Correspondingly T-Mobile has said that smartphone users are consuming as much as 30 times more data than just a few years ago, and that appetite grows each year. Cisco estimates that global mobile data traffic is nearly doubling each year and will grow 13-fold in the next 5 years. As that growth comes at larger and larger scale, network operators are finding themselves at overcapacity. While the FCC is exploring ways to make more spectrum available, there is simply not enough to go around in the short term, and it’s only going to get worse.

This “mobile data crunch,” as we at Bessemer (and others) refer to it, offers one of the best investment opportunities there has ever been around telecom infrastructure. Here’s a look at a few key sectors we believe will experience outsize growth, and are investing accordingly. (Disclosure: Bessemer has investments in or a relationship with two of the companies mentioned in this piece; see below for those disclosures.)

New cell site technology

So if more spectrum isn’t available, how can carriers get more capacity out of existing airwaves? Many are looking to add new cell sites, as cellular spectrum can be “reused” at multiple locations if there is enough separation between sites. Carriers are very excited about moving to a “HetNet,” which will incorporate thousands of small cells – or low-powered radio access nodes that provide the same functionality as a larger tower for a small region. The HetNet will make the network vastly more complex, with the small cells adding thousands more points of interference that will need to be managed.

Companies like Ubiquisys are building intelligent software for small cells to make them more manageable within the Radio Access Network (RAN). Small cells also introduce complications with backhaul (that is, returning the signal to the core network). For all of their flexibility, they are often placed in locations where traditional methods of backhaul like fiber cables or line-of-sight-microwave are impractical or unavailable. Blinq Networks and Siklu are among the companies working on new methods of backhaul for otherwise hard-to-reach small cell deployments.

Offloading alternatives

An easier way for carriers to ease the spectrum crunch is simply to get rid of as much data traffic over their networks as possible, enabled by the use of Wi-Fi offload technologies from companies like AirSense, WeFi, and Devicescape.

Ralph de la Vega, CEO of AT&T Mobility, told an audience he “has been preaching about” this for some time. But he’s done more than that – AT&T now owns hotspots at some 30,000 McDonald’s and Starbucks locations, which handle traffic from the network’s customers when they are in the store. This is more difficult than it may seem, as carriers need to ensure that the consumer experience on Wi-Fi is as good or better than using the mobile network. Bringing awareness of which hotspots are accessible and have a strong signal as well as being able to seamlessly transition a user between the cellular and Wi-Fi network without interrupting service are critical areas being addressed by new companies.

Network shaping

Finally, some startups are going directly at the core network with software solutions that optimize the flow of mobile data traffic. This is perhaps the area we are most excited about, as evidenced by our investments in Intucell and Vasona Networks (Note: Intucell was recently sold to Cisco, but I remain on the board of directors; Bessemer still maintains an investment in Vasona Networks).

Earlier this year, Intucell signed a multi-million dollar deal to deploy its self-optimizing network technology across AT&T’s entire U.S. network. Intucell’s solution optimizes the RAN by identifying in real time faulty or underutilized cells and adjusting their configuration automatically to provide the optimal level of coverage. Similarly, Vasona is leveraging its position as software in the network to deliver IP video and data at the appropriate time and bit rate over a given cell.

What makes us particularly excited about this last category? Carriers can test software solutions on their network at a low upfront cost and see proven results in a short time before committing to a more substantial order. From an investor perspective, this means shorter sales cycles and a more capital-efficient business: We are now seeing startups that have never raised money before yet have already completed successful trials with major operators.

Bob Goodman is a partner at Bessemer Venture Partners.

Photo courtesy of E.O./Shutterstock.com.

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Last month, Cisco Systems scooped up Israeli self-optimizing network outfit Intucell, one of Bessemer’s key portfolio companies. The networking giant paid $475 million for the company just two years after Intucell raised its $6 million Series A round. But that wasn’t a fluke investment. Bessemer has made mobile infrastructure a significant pillar in its investment strategy.

While Bessemer is perhaps best known for its investments in LinkedIn and Skype, its most spectacular exit in the mobile networking space was Flarion Technologies, a pioneer of the orthogonal frequency division multiplexing access (OFDMA) technology that is now at the heart of all 4G networks. In 2006, Qualcomm bought Flarion for $600 million.

