Will LightSquared’s LTE Network Find a Business Model?

LightSquared’s wholesale LTE network might not succeed as a major platform for 4G mobile providers. For starters, there might not be enough customers.

So some speculate LightSquared might instead be able to build a model based on middle-mile backhaul, basically hauling traffic from telco and other ISP points of presence back to major Internet backbone locations.

backhaul revenue potential from the 800 to 1,200 rural telcos and some number of independent or rural ISPs to make such a strategy feasible. I haven't made any attempt to run the numbers, but it seems intuitively unlikely.

Rural Internet access customers tend to pay less, and connect less, than their urban and suburban counterparts. Many ISPs or telcos in rural areas serve a few hundred total customers for voice, and less than that for Internet services. A market for Ethernet connections in the middle mile does exist. What isn't clear is whether the backhaul revenues are substantial enough to build a full business case for LightSquared.

Of course, LightSquared would not say that is the case, but rather than middle mile backhaul is a portion of the total potential revenue streams. That's probably true.

Will LightSquared’s LTE Network Reduce Middle Mile Costs?