Nokia Siemens Networks has announced that it secured an eight year contract worth over $7 billion with a new US operator seeking to build a high speed wireless network to offer wholesale services. Nokia Siemens Networks will build and operate a network for LightSquared, a company that is backed by Harbinger Capital Partners.

LightSquared still needs to raise the majority of the capital required to finance the network and there is some doubt from analysts whether LightSquared will be able to secure the financing. LightSquared say that they have approximately 30 potential clients interested in renting space on the network. The company aims to being construction with $1.75 billion of financing with a second financing round in two years. Nokia Siemens will deliver equipment to LightSquared this year so it can test network services in Baltimore, Phoenix, Las Vegas and Denver in the first half of 2011. It plans to start commercial services for the second half of 2011.

LightSquared aims to build the wireless network using Long Term Evolution (LTE), a technology that is being supported by several operators. The new national network is to comprise 40,000 cellular base stations and reach approximately 92% of the US population in 2015.

Technological innovation, including 3G, improved smartphones and multiplay mobile Internet devices (MIDs), has led to a boom in data usage with data traffic surpassing voice traffic for the first time in December 2009. Having nearly trebled in 2008 and 2009, global mobile data traffic is expected to double every year until at least 2013.

LTE is one of the most promising stepping stone technologies towards 4th generation mobile networks. Many wireless network operators believe that LTE offers the best value proposition to increase network capacity, improve QoS and significantly enhance data rates while reducing the TCO (total cost of ownership).

The big question that needs to be analysed by operators before formulating any LTE strategy is whether customers are ready to accept LTE and pay extra dollars for high speed mobile broadband and related services. This report looks into this question in depth, taking into account current upward trends in demand for mobile data and multimedia content, and whether current technologies can sustain future growth in demand for bandwidth and capacity, should those trends persist. Throughout the developed parts of the world technologies such as 3GPP LTE and HSPA are expected to make a huge impact. Facing congestion and pressures on available bandwidth, HSPA operators will begin upgrading to LTE in 2009/2010 with subscribers exceeding 250 million by the year 2015.

Author: Paul Chapman, Analyst