Its current portfolio includes mobile data traffic shaper Vasona Networks, 4G chipmaker Altair Semiconductor and network API developer Twilio, but after the exits of Intucell last month and Traffix Systems last year (bought by F5 Networks), Bessemer is looking to reload. One of the places Bessemer hopes to find to find its next wireless darling is at the world’s largest mobile trade show, Mobile World Congress.

Next week in Barcelona, Bessemer’s lead wireless partner Bob Goodman is wading into a miasma of LTE-Advanced, HetNet, diameter signaling, envelope tracking and self-optimized networking. Before the show, I had a chanced to talk to Goodman about what exactly he’s looking for at MWC and about Bessemer’s wireless strategy in general.

Wireless has been tough on the investor

Investment in telecom infrastructure startups has plummeted in recent years even as investment in services and applications has recovered since the last recession, according to Ovum. In the 12 months ending in June, new money going into networking companies was just $270 million, compared to $796 million two years before.

There’s a reason VCs are reluctant to invest in telecom, Goodman said: It’s such a stratified market. While there are hundreds of carriers around the world they tend to buy their equipment from just a handful of vendors such as Ericsson, Nokia Siemens Networks, Alcatel-Lucent, Huawei and Cisco. Small players have traditionally found it extremely difficult to get on a carrier’s radar unless you had a big vendor at your side.

After Flarion’s sale in 2005, Bessemer stopped investing in wireless players for several years. Not only were the economics difficult for small companies, but the mobile industry seemed to be going nowhere. 3G networks went up, but they were primarily used for voice. The mobile data revolution we had been promised simply didn’t happen.

But a few years ago, Bessemer jumped back into the infrastructure space. According to Goodman, several trends converged to make the market much more attractive. First, there was the iPhone, which reinvigorated the smartphone and drove a deluge of mobile data traffic over carriers’ networks. Operators were looking not only for technologies to add capacity to those networks, but also technologies to manage and optimize that traffic flow.

While data usage was exploding, the big infrastructure incumbents were fighting a massive price war over international borders. “Huawei and ZTE drove costs down, which led the vendors to chop their investment in R&D,” Goodman explained. So just as carriers needed new innovation, their suppliers weren’t in a position to deliver it.

Finally and most recently, the old carrier-vendor ties began to break down. “The carriers have changed their tune,” Goodman said. “They used to want as few vendors as possible, but now that those vendors are all suffering, they have started looking beyond them.”

Intucell is a good example of how startups are taking advantage of that trend. Goodman and fellow Bessemer wireless specialist Adam Fisher introduced Intucell — then an eight-employee company — to AT&T in 2011. After working with the company’s technology for nine months, first in AT&T’s new Innovation Lab in Israel and then in live trials over AT&T’s 3G networks, Ma Bell committed to a system-wide deployment across its 3G and 4G footprints.

Goodman is convinced that much of the new innovation in mobile is going to be done by small startups in places like Tel Aviv and London, not in the big vendor labs in Stockholm or Helsinki. And now that carriers are willing to work directly with startups — AT&T, Verizon Wireless and Sprint have all opened innovation labs for just that purpose — there’s even more incentive for entrepreneurs to attack the mobile networking market.

What Bessemer is looking for in a startup

If anyone understands the dynamic between carriers and small infrastructure players, it’s Goodman; he’s played for both sides. Before joining Bessemer in 1998, Goodman founded Celcore, a distributed cellular networking company that was bought by Alcatel, and Boatphone, a mobile operator out of the Caribbean. That gives Goodman a perspective on what to look for among the thousands of companies and entrepreneurs converging next week in Barcelona.

I asked Goodman what criteria he was using to evaluate the companies he meets. (As you might expect, he wouldn’t reveal who he plans to talk to.) He boiled his approach down to three things:

• Software: While Goodman isn’t ruling out hardware companies, he still favors companies that write code versus companies that build boxes.
• No straw men: Goodman is looking for a company that has identified a very specific problem carriers face and has developed a very specific solution to address it.
• Speed to market: The telecom industry has tirelessly long development cycles with some technologies taking nearly a decade to make their way through the standards process and into commercial networks. Goodman wants technology that carriers could feasibly deploy as soon as it is developed.

