Blog Post

Will LightSquared’s LTE Network Reduce Middle Mile Costs?

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

LightSquared, the upstart telecommunications company that hopes to build a Long Term Evolution network using both a terrestrial and a satellite network, is prepping to announce its involvement with a project this afternoon to provide wireless access for rural healthcare providers. According to a press release from the Federal Communications Office, the CEO of LightSquared, the FCC Chair and New Mexico’s Senator Tom Udall will today announce a pilot program to, “help bridge critical telecommunication gaps between the Indian Health Services and its rural health providers.”

I’m interested in the program itself, but the announcement also indicated that LightSquared’s wholesale LTE network isn’t likely to help drive competitive pricing or service for mobile broadband for consumers. Rather, it will offer services in the higher-margin machine to machine sector, linking rural areas back to the main Internet, bridging the so-called middle mile. So far, LightSquared has announced one other customer for its planned network, providing middle mile access for a smart grid customer.

This actually changes the math on LightSquared’s chances for success, which I’ve been pretty skeptical of. Satellite (even when combined with a terrestrial network), for many, many reasons isn’t going to be a compelling delivery mechanism for mobile broadband to consumers, but as a last-resort middle mile access, it could work. And right now, middle market broadband access is expensive and provided by only a few companies like AT&T (s T) and Verizon (s VZ). The lack of cost effective middle mile access is one reason that rural broadband service is both expensive and sometimes of a lower quality. So maybe LightSquared can build a business around such service. Though, I’m not sure if it’ll make things must faster or much cheaper given the costs of their infrastructure and the limitations of its spectrum holdings.

Related content from GigaOM Pro (sub req’d):