Trouble Still Shining on LightSquared

Carl Weinschenk

This week brought good news and bad - potentially very bad - news for LightSquared, the startup that seeks to lease LTE capacity on a wholesale basis.

The good news is that Sprint-Nextel consummated what CNET called a "long-anticipated network-sharing deal." LightSquared, the story said, will pay Sprint $9 billion in cash and provide about $4.5 billion in credits for 4G Long Term Evolution (LTE) and satellite equipment. LightSquared, in return, will have roaming access to Sprint's network. The deal is to run for 15 years.

The bad/very bad news is a bit more complex. The LightSquared concept is feared to be a danger to the global positioning system. In June, according to NextGov, a Federal Aviation Administration advisory report said that the upper band allocated for use by LightSquared will result in "complete loss of GPS receiver functionality." On June 30, LightSquared filed a new plan based on use of frequencies allocated to it that are not in question.

This week, an FAA report was leaked that spelled out the dangers of the use of the full spectrum, including the higher band that LightSquared has at least temporarily forestalled. Such use, the report said, could "disable GPS for aviation use over the entire continental U.S." The story puts a high potential price tag on such a failure. It describes the impact of use of the full frequency range on a new GPS-based aeronautical system:

The aviation agency has invested $3 billion in GPS and its GPS-based Next-Generation Air Transportation System. The report said the LightSquared network could cost the aviation industry $70 billion over the next decade due to loss of efficiencies expected from the air traffic control modernization project as well as benefits from the current use of GPS.

LightSquared countered that much of the report focused on the plan that was superceded by the June 30 filing.

That may not be good enough, however. The NextGov story notes that in its June 30 filing, LightSquared suggested that the limitation to its spectrum use is temporary. Indeed, in its filing, the company commits only to a six-month period in which the upper spectrum would definitely remain empty. Later, things become fuzzier:

Six months into the standstill period, LightSquared will commence a process of working with the Commission and NTIA to explore options that ensure that GPS operations are protected and that enable LightSquared to meet its customers' anticipated demand for LTE capacity and service levels, as LightSquared has planned, using a full complement of terrestrial frequencies operating at appropriate power levels.

That is one of several comments in the filing suggesting that LightSquared's voluntary limitation on spectrum may be temporary.

There has been a lot of talk in Washington this week about "kicking the can down the road" in relation to the debt ceiling negotiations. Perhaps LightSquared is doing a bit of that itself, by betting that every day that passes in which it signs customers - some of which are quite powerful - puts it in a better position to outmaneuver the FAA and re-inhabit the upper frequencies over which the parties are battling.

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