“We want to find a carrier problem — an immediate problem — that a really talented group of people can identify and can solve relatively quickly,” he said. “We also want to be able to go directly to the carrier. You don’t want someone else standing between you and the customer.”

There’s evidence that Goodman is willing to bend some of those rules, though. You could argue Goodman’s most successful investment venture broke all of the rules. Flarion built a base station box, which ultimately didn’t sell because it emerged at a time when mobile data use was insipid. Ultimately its OFDMA technology wound up in Qualcomm’s LTE architecture, but only after a long process of standardization.

There are always going to be exceptions if a company is building something exceptional, Goodman said: “I would never rule anything out completely.”

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The extra cash should come in handy if Airship plans to continue its acquisition spree of late. In December the Portland, Ore.,-based startup bought up fellow True Ventures company Tello so it could expand its marketing and branding business into Apple’s Passbook digital wallet. In October, Airship acquired SimpleGeo, adding a location-aware component to its push messaging platform. Though Airship didn’t mention anything about additional acquisitions, it did say it would use the funds to expand internationally.

Airship technology delivers the in-app and background push notifications for more than 20,000 brands with an app-store presence. Airship, for instance, powers the sports score and news updates across ESPN’s family of apps.

Disclosure: Urban Airship and Tello are both backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, the founder of Giga Omni Media, is also a venture partner at True.

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Now we’re doing it, too. Instead of relying on the gut instincts, punditry and armchair quarterbacking that VCs are notorious for, our firm is pattern replicating to decide which entrepreneurs to fund.

Here are the components of a secret algorithm I developed that we use to score and rate potential investments with entrepreneurs.

1. We look at (and score) what you read

What content has been uploaded into your cerebral cortex via apps, websites, PDFs, books and other miscellaneous educational all matter to your eventual success outcome.What books have your founder team read and what have you posted in your social media feeds? If they’ve spent time reading Technology Ventures, Gear Up, Four Steps to an Epiphany and tweeting knowledge nuggets – quoting chapter and verse – that could lift their entrepreneurial success score via our proprietary algorithm. Posting to Twitter your snowboarding pictures from Lake Tahoe might say something else.

Chris Sacca has been quoted as saying he goes right to Twitter and reads the last 50 tweets before he even considers taking a meeting. In our new VC algorithm, you can scrape and evaluate multiple social media streams for what founders have read, uploaded, integrated, and executed. Quality is great, but we are really looking for the quantity of entrepreneurial material comprehended.

2. Age of cellphone number and time of first daily phone call

The age of an entrepreneur’s cellphone number reveals so much: their relative stability, how old they are, whether their number was a jettisoned friends-and-family program or an imported landline number. We get the age of cellphone number through a process called cellphone underwriting, which reveals all of the above and more, and which is perfectly legal but secretive enough that I won’t reveal how it works. At the end of the day, we’re looking for entrepreneurs who are young, stable, middle class, and who have the support of family and friends networks — and the age of the cellphone number tells us all those things.

So, I take the approximate age of a founder’s cellphone number and then during due diligence, I get a stat: The average time of their first phone call in the day. If you and your entrepreneur team are making and taking calls at 6:30 a.m PT, you’re probably talking with people back East and there’s a 50-50 shot you’re making north of a million in revenues.

So revealing data like this, that we used to W.A.G. (wild ass guess), we can now find out by using our firm’s make-shift cellphone underwriting API, which hooks in with Verizon and AT&T – the two main carriers of the iPhone. (And by “makeshift API,” I mean have our associate do it manually.)

3. How Othman Laraki are they?

Othman Laraki is a tale that is told inside of the VC community. He sold something big to Twitter. He has degrees from both MIT and Stanford, but also has a ton of street smarts. As an example of his street smarts, he squatted in 2,000 square feet of office space at Stanford’s Engineering building. That duality of street smarts coupled with academic smarts is a critical component of my firm’s algorithm.

