Open Range rural broadband goes titsup
WiMAX on satellite frequencies – what could possibly go wrong?
Despite tapping the US government for cash and promising to connect six million people, Open Range has called it a day, laying off most of the staff and filing for Chapter 11 bankruptcy.
The plan was to provide broadband to rural communities, using WiMAX and satellite frequencies leased from Globalstar. But Globalstar didn't fulfil the requirements of variant use, leaving Open Range without spectrum. Now, despite signing a last-minute deal with LightSquared, the company is out of cash and out of options.
Chapter 11 will keep Open Range together while it tries to split out its assets. The company reckons those assets are worth about $114m, compared to $110m in debts, and suggests the operation could be sold as a business or broken up for parts. Given that Open Range lost $50.4m last year, on sales of $1.7m, it is going to be a hard sell as a going concern.
Much like LightSquared's insanely optimistic plan, Open Range offered connectivity in frequencies which were supposed to only be used for satellite communications. Also like LightSquared, the company successfully lobbied the FCC to relax those rules. Unlike LightSquared it didn't own the bands. So when, at the end of last year, Globalstar failed to live up to the spectrum requirements, the FCC's latitude was rescinded – leaving Open Range with nowhere to go.
Satellite frequencies can be used for an "Ancillary Ground Component", in-fill broadcasts which can push into buildings and other areas lacking line of sight to the bird in the air – but the bird still has to be there. In 2006, Globalstar received an 18-month opportunity to sort that out, and promptly sublet the frequencies to Open Range.
Sadly Globalstar has had trouble getting satellites launched, blaming the financial crisis and the Italian earthquake for the delays when requesting an extension to that 18-month period last year, an appeal which fell on deaf ears. The company's first generation of satellites started failing in 2007, according to Space News, which also reports that the second-generation birds are now having problems with flywheels, none of which is good news for Open Range.
Not that Open Range was ever interested in providing satellite connectivity. But the company took a government loan of $267m, and raised $100m from JPMorgan Chase, on the promise of providing broadband to six million people across America using WiMAX technology in satellite frequencies which would only be available if Globalstar kept using them for satellites.
In March, Open Range was one of the first companies to sign up with LightSquared, intending to lease some of that spectrum for its WiMAX operation as well as mutual roaming. But with LightSquared still squaring off against the GPS crowd, the time just ran out for Open Range.
Open Range has now been reduced to serving fewer than 20,000 customers, and has laid off 122 staff, leaving a skeleton crew of 48 to keep things ticking over while it tries to find a buyer for the company's assets. ®
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