Pipeline's Interview with Frank Boulben, CMO of LightSquared

This issue of Pipeline is all about the impact that end-user demand places on the network. However, is it possible for a network to have just as drastic effect on the end-user? That is to say, can an entirely new way of looking at networks and service providers fundamentally change the face of wireless service in one of the highest-ARPU markets in the world?

LightSquared is betting that it can. The wholesale network operator is in the process of rolling out its network in the United States, and we spoke with Frank Boulben, LightSquared’s CMO, about the state of the company and his hopes for its future. With a background that includes time at Vodafone and Orange, Boulben knows a thing or two about traditional wireless carriers, and he seems assured that LightSquared is a whole new ball of wax.

Pipeline: LightSquared positions itself as the first truly open, wholesale-only network: What does that mean, and what is the significance of that business model?

LightSquared’s Frank Boulben: Unlike all wireless carriers in the world, we won’t be investing in creating a brand, maintaining retail stores, building call centers, subsidizing devices, etc. What represents, traditionally, half of the value chain of a wireless carrier, we are not going to do. We are going to concentrate on doing one thing well, which is operating a 4G LTE network. The capacity from that network will be sold on a wholesale-only basis to a variety of customers. Those customers will be existing wireless carriers, and we’ve already signed several of them, which either haven’t got 4G spectrum at all, or haven’t got it nationwide, or haven’t got enough of it. So that’s our first category of customers. We’ll also be selling to a wide variety of companies interested in offering wireless services to the end user. These could be wireline companies, they could be cable operators, and they could be retailers. We just announced a deal with Best Buy a few months ago. They could even be device manufacturers, web players, or consumer electronics players. So any company wanting to sell connectivity to an end user, or any company looking to embed connectivity into a device, like Amazon does with its Kindle, can buy wireless capacity from us. They can do so at single-digit-dollar-per-gigabyte rates with volume discounts. Its commodity pricing.

Pipeline: And that’s something that isn’t available currently?

Boulben: Unlike what exists on the market today, which is typically a retail-minus type of pricing, wherein a carrier will say “Okay, I’m selling this plan for $55/month, so I’ll sell it to you for $55/month minus 25%”. We are not doing any of that. We are taking a very simple, commodity-like approach. This means that for the first time, there is a wireless carrier selling connectivity on the wholesale market without competing directly with its customers. When you’re a traditional wireless carrier with your own brand and your own customer base, you don’t want your wholesale customer to be too successful or else they begin to threaten your customer base. In our case, we are successful only if our customers, like Best Buy, are successful. Our fate is aligned with that of our customers.

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