A fund that is now underwater used to troll for deals in the basement of the CS lab at Stanford without taking into consideration the street-smart component. They failed to realize that you can’t just replicate what other people already did super long ago — you have to innovate a quarter step. That team of VCs is now begging for LP money in the pay-for-play conference known as “Venture Alpha.” (Spoiler alert: They will not make it to their next fund.)

We don’t talk about the data inputs for this street-smart metric but as a hint: Augie Garrido once said, “Question authority but follow the rules.” We are looking for entrepreneurs who question the status quo and tip-toe the fine line, but still firmly understand rules and existing hierarchies.

4. Stanford University founder team formula

If you reverse engineer the biggest exits, you can see that the whales in every fund’s portfolio had two or three founders from Stanford, with an odd-ball founder from some other school tossed into the mix. YouNoodle released public data on this observation. Our algorithm does not say “just Stanford.” It does say two or three founders from a good school with at least one in the litter that is not exactly like the others – think Cal, NYU, CMU, Illinois or MIT in a pinch.

Recently, Mark Suster, blogged about the phenomenon of overly homogenous founder teams. He argues that if teams are too similar where “all founders even have the same phone,” the founders will likely follow versus lead.

Remmy Oxley is the pseudonym of a Silicon Valley VC. Follow him on Twitter @RemmyOxley. 

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I still think the idea of Google becoming a carrier is laughable (you can read why here), but it’s looking more and more likely that Google wants to put some skin in the mobile broadband game through strategic investment. In fact it’s already done so in the past, plopping down $500 million to fund Clearwire’s WiMAX ambitions. WiMAX didn’t exactly work out – it sold its Clearwire stake this year – so now Google may be setting its sites on LTE.

Dish is a satellite communications and TV provider with a hankering to become a terrestrial mobile operator. Over the last few years it’s scooped up a bunch of satellite communications licenses that it’s asking the Federal Communications Commission to clear for LTE use. Dish claims that wants to become a legitimate contender in the 4G market and is looking for partners to help it get its LTE network off the ground – or so it claims. Dish is just as likely to flip its spectrum for a quick profit once it gets the FCC to open up its spectrum.

Assuming for the moment that Dish is sincere, however, what would a partnership with Google bring it? Obviously money: Google has deep pockets and building a network 4G network from scratch is an expensive proposition, costing the companies well upwards of $10 billion. Ideally Dish would like to partner with an entrenched mobile carrier, one that already has the core and tower infrastructure in place to host its radio network as well as the back office and customer service operations to actually run a nationwide mobile carrier.

Google has the cash and Dish has the spectrum, but neither Google nor Dish bring expertise and infrastructure, which would put both at disadvantage. They would have to start from square one, replicating what the major wireless operators have spent more than a decade building. If that sounds like a huge disadvantage, that’s because it is.

But then again Google may be looking to start from scratch. Partnering with an established mobile operator, means embracing the traditional carrier business models of expensive mobile data tiers and long-term contracts as well as a mindset still grounded in protecting old-school voice and SMS services and their revenues. There’s a reason why Google invested in Clearwire. It wanted to challenge the traditional way of selling wireless services. It may now see the same opportunity with Dish.

Dish photo courtesy of (CC BY 2.0) Flickr user 

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Meanwhile, the startup companies that make the gear over which those services traverse have seen investment fall from $796 million in 2009 annually to just $270 million in the 12 months ending in June, Ovum found. According to Ovum principal analyst Matt Walker:

“A funding disconnect has thereby emerged between network builders and network users. Lots of innovation and venture capital is targeting the network users, such as mobile apps and OTT platforms. However, little of it is directly helping the network builders. With a weak start-up pipeline, the industry relies more on incumbent vendors to generate new ideas and products. Their budgets are bigger, but VCs are often better at funding ‘game changing’ ideas ignored by established vendors.”

Admittedly, investing in the next big social network or an app that could generate millions of downloads is a lot sexier than, say, envelope tracking technology or cell site radio frequency filters. But those infrastructure innovations are just as important. The capabilities of many apps and services have already far exceeded the ability of our mobile networks to deliver those apps and services at a reasonable cost (think Netflix on 4G tablet). If we let network innovation slip, we could wind up with a bunch of very powerful services that have nowhere to go.

