Dr. Tim Farrar

GLG News by Dr. Tim Farrar, President

GLG News is now G+ Insights

G+ is a community for professionals, academics and entrepreneurs to connect through online discussions and in-person meetings. You will continue to see G+ Insights (formerly GLG News) here as well as on the G+ website, where you can share and discuss the G+ Insights you read.

Car manufacturers will deploy satellite radio for many years to come

August 7, 2008

Analysis of:Satellite Radio: Dead Companies Walking | www.lightreading.com

Satellite radio is (and always has been) a car-based service. Auto manufacturers can rely on satellite radio to be there for many years to come (due to the long-lived satellite assets) and so don't risk obsolescence, which has been a big problem for navigation systems. In comparison terrestrial wireless technologies change too rapidly for auto manufacturers to commit to a single standard (viz OnStar's problems) and so probably aren't a realistic substitute except as a user-provided device (like iPods).

Back to the future for DISH and DirecTV

August 6, 2008

Analysis of:DISH Loses Subscribers as Competition Stiffens | www.reuters.com

DISH has not stopped believing that its long term future lies in a merger with DirecTV, and the SATS spinoff was made with this in mind. The WSJ analysis (http://online.wsj.com/article/SB121784781012209687.html) indicates that a merged company would market "a potential broadband offering" in urban areas, which presumably means revisiting wireless broadband options such as ATC (Ancillary Terrestrial Component), the 700 MHz D-block and the AWS-3 auction.

Sirius and XM will merge, but how big is the market?

June 20, 2008

Analysis of:Sirius-XM Deal: The Pace Quickens | www.businessweek.com

The long term market potential for satellite radio is probably 30M-40M subs. The subscriber base will come from the car market, though it is possible content may be syndicated to other platforms (e.g. MediaFLO). Growth will be driven by OEMs, since unlike the retail channels they are less likely to move on to newer products.

Hughes wins yet another MSS contract

May 27, 2008

Analysis of:Hughes Selected by Globalstar to Design, Supply and Implement Next Generation Ground Radio Network and User Terminal Chips | www.earthtimes.org

Hughes continues to dominate MSS system development contracts. However, it is unclear how Globalstar will pay for this contract, given the lack of any vendor financing arrangements.

Satellite may be Sexy, but Spectrum is Key

April 30, 2008

Analysis of:Satellite Is Sexy Again | www.businessweek.com

Mobile satellite operators are struggling to find partners to finance an Ancillary Terrestrial Component (ATC) buildout. Doubts are rising about the value of their spectrum, but Harbinger is keeping several players afloat. However, predictions of mergers and bankruptcies are likely to prove correct over the next year.

The FCC's Public Safety Broadband Plan Never Made Much Sense

January 10, 2008

Analysis of:Cell Firm's Shutdown May Crimp FCC Plan | online.wsj.com

The 700MHz D-block spectrum wasn't worth $1.3B, especially to a new entrant. It seems highly likely that the reserve price will have to be reduced and/or the buildout conditions loosened. This may delay the date for completion of the auction considerably, with implications for other players (e.g. ATC spectrum, AT&T/DISH, Leap/MetroPCS) whose future plans depend on it.

Is Mobile TV Dead On Arrival?

January 9, 2008

Analysis of:Satellite DMB Business Facing Survival Game | www.koreatimes.co.kr

The problems of TU Media in Korea highlight the very challenging business case for broadcast mobile TV. The lack of information emerging about MediaFLO in the US probably indicates initial take-up has been disappointing. European satellite players such as Inmarsat and SES-Eutelsat may also re-evaluate their commitment to satellite-based mobile TV networks

Mobile TV doesn't generate enough value for Aloha

October 10, 2007

Analysis of:AT&T Vuys Aloha Wireless Spectrum | online.wsj.com

Aloha has admitted by selling out to AT&T that the business plan for a second mobile TV player is not very attractive. The spectrum is far more valuable to an incumbent and when used for two-way voice and data services. The benchmark established for a non-national 700MHz spectrum footprint at $1.06/MHzPOP makes it very likely that auction values will significantly exceed the reserve prices (of up to $0.70/MHzPOP for the national 22MHz C-block license). 

Echostar Intends to be a Major Player in Mobile TV

September 27, 2007

Analysis of:Echostar Slings Itself Into Mobile Entertainment | online.wsj.com

The Echostar spin-off is likely to make additional investments in international (and perhaps even domestic) mobile TV platforms, which could have significant ramifications for Ancillary Terrestrial Component (ATC) players in Europe and even the US. The Sling Media acquisition pairs well with Echostar's investments in these mobile TV platforms, since both are directed towards enhancing the mobile TV experience.

WiMAX Still Has Many Hurdles to Overcome

August 27, 2007

Analysis of:The Road To WiMAX | www.businessweek.com

WiMAX only has significant value as a mobile technology, and has only a few years to establish itself before wireless carriers (in most of the world) continue down the W-CDMA LTE path. The best WiMAX can hope for as a fixed broadband competitor is to establish a modest niche, with room for one (profitable) operator at most in each market.

