TerreStar's move to 4G an industry game changer?

Satellite TerreStar Networks, formerly known as Motient, is planning to build what it calls a 4G all-IP integrated satellite/terrestrial network in North America. The company says it will offer a wholesale business model with priority access for first responders and allow other wireless carriers, third party developers and portal companies to use its 4G network. TerreStar plans to roll-out its network in late 2008 or early 2009.

Most of us know the crash-and-burn history of the MSS industry in the late 1990s. Iridium and others ran to bankruptcy courts, suffering from high operating costs. Many players are now banking their survival on incorporating an ancillary terrestrial component (ATC) that would solve a fundamental problem plaguing the MSS industry: operators' inability to penetrate buildings with satellite signals. That technical shortfall has had a tremendous constraint on demand and resulted in higher operating and equipment costs. But ATC was looking to be another me-too cellular service. However, if TerreStar can pull this strategy off, it will leap-frog the majority of operators with an all-IP next-generation network that could bring highly differentiated services.

Earlier this year, Mobile Satellite Ventures (MSV) teamed with Nortel to deploy a trial integrated WiMAX and satellite broadband service. TerreStar is a shareholder of MSV. Evidently, TerreStar decided against WiMAX, and it's unclear what type of "4G" technology the company is deploying since I couldn't speak with anyone before deadline. However, its safe to guess that services will include high-speed wireless voice, data and Web access, file sharing and VoIP connectivity using residential gateway devices and PC cards for users in fixed and portable modes of use. Those were the types of services MSV was testing with WiMAX.

This whole plan comes at great risk with an unproven business model and commercially unproven technology. No one has ever launched a successful wholesale business model of this type. Couple that with the unknowns surrounding full MSS/ATC integration and nascent 4G technology, and you have the potential for a lot of trial and error. But if TerreStar pulls it off, we could see quite an industry game-changer.--Lynnette