As Walker points out, the onus for innovation thus falls on the big established telecom vendors, and it’s quite the burden. Ovum estimates that with the falloff in startup investment, big network infrastructure makers’ R&D budgets are now 90 times larger than the investment going into networking startups –- that’s up from 30X two years ago.

Nokia Siemens Networks’ conception of a heterogeneous network

Don’t get me wrong — the Ciscos, Ericssons and Huaweis of the world are responsible for some amazing science and innovation. And today they’re building the small cell and heterogeneous networks of the future. But there are limits to what the big vendors can accomplish. The R&D budgets of the big industrial labs have shrunk immensely in the last two decades, and there’s only so much talent and so many resources those vendors can devote to innovation.  The biggest issue, though, is that the big equipment makers innovate in much different ways than small startups.

Big vendors have big ingrained investments

Look around. A lot of the wired and wireline networks we use on a daily basis have been with us for a while. The first 2G networks in the US went up in the late 1990s and they’re largely still in use. A good part of the big vendors’ businesses is maintaining, upgrading and iterating on the networks they’ve already built.

The lightRadio Cube, Alcatel-Lucent’s vision for the small cell.

That doesn’t mean the big vendors are merely redesigning the same old equipment, but they’re definitely looking for continuity with their older networks. Alcatel-Lucent’s lightRadio and Nokia Siemens’ Liquid Radio architectures, for instance, are truly mind-blowing approaches to the new heterogeneous network, but they’re still fundamentally the cellular technologies that have been these vendors’ bread and butter since the birth of wireless.

When Wi-Fi came along as a mobile data alternative to cellular, these vendors were resistant if not outright hostile. It took two startups, BelAir Networks and Ruckus Wireless to make the business case to carriers for large-scale outdoor Wi-Fi networks to supplement 3G and 4G networks.

The big vendors are working largely within global standards frameworks. That’s by no means a bad thing. It’s why an iPhone can communicate with a Nokia-built base station, and a Cisco router can be plugged into an Ericsson core network. But standards work is painfully slow. A lot of the innovation work in networking technology works goes on outside of the standards bodies, and if that work proves successful it wind up shaping the standards themselves.

There’s probably no better example in wireless than CDMA. Qualcomm’s upstart cellular interface was initially adopted by a single US carrier, AirTouch, but it eventually became the basis for all global 3G networks.

Innovating between the lines

While the big vendors have focused on the overarching evolution of networks it’s up to infrastructure core technology startups to fill in technology gaps. Companies like NSN and Ericsson will most certainly handle the large-scale rollout of small cells and hetnets in the future, just like Apple and Samsung will be designing our future 4G smartphones and connected tablets.

But it will be startups like Seattle’s still under-the-radar PivotBeam that are developing the critical software defined antennas that will link these millions of small cells back to the network core. And it will be small engineering companies like Nujira and Quantance supplying the power envelope tracking technology giving those 4G phones a tolerable battery life.

I’m not saying all of these specific companies are all going to be the next Qualcomm, and that you should go invest in them. But they’re part of a critical network infrastructure startup scene, and that scene appears to be shrinking. We’re already starting to see the consequences. The industry has started delivering speed in the form of LTE but it has so far failed to deliver us the cheap capacity critical to moving the mobile industry forward. If the investors keep neglecting network startups, that problem is only going to get worse.

Photo courtesy of Shutterstock user Mati Nitibhon

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As I moved from the acceleration side back to being an entrepreneur, I wanted to systematically list what I’d learned and work out what entrepreneurs could generally benefit from. I also ran a survey and a string of interviews to find the value that startups expect from accelerators — and ask why they actually got. My findings form the backbone of my book Speed Up Your Startup: What Entrepreneurs Should Learn From Accelerators To Succeed With Their Businesses. 

What I found was there are 10 primary ways accelerators add value to startups. Breaking them down, we’re able to see how that value is produced, and come up with ways to get the same advantage elsewhere. The goal is both to demystify and examine the workings of a successful accelerator, and produce recommendations that startups can act on.

Let’s take a look.

1. Generating and validating an idea and a business model. Accelerators help through expertise in the field, knowing what has worked and what hasn’t before, and what others are doing that is similar. 