Google May Bid in the 700MHz Auction, but is Unlikely to Win

August 22, 2007

Analysis of:Schmidt: Google will "probably" bid in 700MHz | www.fiercewireless.com

Google's CEO indicates he can live with the open access rules and will probably bid in the upcoming auction. However, AT&T and Verizon will want to keep Google out and can afford to pay much more for the spectrum. End result is likely to be bids as high as $10B for the 22MHz open access block and perhaps $18B for the auction as a whole. Clearly this would be bad news for Vodafone's prospects of receiving dividends from Verizon Wireless in the near term, since they are expected to be the biggest bidder.

Google's indicative $4.6B spectrum bid won't be acceptable to the FCC

July 23, 2007

Analysis of:Google Talks Principles, Moves To Disrupt Wireless Market | www.cellular-news.com

The FCC is unlikely to accommodate Google's requested wholesale access conditions for the 700MHz auction, since these would make incumbents unlikely to bid. The 22MHz of spectrum may not be worth $4.6B for the data-oriented wholesale business model Google has in mind, but incumbents could justify paying $10B for spectrum to provide additional 3G network capacity. There has never been a successful operator with a wholesale cellular business model, despite several attempts, and data-oriented MVNOs have not fared much better.

Advantage DBS? Where does this leave the Sprint-Comcast "exclusive" agreement?

July 19, 2007

Analysis of:Clearwire and Sprint | online.wsj.com

The Sprint-Clearwire joint venture for WiMAX deployment appears to leave the 2005 "exclusive" agreement between Sprint and the cable consortium of Comcast, Cox, Time Warner and Advance/Newhouse in tatters. While DBS players may not be able to access fixed WiMAX deployments in Sprint areas via the Sprint-Clearwire JV, they should have the flexibility to deliver a quad play in most other respects, with none of the capital cost that would have been needed to deploy their own network. It appears implausible that cable companies will now put money in to support Sprint's deployment, given the risk of boosting their main competitor.

Draft 700Mhz rules may put downward pressure on spectrum valuations

July 16, 2007

Analysis of:FCC Draft Auction Rules A Win For Google, Hi-Tech Industry | money.cnn.com

The proposal for one large national 22MHz block, with numerous restrictions promoting open access, limits the number of potential bidders. The resulting spectrum valuation for this part of the 34MHz total commercial allocation could be closer to $2B-$3B ($0.30-$0.45/MHzPOP) than the originally mooted $1.50/MHzPOP ($15B for the auction as a whole). This would have negative consequences for other spectrum holders, particularly MSS-ATC proponents, especially if prospective partners (DirecTV, Google, etc) opted to join forces to build out the 700MHz block.

Sprint could actually be the biggest medium term winner from the iPhone

July 11, 2007

Analysis of:Was Verizon Really Wrong To Pass On The iPhone? | telecom.seekingalpha.com

Use of standard Internet browsers on cellphones now looks a lot more plausible as a result of the revolutionary iPhone interface This application could provide the demand needed to fill up new high speed mobile data networks (whether mobile WiMAX or HSDPA/UPA) Sprint and Clearwire would benefit because the value (and potential differentiation) of their large 2.5GHz spectrum holdings will increase

Satellite broadband has a sustainable position in rural US markets for at least the next decade

May 17, 2007

Analysis of:AT&T and WildBlue Expand Satellite Access Service | www.convergedigest.com

It appears unlikely that mobile WiMAX at 2.5GHz will be economic for rollout to the last 5M-10M US homes. Cellular operators will be able to pay far more for 700MHz spectrum than broadband access providers, and cellular providers probably won't emphasize fixed data solutions in their deployment. The key issue for satellite broadband providers is whether partners such as AT&T will be motivated to push the service or whether these deals are simply a maneuver to make AT&T look good with regulators.

Inmarsat's upside from in-flight cellular is far more limited than equity analysts project

October 10, 2006

Analysis of:Would you fly in chattering class? | www.economist.com

Analysts such as cazenove have projected huge upside for Inmarsat from in-flight cellular services.

Inmarsat's stock price has appreciated significantly on the back of the OnAir/Ryanair deal
Ryanair is expecting to make a profit from in-flight cellular and this is unlikely to be realized, which could prompt it to pull the phones off its planes

AWS auction leaves few obvious options for MSS-ATC players

October 9, 2006

Analysis of:Cable Consortium Acquires Spectrum Licenses Covering National Footprint | www.cmcsk.com

The price level achieved in AWS auction ($0.53 average) leaves little upside for ATC spectrum valuations, if discounts are applied for satellite buildout costs, incremental handset costs and reservation of a proportion of spectrum for satellite use.
Only the DBS players are left without an adequate spectrum position.
As a result there are unlikely to be enough terrestrial partners for all of the proposed MSS-ATC systems to reach separate deals for cellular network buildout.

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