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back to article Satellite firm offers 4G network on back of 2G business model

Harbinger is an equity fund with really big plans: the idea is to build a national 4G network of 36,000 base stations using LTE technology, and then lease it to network operators too poor to build their own. But to do that the company will have to launch a satellite or two and raise some serious cash, but if it can be done then …

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One Word

Google.

They might use this network to give the telcos a hard time by charging for data and providing a global flatrate for IP telephony.

Do the math:

GSM voice codec needs about 10 kbit/s.

5GB UMTS data currently costs about 40 Euros (60 dollars) with Vodafone.

That means 1 bit costs 0,000000001 Euros. That means one minute VoIP Telephony costs 0,0006 Euros. That's 0.06 eurocent. Or About 0.1 dollar-cent PER MINUTE, WORLDWIDE !

Ok, 0.2 cent if you sum up both ends of the conversation.

Big opportunity to screw the "old" telcos and Google would be capable of doing it !

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Headmaster

Do the maths

Have you any idea how many call minutes there a day?

Actually all your calculations are crap. GSM might be 10 kb/s but VoIP is quite a bit more.

Mixed mode networks run largely by the equipment providers (Bharti in India is the model, I think) are going to dominate. Satellite frequencies and or wimax are unlikely to be popular enough for handsets but might well be used for backhaul or "fixed line" internet in places where cable laying isn't worth it. Costs have to be cut as the networks have thus far failed entirely to get the public to pay a premium for data.

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Anonymous Coward

Title.

So why isn't Harbinger teaming up with Iridium?

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Handsets?

This may be a silly question but if this is a new approach to mobile networks in previously unused (for mobile) bands, won't it need new handsets too? Or is the RF side of a modern mobile handset sufficiently reconfigurable that no new handsets will be needed?

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Handsets?

My understanding is that the handsets will need a satellite receiver as well as a cellular modem to comply with the license terms. However, in practice the handsets would never use the satellite radio.

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I'll wait for 5G

"The plan is based on 40 million predicted connections within the next five years, which is a hell of a lot even if one is selling wholesale."

Over recent years we've seen the launching of several very expensive technological upgrades that have failed to take the world by storm. Vista, Blue-Ray and the PS3 are three good examples. By offering only a marginal improvement in quality (in the mind of the consumer) at a significant extra cost, most of the market simply said "thanks, but no thanks".

Will 4G be a similar flop? Harbinger is banking on a significant change in the way the market currently works. At the moment, most people don't have a data plan with any mobile device, and there are a lot of consumers who will never want to do more than check their emails, Facebook and Twitter accounts. For this 3.5G is adequate, especially as most smartphones come with wifi. 4G will only become a standard if the phone manufacturers and mobile networks decide to make it standard... and that will almost certainly mean having to subsidise both handsets and data costs for the first few years.

Considering the sleight-of-hand tactic being used by Harbinger, the big networks may just decide to refuse to stump up the extra cost, drive the Harbinger out of business and then buy up the infrastructure at a fraction of the cost it took to put it in place.

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@ominous cowherd

Probably yes, but multiband Handsets are very common nowadays. I don't think this would be a big deal for the current semiconductor industry.

GHz circuits are now standard. The challenge is more in the millimeter wavelengths these days.

Certainly you need millions of sets to make all of that economical. So it might be sort of a egg/hen business issue...

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Real costs

"They valued the spectrum based on obligation to launch satellites - still an expensive business - and the business model for satellite telephones is far from proven."

If this is such a good idea how come the other telcos discounted it due to the cost of the satellites?

The untested satellite telephone bit can really be ignored as the actual plan seems to be to rely on blanket ground infrastructure - not like an actual satellite telephone at all.

The costs just don't make sense, Harbinger plans to 'save' $34b over the telco estimates yet the telcos have discounted this idea already because the cost of launching satellites. Even the worst case back of envelope guestimates would put 2 satellites+launch at $2b, still saving a ridiculous amount of money.

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FAIL

@Clark

"Actually all your calculations are crap. GSM might be 10 kb/s but VoIP is quite a bit more."

Now that you use such strong words, could you please come up with hard counter-arguments ?

Many people would be happy to use a GSM-quality phone codec if it cost only 0.2 cents/minute. And even at VoIP bandwitdth, it would just be 2 cents/minute, as VoIP is hardly more than 100 kbit/sec.

The mobile operators are trying to wring out people and they are a bunch of morons. Just look at how they want to price Video-Telephony. Nobody uses it, because of their ridiculuous pricing. The also "agreed" on that stupido-tech J2ME, which nobody can seriously use.

Only the non-J2ME iPhone shook up things.

Much more to come from the internet companies, I think. The telcos are the modern Mentally Retarded's Asylum.

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Headmaster

Some figures

Duplex VoIP runs at least at 16 kb/s. This might be less on LTE as that it is entirely IP based and wouldn't have the additional overhead that VoIP on GSM/UMTS currently has. That isn't the real problem. Even at 0.2 cents a minute Google could not afford to offer the service for free (your argument) and that's totally ignoring termination charges of around 10 cents per call. There are millions of call minutes a day.

Sure, there is a huge markup on voice calls on mobile networks (total national voice flatrates cost around € 100 a month which gives you an idea of what the marginal cost is). The profit is why the spectrum is licensed. But the comparison with data charges doesn't hold water. Data charges have been reduced to encourage take up but the big problem (it's better to make some money rather than none out of the asset) with mobile data is cell contention. No matter what technology you use, you quickly end up having to ration bandwidth on a cell and most licences stipulate that voice gets priority with possibly severe penalties for call dropouts. LTE will let the networks manage bandwidth better, scale better and build cheaper networks. But the investment costs are still so large, that with charges continuing to drop, it doesn't make sense to build your own network anymore. So, networks will in the future increasingly be build and managed by the equipment makers and capacity will be rented to operators. In this model the actual details of the technology - LTE, WiMax, satellite, femto-cells - becomes less relevant and more varied offers such as guaranteed but premium bandwidth will arise alongside the bargain basement services as currently available for fixed line services. This infrastructure model does make more sense for Google and Apple trying to offer and charge (one way or another) for added value services.

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Stop

haha

So the difference is 10kb vs 16kb ? I am truely impressed.

And regarding contention, I don't consider it really difficult to throttle throughput in time of high demand. Everybody gets their 16kb during high demand and if that is not enoug, new connections are declined. Problem solved.

Also, lower bands (think 400 MHz and less) are being freed because digital TV does not eat some much bandwith. That means much longer mobile<-->tower distances are possible and costs can be dramatically reduced.

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Google, indeed

I agree with J(ohn )Locke that it's time for 'tabula rasa', a clean slate on which Google can make their play. I would by no means be surprised to see Google pick up this project (let's face it, Harbinger is a finance company, and would probably be happy to sell off the project at a profit.).

After all, Google did make news some time ago about wanting to build a fiber backbone, and it would make sense to also add a wireless part to it. And LTE meshes very well with IP.

I think we'll see Google-branded (as well as third-party) Android devices that use this IP-over-LTE (with or without voice), within a year or so. I think it's even conceivable that they will throw in connectivity for free, a bit like amazon with their 'whispernet' for kindle, all in order to create ad opportunities.

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