2. Investing and finding more investors. There is more to startup support than money, but it helps a lot. As well as the validation offered by the previous point, investors also like the validation provided by other investors. A startup from an accelerator program has already passed a certain vetting process and is thus likelier to be interesting. This also works in the case of co-investing: many investors like co-investing with proven accelerators and VCs.

3. Providing contacts and opening doors. A good investor can open doors for you that you wouldn’t even get to knock on yourself. This also goes for customers, partners, potential hires and media contacts. Accelerators that have proven successful in the past — or ones that have successful individuals behind them —are more interesting and thus have the strongest contacts.

4. Providing mentors, advisors and guidance. This is a key component of many programs. The startup world runs by advising and mentorship. Other founders share their own experiences on their blogs, in the talks they give, and in the mentorship sessions at accelerator programs. These are both networking opportunities and learning opportunities for startups, but primarily they are geared toward telling the startups what they should do to multiply their chances of success.

5. Providing hands-on help or education. If the startup needs to do something that they can’t do themselves, accelerators may either help them, train them or help find someone to do it for them. It is common for an early-stage accelerator to help in company formation, for example. Some have experts-in-residence for instance in marketing and recruiting. 

6. Helping in product development and testing. An accelerator can help shape the product while it is being developed. This depends much on the length of the program and on the program’s focus. It’s also key whether this is done within the accelerator’s core team, by their immediate network or by securing test or pilot customers and users externally.

7. Helping with product marketing and user acquisition. Accelerators are very concerned with getting real users and customers for their startups, and some help with this by providing hands-on resources for marketing. Without large marketing budgets, the most efficient way to ensure this is building products that have marketing built into their logic.

8. Providing a peer group in a high-pressure environment. Founders get best along with other founders — not because of their amicable personalities, but because they share a passion for doing something special that outsiders often may not understand. While that’s at least a generalization and at worst a cliché, having a peer group who face similar challenges can be highly motivating. Time pressure may seem like a bug, not a feature, but it’s a success factor in a startup accelerator. Deadlines are tangible measures of discipline — and enforcements of it.

9. Providing a physical location and support resources. A place to work from can be a co-working space, an office or a series of temporary gatherings. Physical resources like printers, chairs and coffee makers also make a startup’s life easier.

10. Negotiating and providing discounts, freebies and perks. This is slightly related to points 3–5, but worth underlining separately due to their potential impact. For example, Amazon Web Services partners with leading startup accelerators and offers free credits to their services, making the infrastructure choice effortless to many.

The survey confirmed this breakdown, but also unearthed some interesting differences between what startups expect from accelerators and what they actually receive from them.

Mentorship and advice from the core team, for example, had both high expectations and were deemed valuable by startups taking the survey — but customer and partner contacts in the industry didn’t fare as well.

Forty nine percent of respondents who had not participated in an accelerator reported that customer contacts would be very desirable. However, only 22 percent of the participants reported that the industry contacts provided by the accelerator had been excellent. Forty six percent reported these to have been “neutral” or “poor”. More detailed answers support this, with many founders pointing out that an accelerator would add the most value by providing partner or customer contacts. “Industry fit” was also mentioned as an important criteria when selecting an accelerator program in the first place. 

The lack of auxiliary business services – such as company formation, accounting or payroll processing – provided by the accelerator programs was a big letdown. 67 percent of respondents reported these as “poor” or “neutral”. At the same time, in non-accelerated startups, 65 percent of respondents placed these services in the top two categories of interest.

The survey was taken by 151 startups and supplemented with 33 additional interviews. More about the survey and the book is at the Speed Up Your Startup site.

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According to the filing, the issuer would “need substantial additional capital to meet its  business and financial obligations beyond the next 12 months.” That sounds an awful lot like Clearwire, which recently raised new funds to get its LTE network off the ground and is strapped for operational capital.

UBS analyst John Hodulik said Dish management won’t confirm whether the investment is in Clearwire, but chairman Charlie Ergen did hint at the possibility at Dish’s second quarter analyst call. “Ergen reiterated that it would make sense for DISH to enter the wireless business with a partner that’s already in the space,” Hodulik said in a research note.

