Light Dims at the End of LightSquared's Tunnel
LightSquared's hopes to proceed with its high-speed broadband network have been all but dashed, but the company has not thrown in the towel just yet. It could enter business partnerships to use its spectrum in acceptable ways, or it could take its beefs over the GPS-interference testing to court, among other possible moves. However, time and money are running out.
02/15/12 2:59 PM PT
The Federal Communications Commission said Tuesday that it will not approve LightSquared's network, as it would interfere with GPS signals used by planes, boats and cars throughout the United States. The FCC's approval of LightSquared's plans was conditional on resolving those interference issues. LightSquared's high-speed network would have served as many as 260 million people.
LightSquared remains committed to finding a resolution with the government and the GPS industry, the company said Wednesday. It maintained that the testing process that influenced the FCC's decision was severely flawed and relied on obsolete and niche devices.
LightSquared will run out of cash in a matter of months, according to a Bloomberg report. The company will soon face a 15 percent interest-rate charge on an outstanding US$190 million loan. LightSquared's primary investor, Harbinger Capital Partners, reportedly has already lost $1.5 billion in investments in LightSquared after a large cut in value last year.
An Uphill Battle
LightSquared may be able to pursue legal avenues to attack the validity of the government's studies.
"It is a case of their word versus LightSquared's at the moment, so it is difficult to validate these claims," said Patrick Connolly, senior analyst for telematics and navigation at ABI Research, told the E-Commerce Times.
"One of the major issues is defining what was an acceptable level of interference, and it is certainly something that could yet be played out in court," he said.
However, "overcoming technical arguments is very difficult, costly and time consuming," Jim McGregor, chief technology strategist at In-Stat, told the E-Commerce Times.
A better strategy for LightSquared would be to reconsider the company's long-term strategy and business options, he suggested, such as entering partnerships to obtain usable spectrum.
"We are in a world with limited availability of spectrum, and sooner or later that will impact the entire industry," noted McGregor.
The Spectrum Squeeze
Even if LightSquared is not able to come to an agreement with the FCC that would allow the company to proceed, it still has alternatives. Time, though, may be an inhibiting factor.
"Assuming that the proposed broadband network is now not a possibility, LightSquared still sits on some very valuable spectrum," noted Connolly.
There may be other ways for LightSquared to use its spectrum that will not interfere with GPS, he said. "Of course, that's provided it has the funding to stay afloat."
Another issue revolves around GPS receivers operating outside of the dedicated spectrum band, Connolly pointed out.
"This has led to the resulting interference issues with the proposed LightSquared network," he said. "While this issue was covered under the original license terms, it may add significant value to the spectrum if the GPS industry was forced to design all future receivers within the L band."