2011 Share Posted June 17, 2011 Aren't you guy afraid of dilution that will occur in a not too distant future? Link to comment Share on other sites More sharing options...
bmichaud Posted June 17, 2011 Author Share Posted June 17, 2011 Foolish capital allocation decisions are always a risk especially with a company in need of outside financing, hence why a very wide margin of safety is required. The way I look at CLWR is a 50% downside versus at least 100% upside. 50-50 chance either scenario occurs is a 25% expected return. So yes dilution is a risk, but I believe I am being compensated for it. Link to comment Share on other sites More sharing options...
CONeal Posted June 17, 2011 Share Posted June 17, 2011 With Lightsquared making a deal with Sprint how does this affect clearwire? Reading through the thread i thought Lightsquared was up the creek without a paddle bc of the gps interference. http://www.bloomberg.com/news/2011-06-17/falcone-s-lightsquared-venture-reaches-a-15-year-network-deal-with-sprint.html?cmpid=yhoo Link to comment Share on other sites More sharing options...
bmichaud Posted June 17, 2011 Author Share Posted June 17, 2011 That deal has been in the rumor mill for months and nothing is set in stone until the gps issue is resolved. Regardless, there's room for both LS and CLWR...various research has discussed the possibility of S, LS, and CLWR all working together, or S working with LS via a networking sharing agrmt sans a wholesale agrmt attached, then a separate network sharing agrmt with CLWR/S while continuing their wholesale arrangement. Brkr_guy would have far more insightful comments to add... Link to comment Share on other sites More sharing options...
brker_guy Posted June 18, 2011 Share Posted June 18, 2011 Bmichaud, I promised the guys on the LVLT thread that I would hold my tongue from now on regarding the CLWR and LVLT investment ideas. However, I will make an exception on this since the press and media likes to front run actual stories. Look at this quote, "Falcone told Harbinger Capital Partners hedge fund investors about the accord in a letter today obtained by Bloomberg News. The companies were discussing a deal valued at as much as $20 billion, people familiar with the matter said earlier this month." I invite Bloomberg News to post a link to that story. This GPS interference issue is FAR from getting resolved. Just go read stories at www.gpsworld.com for the latest update on that. So until we see an actual PR from Sprint AND LightSquared with actual quotes from respective executives, let's stay calm and be rational. In the mean time, you guys might like to read this story first. http://tech.questexmediagroup.com/t/1779197/17964040/26303/0/ http://www.questexenews.com/t.do?id=8202569:23403162 http://www.questexenews.com/t.do?id=8189589:23403162 Link to comment Share on other sites More sharing options...
Cardboard Posted June 18, 2011 Share Posted June 18, 2011 I watched a documentary last night on TV about the weaponization of space and based on that, I can almost guaranty that LightSquared operating on the current band which interferes with GPS will not occur. There is no way that the U.S. administration will let that happen with the amount of money and undisclosed military projects done already to even remotely comprise them. It will be banned by the President for national security reasons if the FCC let's it go. I think that LightSquared knows that as well and is now trying to potentially make a deal with Dish (TerreStar) to switch spectrum explaining somewhat the 2 week delay in the report. There could also be a deal with Clearwire in the works which has the right spectrum and much more than Dish to go ahead national. What I have a hard time understanding at the moment is any technological advantage of LightSquared LTE vs Clearwire LTE if we have them operating on the same spectrum (say Clearwire spectrum). Is there any advantage for Sprint to select LS2 technology? You would need a heck of a good reason for Sprint to abandon Clearwire considering where they are currently and the spectrum that they hold. Coming weeks should tell us the full story. Cardboard Link to comment Share on other sites More sharing options...
bmichaud Posted June 18, 2011 Author Share Posted June 18, 2011 Why stop commenting on LVLT and CLWR? Having experts on an industry comment within the investment space rather than leaving that expertise confined to the industry only makes the marketplace that much better. Without the commentary on thsi board I would have discarded LVLT at first site due to negative cash flow and low accounting BV - but now my circle of competence has expanded tremendously not only for LVLT (and CLWR) but for a whole new industry full of opportunity. Do what you may, but I would encourage all of you to continue the thread and just disregard the commentary from those who fail to take the time to read the entire thread and look into the opportunity for themselves (assuming it is those commentators that are driving the decision to discontinue commenting on LVLT and CLWR). Link to comment Share on other sites More sharing options...
bmichaud Posted June 22, 2011 Author Share Posted June 22, 2011 Looks like Mr. Market won on this one - from $3.40 on Friday to $4.10 today? Link to comment Share on other sites More sharing options...
bmichaud Posted June 23, 2011 Author Share Posted June 23, 2011 http://www.wirelessweek.com/News/2011/06/LightSquared-GPS-Industry-Square-Off-on-Capitol-Hill/ Regardless of the direction LS takes, it's going to take awhile. In the mean time, CLWR will continue adding Sprint subs to its 4G network.... Link to comment Share on other sites More sharing options...
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