Satellite-LTE startup LightSquared has made a deal for national electronics retailer Best Buy to resell its service, LightSquared CEO and Chairman Sanjiv Ahuja said on Wednesday at the CTIA Wireless trade show.
The companies will begin trials in the first quarter of next year, Ahuja said. The deal appears to be the biggest yet for LightSquared, which plans to operate entirely as a wholesale provider of network services. On Tuesday, the company announced a resale and roaming partnership with Leap Wireless, provider of the Cricket mobile service.
LightSquared already has satellites in place and plans to build a terrestrial LTE (Long-Term Evolution) network with coverage complemented by the satellite service. Its customers will be able to resell either or both services. Ahuja did not specify which types of service Best Buy would offer.
The bold vision of a wholesale-only national carrier with two types of infrastructure faces both regulatory and competitive challenges. After warnings by GPS (Global Positioning System) vendors that LightSquared's LTE network will interfere with the GPS system, the company had to launch a series of tests along with the GPS vendors that are due to conclude in June. Meanwhile, analysts believe consolidation of carriers, such as AT&T's planned buyout of T-Mobile USA, will hurt LightSquared's prospects by reducing the number of potential resellers for its wholesale service.
LightSquared's service will be sold in Best Buy retail stores through Best Buy's mobile data service, Best Buy Connect. Best Buy already has a reseller deal with WiMax operator Clearwire. The chain could give LightSquared a wide reach across the U.S. if it sells the service in all its locations.
To date, LightSquared's partners have been minor players in the national mobile industry. Cricket has approximately 300,000 subscribers on a network that reaches 95 million U.S. residents, or 260 million including a roaming agreement with Sprint Nextel. Cricket sells all its devices, ranging in price from $29.99 to $299.99, on a no-contract basis.
Earlier this year, LightSquared announced a partnership with Open Range, a service provider to rural communities, in which the companies would work together to build out the LTE network. Open Range would also lease spectrum from LightSquared and resell its satellite service.
The provision of broadband to rural areas of the U.S. has become a hot-button issue, with the Federal Communications Commission pushing to get rural residents online through its National Broadband Plan. President Barack Obama set a goal of bringing 4G wireless service to 98 percent of the U.S. population in his 2011 State of the Union Address.
With its planned acquisition of T-Mobile that was announced on Sunday, AT&T highlighted opportunities to bring LTE to suburban and rural areas by combining spectrum from the two companies. On Tuesday, Swedish mobile equipment giant Ericsson announced a partnership with NetAmerica Alliance, a service provider that plans to unite many small owners of spectrum in rural areas and piece together a national LTE network, offering broader coverage through roaming agreements.
However, some observers question the economic viability of networks designed to reach sparsely populated areas, particularly with traditionally expensive technologies such as satellite.
"If it was really that hot a market, the (major) carriers would have built there," said NPD Group analyst Eddie Hold.