Why would Dish need the ailing Clearwire? Well, Dish claims it wants to become a mobile carrier, using recently acquired satellite spectrum to build an LTE network, access to which it would sell wholesale to other carriers and virtual operators. I have doubts that Dish truly intends to use that spectrum. It’s likely putting on a show for the FCC so it can get its satellite airwaves reclassified for terrestrial use, after which Dish would flip them for a quick and substantial profit.

But if Dish does plan to build a network, partnering with Clearwire would be logical step. Clearwire has the expertise and much of the infrastructure in place to host and run a future Dish network. It just doesn’t have the money.

Meanwhile, Ergen is trying to pressure on the FCC for permission to build a network. Currently the S-band frequencies Dish holds are allocated for “ancillary terrestrial” use, meaning it can only use LTE to offer supplemental capacity for a satellite broadband network – much like Sirius XM uses ground transmitters to boost its satellite signals in urban areas.

Dish wants the FCC to grant it a flat out waiver – much like it granted to LightSquared – to build a terrestrial only network, effectively turning its frequencies into a new cellular band. The FCC, however, wants to examine the satellite communications spectrum as a whole, deciding whether to permanently reallocate portions of it for mobile broadband. That means Dish will have to wait for the FCC to deliberate, and Ergen doesn’t want to wait.

At Dish’s earnings call, Ergen made the bold statement that Dish would launch a hybrid satellite-LTE service if it failed to get FCC permission for its 4G-only network, Light Reading reported. Ergen claimed that there is small market for satellite handsets that Dish could tap into, but that’s a bluff if I’ve heard one. Ancillary licenses like Dish’s have been around for years and no company has succeeded in making the hybrid model work. In fact, Dish bought its spectrum for two companies that went bankrupt trying to offer just such services.

Dish photo courtesy of (CC BY 2.0) Flickr user Dave Lindblom.

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Stoke is hardly a new startup. It raised its Series A round back in 2004 from Sequoia Capital and Kleiner Perkins. Since then it’s racked up about $97 million, yet has remained relatively quiet except for a high-profile deal with DoCoMo in 2009. But Stoke may have just been waiting for the industry to catch up to its technology.

Stoke makes complex gateways that serve several functions on a mobile carrier’s 3G or 4G network: they can aggregate millions of cellular radio or Wi-Fi nodes, provide secure encryption for normally vulnerable IP LTE data traffic, and can shunt, or offload, over-the-top application traffic to the Internet before it clogs up the network core. Regardless of which use case or cases a carrier adopt the gateway’s central mission to is the handle the enormous deluge of mobile data traffic the smartphone has wrought.

Stoke first started selling its gateway as a 3G mobile data offload element, but couldn’t find any carrier interested, said Dan McBride, VP of marketing for Stoke. Carriers were experiencing enormous traffic spikes from the iPhone and Android devices, but they all said they weren’t interested in investing any more in 3G with LTE on the horizon, McBride said. So Stoke shifted gears and started positioning its product as a femtocell gateway and an LTE security and aggregation platform.

Femtocells didn’t exactly go gangbusters, but Stoke did begin winning LTE deals. The vendor has racked up 14 LTE contracts globally, McBride said, though apart from DoCoMo he wouldn’t reveal with whom. What’s more, with Wi-Fi’s new popularity among operators and the advent of small cells, McBride feels the marketplace doors are swinging wider. AT&T and Sprint are hinting at large-scale small cell deployments and wireline and wireless operators alike are bulking up on Wi-Fi access points– they will need something to secure and direct all of that traffic.

While Samsung’s cash is welcome, it wasn’t necessary to keep Stoke going, as it has been profitable for 18 months, McBride said. “It’s not the money that’s important – it’s not about operational funding,” McBride said. “It’s solely to bring us closer to Samsung.”

Samsung has made the rather audacious pledge to become a top three mobile infrastructure maker globally – a claim that would be almost laughable if it weren’t for some recent high-profile LTE wins such as Sprint’s Network Vision deal. If Samsung can really go the distance though — displacing half a dozen industry giants in the process – then Stoke would certainly enjoy the free ride.

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