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New 4G operator LightSquared is swapping out spectrum with fellow satellite operator Inmarsat in an effort to align its frequency holdings with its long-term evolution deployment plans.

Though LightSquared has received FCC permission to use its 59 MHz of L-band satellite spectrum for terrestrial mobile broadband services, the interlaced L-band licenses are hardly optimized for a wideband 4G deployment. LTE uses orthogonal frequency division multiplexing access technology, which through the use of sub-channels can spread a single LTE carrier over virtually any amount of spectrum. The more contiguous spectrum an operator packs into that channel, the more capacity it can offer over a single wireless carrier, while still effectively using the same infrastructure. For instance, Clearwire (NASDAQ:CLWR) is testing LTE in a configuration that uses a 20 MHz downlink and a 20 MHz uplink channel, which could allow it to support speeds as high as 70 Mb/s.

Meanwhile LighSquared’s frequencies are spread all over the L-band. In their current state, the largest channel LightSquared can put together is a single 5-by-5 MHz carrier, said Drew Caplan, chief network officer for the new operator. But by swapping out frequencies with Inmarsat, LightSquared will eventually be able to deploy LTE in two separate 10-by-10 MHz carriers, allowing it to take advantage of LTE technical efficiencies and keep it competitive with its fellow 4G operators, Caplan said.

“We and Inmarsat are the big dogs in the L-band,” Caplan said. “When we were awarded our spectrum, though, it was interlaced to reflect our status as satellite providers.” To use an old IT computing term, LightSquared’s spectrum “need to be de-fragged,” Caplan said.

LightSquared, then SkyTerra, signed the agreement with Inmarsat in 2007 after both companies determined they would attempt to use their spectrum for terrestrial broadband access at some future date. The two satellite providers will implement phase one of the agreement immediately, which will effectively give LightSquared two unencumbered 5-by-5 MHz channels for its initial LTE deployment next year. Phase one will take about 18 months to implement, as both operators currently have satellite infrastructure operating over the frequencies in question. LightSquared has also agreed to bear the costs of the transition, paying Inmarsat $337.5 million over the next year and a half.

Phase two of the agreement will add an additional 5 MHz to the uplink and downlink of each of LightSquared’s LTE carriers, effectively doubling the size of its 4G channels. Though LightSquared will initially deploy its LTE network in a 5-by-5 MHz configuration, the Nokia Siemens Networks (NYSE:NOK, NYSE:SI) base stations can be upgraded via software to support the expanded bandwidth, resulting in relatively little new capital expenditures, Caplan said. Any devices deployed over the LightSquared network will be able to support both channel sizes, Caplan added.

LightSquared has the option of triggering phase two at any time between now and 2013, would take 30 months to fully complete and would cost LightSquared an additional $115 million in annual payments to Inmarsat.
Caplan said that LightSquared decided not to implement the full spectrum swap immediately because it has plenty of leeway. Its 20 MHz of spectrum will be plenty to support its initial launch and the infrastructure upgrades easy to implement, he said.

After phase two is complete, LightSquared will have 40 MHz devoted to LTE, which is more than any other operator aside from Clearwire currently has allotted for 4G, Caplan said. LightSquared will keep 6 MHz of its 59 MHz devoted to satellite services. The remaining 13 MHz doesn’t lend itself easily to a large-channel LTE deployment, but LightSquared is weighing many options. It’s designating 5 MHz for a potential time division duplexing LTE deployment, which wouldn’t require split channels, while the remaining 8 MHz is in the 1.4 GHz band, part of which it plans to lease to Airspan Networks for M2M applications.

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