LightSquared inked a multi-year strategic network partnership with Open Range Communications, one of its first major wholesale partnerships for its forthcoming LTE network.
The deal will allow Open Range to lease LightSquared's L-band spectrum and sell its satellite capacity. The partnership also includes a nationwide reciprocal roaming arrangement. The two firms will collaborate on the design, buildout and operation of Open Range's network as well as on products and services. However, the deal is subject to review by the U.S. Department of Agriculture's Rural Development Utilities Program, and approval of spectrum lease arrangements by the FCC.
Open Range received a $267 million federal loan in 2009 to deliver high-speed wireless access to 500 communities across 17 states. The company also also received a $100 million investment from One Equity Partners, the private equity arm of JPMorgan Chase & Co.
Despite the deal, LightSquared is still facing pressure on GPS interference concerns. A new coalition, called the "Coalition to Save Our GPS," has come out against LightSquared and said that the company's network poses a "serious threat" to GPS. The group includes Caterpillar, GPS makers Trimble Navigation Ltd. and Garmin Ltd., and the Air Transport Association, with members including Delta Airlines and American Airlines.
The GPS community has said that LightSquared's L-band spectrum, in the 1.5-1.6 GHz band, is too close to GPS spectrum, and that the company's cell sites will cause harmful interference. As a condition of the waiver the FCC granted LightSquared in late January, the company must resolve GPS interference issues before turning on its commercial service. The company formed a working group in February with the United States Global Positioning System Industry Council to study the interference issues. LightSquared has to report to the FCC regularly about its progress and a final report is due in June.
LightSquared has said it signed wholesale deals with two U.S. operators, and according to a recent Bloomberg report, LightSquared also has inked deals with a national retailer, a device manufacturer and a website. LightSquared is also reportedly considering a network sharing deal with Sprint Nextel (NYSE:S) to lease Sprint's cell sites and network equipment in a bid to build out its wholesale LTE network faster. Flat-rate carrier MetroPCS (NASDAQ:PCS) recently indicated that it supports LightSquared's plan, but has not confirmed that it has partnered with the company.
LightSquared, which secured a $586 million loan last month from UBS AG and JPMorgan, has an aggressive buildout schedule. The company is conducting LTE trials in Baltimore, Denver, Las Vegas and Phoenix, with commercial launches planned by the third quarter of this year. Nokia (NYSE:NOK), AnyData and Qualcomm (NASDAQ:QCOM) are working on devices. LightSquared, which has access to a total of 59 MHz of spectrum, has said its network will consist of around 40,000 cellular base stations covering 92 percent of the U.S. population by 2015.
- see this LightSquared release
- see this Bloomberg article
- see this GPS Coalition release
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