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LightSquared: Living on borrowed time (and spectrum)

Posted By TelecomTV One , 21 February 2012 | 0 Comments | (2)
Tags: Lightsquared AT&T Verizon GPS Regulation Technology Satellite competition Broadband

Things are moving fast and troubles are mounting for LIghtSquared, the company that was all set to launch a broadband wireless service across the continental US until, last week, it was comprehensively stiffed by the Federal Communications Commission. Now it has defaulted on a US$56.25 million payment to the UK company Inmarsat, from whom it licenses some spectrum. Martyn Warwick reports.

LightSquared's innovative initiative that would have provided LTE mobile broadband to some 260 million people across the US via a combination of satellite and terrestrial transmission was effectively scuppered last week when the American regulator, the FCC suddenly announced that it was reversing an earlier decision and would withdraw its approval for the project.

When the project was first mooted, the FCC signaled that it would be in favour of it - provided LightSquared liaised with the satellite tracking companies to address worries that the LTE service would disrupt GPS-based navigation devices.

These operate in spectrum immediately adjacent to the frequencies LightSquared wanted to use and to which it had been given the nod by the regulator. Given that tacit approval, LightSquared went ahead and spent more than $4 billion on the detailed design and initial deployment of its network and was gearing up to source a further $14 billion of completely private financing to get the system operational (and that would be a very real, and welcome national competitor to the likes of AT&T and Verizon) when the FCC did its sudden about-face.

The FCC's decision to rescind its earlier decision was based upon what seems to have been a suspiciously sudden realisation that the LightSquared network would for ever be in conflict with GPS signals. And it would have us all know that volte face had nothing whatsoever to do with political pressure being applied by wealthy vested interests. Perish the very thought.

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It's more a case of "bureaucratic inconsistency" - apparently.

LightSquared has access to two chunks of bandwidth, one that sits directly adjacent to the GPS spectrum band and and another set some distance below it. The company says it has time and again proven that the lower band does not interfere the vast bulk of GPS equipment and also, not unreasonably, points out that it is the GPS kit manufacturers who have for many years been so lax in their approach to matters that they routinely build kit that allows out-of-band signals to leak-in and cause interference problems.

It is Inmarsat that owns the block of spectrum furthest away from the GPS frequencies and it is this block that LightSquared is leasing. Hitherto, the company has been a good payer and Inmarsat's filed records show that as of November 2 last year it had paid the UK satellite organisation $420.6 million - $286.6 million of which was handed over during the course of 2011.

However, the $56.25 million payment due yesterday (Monday, Feb 20) has not arrived and Inmarsat has issued a default of payment notice that gives LightSquared 60 days to stump-up If it fails to do so the spectrum licence will become null and void.

According to Bloomberg, LightSquared is now feverishly working to do a deal with the military and exchange radio spectrum with the Department of Defense. It is also threatening to appeal the FCC's changed decision in the courts but that could take so long that the company would be broke long before any definitive judgement is handed down.

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