[Satellite News 05-17-10] MSS industry leaders and analysts are viewing hybrid networks as an opportunity to protect the vital services that mobile providers are responsible for, illustrated by factors that drove Harbinger’s $262.5 million acquisition of SkyTerra in September.
    While telecoms have argued that the deal results in Harbinger owning 100 percent of SkyTerra and stakes in MSS providers Inmarsat and TerreStar and transforms SkyTerra into a powerhouse private company with a total enterprise value of about $1.84 billion, Inmarsat CEO Andy Sukawaty said that MSS and terrestrial partnerships would be crucial to support bandwidth requirements for other non-traditional MSS services in the future. “I think we now need to take the next step and deploy some hybrid networks. We need to see it clearly demonstrated. We partnered with SkyTerra to make that happen. SkyTerra has taken the lead in those kinds of hybrid services. I think it is inevitable that MSS operators will be part of these kind of marriages over the next few years,” Sukawaty told Satellite News.
    Harbinger said its post-acquisition plans include leveraging its ancillary terrestrial component (ATC) authority, granted by the FCC’s broadband plan, to construct an LTE terrestrial wireless network integrated with satellite for wholesale 4G data services on a wholesale basis. The network would be built using 23 MHz of spectrum in 1.4 GHz, 1.6 GHz and MSS/ATC L-band satellite spectrum.
    Harbinger also committed to spend billions of dollars to deploy a nationwide mobile-broadband network. Tim Farrar, principal of TMF Associates, said that Harbinger’s actions demonstrate belief in the value of spectrum over consolidation. “To date it’s been more the opposite — all the money coming into the MSS sector has kept companies afloat that otherwise would have had to merge or disappear. However the traditional MSS market is still a good fit for private equity — steady growing cash flows in a market with about 8 percent annual revenue growth is attractive when valuations are not distorted by spectrum.”
    TelAstra President Roget Rusch said there is excitement about such partnerships, but also caution. “Many investors are scratching their heads and trying to decide whether this is a business with long-term prospects. Almost every investor that has discussed this with me has been focused on the spectrum value. My own view has been that there is no value to the spectrum per se unless someone can build a profitable business around it. However, now that the FCC is considering repurposing the spectrum for terrestrial use the raw spectrum might actually be available.”
    While some VSAT service providers are experiencing a drop in service revenues and equipment sales, Frost & Sullivan Research Analyst Daniel Longfield suggested in a report that the VSAT market could help the overall market thrive by “bringing communication capabilities to remote rural areas that are not currently served by terrestrial communications networks and build redundant, ubiquitous, and emergency-resilient hybrid satellite VSAT/terrestrial wireline or wireless networks for large enterprises and governments.”
    Sukawaty, who spent the bulk of his career in the terrestrial mobile phone business, said that there are plenty of terrestrial opportunities for MSS companies, which will depend on how bandwidth is managed. “With the explosion in data services, the amount of spectrum that is allocated to terrestrial mobile operators is wholly inadequate There is not enough spectrum to support the huge demands from users for data services on mobile devices. I think the iPhone has made believers out of people, and as the applications get more user-friendly, people will use it and gobble up spectrum as a result. I think the wireless terrestrial industry is scrambling to look for ways to support that. The FCC rightly is trying to get a bit in front of this and say, we are going to free up 500 MHz of spectrum so that the United States does not fall behind in this very important development that builds infrastructure for the country and economy. I think you will see the same thing occurring in Europe. In fact, it is occurring, as users will become intolerant to this, and it has to be addressed with additional spectrum.”