Sprint puts LightSquared pact on hold while awaiting word from regulators

Sprint Nextel (NYSE:S) CEO Dan Hesse said the carrier has put its 15-year, $9 billion network-hosting deal with wholesale LTE provider LightSquared on hold while both companies await word from federal regulators on whether LightSquared can proceed with its network.

"We feel we are protected," he said. "We are not investing any more in LightSquared. We have put that all on hold for now." 

The Sprint chief said he was hopeful that LightSquared will be able to overcome technical challenges related to GPS interference that have left the company's network deployment plans in limbo. 

"Both companies remain optimistic that we will receive FCC approval early this year, and the deal between the two parties remains intact," LightSquared said in a statement to Bloomberg. "LightSquared and Sprint collectively agreed that it is fiscally prudent to defer further capital spending on network deployment until the FCC authorizes LightSquared's network."

Hesse's comments came after Sprint announced a 30-day extension, until Jan. 31, for LightSquared to receive approval from the FCC to commence terrestrial operations. Government testing conducted under the auspices of the National Telecommunications and Information Administration is still ongoing to determine if all GPS interference concerns have been resolved. In a filing with the FCC last month, LightSquared asked the FCC to declare that GPS device makers are at fault for interference caused between LightSquared's L-band spectrum and GPS receivers, and that LightSquared, a licensed spectrum holder, should be allowed to launch commercial service as quickly as possible.

Separately, Tim Farrar, an analyst for TMF associates who has written extensively on LightSquared and is a skeptic of the company's plans, wrote in a blog post that the NTIA's planned testing of the compatibility of high-precision GPS devices with LightSquared's network has been put on hold. "This testing was supposed to take place in the near future (perhaps as soon as this month, although a more realistic timetable was spring 2012)," he wrote. "It was reported in December that LightSquared had not yet provided the filters for this testing program and it is unclear whether this is a contributing factor in the decision, or if the NTIA has simply decided that it is not worth expending resources on the testing until the issues revealed in December about the interference with general purpose navigation devices and an aviation terrain avoidance system have been addressed."

An NTIA spokesperson told FierceWireless that the agency's analysis for general location and navigation GPS testing is still underway and that it is "examining the full range of scenarios so that we can make a final recommendation that is informed by the facts. The conclusions to be drawn from the test data will vary depending on factors such as LightSquared's power levels and other technical variables." The spokesperson said the NTIA continues to work in consultation with the FCC, government agencies, and industry to address interference concerns, and that it has not yet stated a timeline for producing recommendations "but we are working to address the issues promptly and conclusively."

However, the NTIA spokesperson said that "federal testing has not yet begun on high-precision devices. We won't speculate further on timing other than the fact that it would be appropriate for the high-precision testing to take place after the analysis of the location-based/navigation device testing is complete." The spokesperson confirmed there is not a specified timetable that the NTIA has stated for the high-precision testing.

"LightSquared is ready to go with the receivers that will be tested," the company said in a statement to FierceWireless. "The company is just waiting for the government to put its testing plan together. As soon as the government asks for the devices, they will be delivered."

For more:
- see this Bloomberg article
- see this FT article
- see this Kansas City Star article
- see this TMF Associates post

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