LightSquared's proposed network should be shelved, regulators find

LightSquared's efforts to launch a wholesale LTE network appear to have hit their final roadblock, as regulators concluded that concerns over interference between the company's proposed network and GPS receivers could not be mitigated. Based on testing by the National Telecommunications and Information Administration, the FCC said it would not allow LightSquared to build its planned LTE network.

The decision, which could become the subject of litigation, brings to a close more than a year of technical testing, political intrigue and pressure on regulators to find a solution. There are now few remaining options for Harbinger Capital Partners, the hedge fund backing LightSquared. 

In a letter to FCC Chairman Julius Genachowski, the National Telecommunications and Information Administration concluded that after evaluating the results of testing into interference between GPS receivers and LightSquared's L-band spectrum, "there is no practical way to mitigate the potential interference at this time." In January 2011, the FCC granted LightSquared a conditional waiver to allow its wholesale customers to offer terrestrial-only service, but that waiver was conditioned on all GPS interference concerns being resolved before LightSquared could launch service.

Shortly after the NTIA's conclusions were released, the FCC said in a statement that it would not lift the prohibition on LightSquared commencing terrestrial service. The FCC said in a statement that its International Bureau will propose vacating the waiver and suspending indefinitely LightSquared's authority to offer terrestrial service. The FCC will issue public notices on those moves, which can be commented on and appealed to, but the action essentially represents a closed door to LightSquared's plans.

"This proceeding has revealed challenges to maximizing the opportunities of mobile broadband for our economy. In particular, it has revealed challenges to removing regulatory barriers on spectrum that restrict use of that spectrum for mobile broadband," FCC spokeswoman Tammy Sun said in a statement. "This includes receivers that pick up signals from spectrum uses in neighboring bands. There are very substantial costs to our economy and to consumers of preventing the use of this and other spectrum for mobile broadband. Congress, the FCC, other federal agencies, and private sector stakeholders must work together in a concerted effort to reduce regulatory barriers and free up spectrum for mobile broadband."

For its part, LightSquared said it "remains committed to finding a resolution with the federal government and the GPS industry to resolve all remaining concerns" but that it "profoundly disagrees" with the NTIA's conclusions. Reiterating past comments made by company officials, LightSquared said in a statement that the NTIA was evaluating tests from a government GPS body that were designed to make sure LightSquared's network failed.

LightSquared representatives did not immediately have a comment on the FCC's actions. The company has signed wholesale agreements with more than 30 companies, and it's unclear what will happen to those deals if LightSquared is effectively shut out from operating its network. LightSquared representatives did not immediately comment on that either.

Also uncertain is the status of LightSquared's network-hosting arrangement with Sprint Nextel (NYSE:S). Sprint had given LightSquared until mid-March to receive regulatory approval to launch its network. "We have seen the government's recent comments and are reviewing them and have no comment on them," Sprint spokesman Scott Sloat told FierceWireless. "Sprint has been supportive of LightSquared's business plans and efforts to resolve potential interference issues expediently." Sloat also reiterated that Sprint has stopped installing LightSquared equipment on Sprint's network, and that Sprint's Network Vision network modernization program remains on track.

At this stage, one of LightSquared's last options may be to sue and argue that its rights as a licensed spectrum holder are not being upheld. "With LightSquared set to run out of money in the near future, the company must now consider whether to file for bankruptcy and preserve its resources for the inevitable litigation fights, or continue pretending that all of these problems can be overcome while its cash drains away," TMF Associates analyst Tim Farrar wrote on his blog.

For more:
- see this NTIA letter (PDF)
- see this LightSquared statement
- see this FCC statement
- see this Coalition statement
- see this WSJ article (sub. req.)
- see this NYT article
- see this Bloomberg article

Related Articles:
LightSquared presses FCC for stricter GPS device standards
Falcone's Harbinger Capital loses 47% of value due to LightSquared writedown
Sprint extends lifeline to LightSquared until mid-March
FCC comment period keeps LightSquared hopes alive
LightSquared blasts U.S. GPS interference tests, says Sprint is in the loop

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