Ligado's Best Move Could Be Selling Part of L Band to Verizon

Ligado officials said Thursday the company has lined up $100 million in new investments and remains focused on building an IIoT network (see 2005280005). Ligado has held a series of calls with investors since the order was released, hosted by some of the big investment firms, they said.

“Going it alone to start its own IoT business is a high-risk proposition,” said Armand Musey, Summit Ridge Group founder. “If they can get an acceptable offer from a major carrier, that will be more attractive.”

In Verizon’s Q1 call, CEO Hans Vestberg said there are “several challenges” with L-band. The frequency “is not used anywhere in the world,” he said: “That means that there is no equipment, no handsets and things like that which you need in an ecosystem. That's so important. But as with all frequencies and all, the spectrum, we're of course looking into it.”

The message to investors has been that the most viable option is “to try to sell the spectrum to Verizon for an uplink for the C-band downlink,” said consultant Tim Farrar. That might not work or be of interest to Verizon, but Ligado could ignore the downlink restrictions imposed by the FCC if it sells just the uplink parts, he said. Farrar said Ligado already carries debt and doesn’t have the money to deploy a network so it needs a deal with a carrier.

“It’s overwhelmingly more likely that Ligado’s spectrum will be acquired by a traditional carrier, most likely to pair as uplink for C-band downlink,” agreed MoffettNathanson’s Craig Moffett: “Verizon is, by far, the most frequently mentioned name.” Verizon didn’t comment Friday.

Speculation is, Ligado hopes to strike a deal with Verizon, said Resilient Navigation and Timing Foundation President Dana Goward. Whether that would be more acceptable to Ligado opponents than an IIoT network “depends,” he said: “If the new party were to do exactly what Ligado said it was going to do in its application, then the concerns would remain.” Ligado officials told us they're exploring their options.

The L band is “very valuable spectrum … because of where it is and its characteristics,” said Dennis Roberson of Roberson and Associates, a Ligado consultant. “Many potential partners are going to be very interested.” Benefits of combining downlink spectrum in C and uplink in L are “real,” he said Friday. The L band could also be combined with citizens broadband radio service spectrum, though the C band has fewer challenges, he said. The L-band propagation characteristics are “vastly better” than those of the C band, he said: “The further down you go, the more distance and more penetration into buildings and the like you get.” Roberson also sees interest in using the spectrum for the IIoT. He noted German regulators set aside spectrum specifically for industrial use.

Concerns

Any terrestrial use of the L band would be worrisome, said Renee Leduc, principal at Narayan Strategy. The L band has "been a satellite neighborhood for a very long time,” she said. Putting terrestrial and satellite in the same spectrum creates “the potential for devastating interference,” she said.

The Pentagon may “make it so costly for Ligado to continue, that selling the uplink part is the only way to put the spectrum into productive use,” said Technology Policy Institute President Scott Wallsten. “It would be a terrible precedent if DOD is able to circumvent process to get its way,” he said: “If the consequences are truly as dire as they claim, then the question is who at DOD and other agencies should be fired for having ignored it all these years while the issue was being debated and studied.”

The FCC’s order cites use by railroads requiring ubiquitous coverage and highly reliable performance. The FCC says by combining its terrestrial and satellite operations, Ligado can provide the IIoT in “rural areas and other communities that terrestrial networks alone cannot effectively reach.” A footnote mentioned potential benefits of combining C-band spectrum, which is higher-frequency mid-band, with Ligado’s lower-frequency L band.

Industry officials said the IIoT business also has challenges, with national carriers offering their own IoT plans and Iridium offering service, though without the terrestrial component that Ligado would combine with satellite coverage.

Ligado’s spectrum isn’t part of the official standards, “which means they are behind,” said Recon Analytics’ Roger Entner. “Generally speaking, IoT networks are piggybacking on regular wireless network for a dual-use approach to reduce the cost of deploying sites.” Otherwise, “the business cases become very difficult,” he said: Any IoT network provider would need to connect many devices at low revenue, while rent on a cellsite averages $1,800 monthly, he said: “A stand-alone IoT network needs to serve hundreds of thousands, if not millions, of devices and is competing against cellular-based systems with a lower cost structure.”

“We are in the earliest stages of IoT and how 5G can expand that market,” emailed LightShed’s Walter Piecyk. “Low, mid and higher band spectrum can all play important and different IoT roles. However, there is far more competition by other non-IoT applications for mid band spectrum than the alternative bands. Ligado’s relevance thereby extends to IoT in addition to the more obvious application as an uplink band that could lower the cost and speed the deployments of broadband on higher bands of spectrum.”

“Ligado’s spectrum is ideally suited to industrial propagation across long distances and applications related to railroads, oil fields, agriculture, and so forth,” American Enterprise Institute's Roslyn Layton said: “The 5G standard integrates well with a range of diverse industrial and satellite applications.” Layton said there isn’t a problem of competition today in the IoT or IIoT. “It’s just getting started,” she said: “Anyone who wants to invest, particularly in this environment, should be encouraged.”