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FCC poised to give LightSquared's satellite broadband venture a boost

By Cecilia Kang

Washington Post Staff Writer
Tuesday, January 25, 2011; 6:05 PM

With a wave of new smartphones and tablet computers threatening to overwhelm wireless networks, the Federal Communications Commission is preparing to take another aggressive step to ease the growing capacity crunch.

On Wednesday, the agency is expected to grant a crucial waiver to Reston-based LightSquared that would pave the way for the firm to create a mobile network offering affordable broadband service based on satellite signals.

LightSquared, backed by billionaire Philip Falcone and his Harbinger Capital hedge fund, would be a rare new entrant to the U.S. wireless market, in which six out of 10 subscribers rely on broadband networks run by AT&T and Verizon Wireless.

FCC officials say they see LightSquared's proposal as a way to spur competition in the sector and have already granted an overall operating license to the firm.

"This is a promising opportunity to promote mobile broadband," said a FCC senior official, who spoke on the condition of anonymity because the waiver had not been formally approved. "LightSquared would be a new competitor and entrant into mobile broadband with new sources of capital and a new kind of business model that consumers find appealing."

If granted, the waiver would allow LightSquared to provide wireless broadband access without also having to sell satellite service. Such an exemption is key to LightSquared's ability to attract business customers who desire Web access but don't want to spend extra to lease satellite connections.

LightSquared's proposal, however, has met with opposition from global-positioning system operators and federal agencies, who have argued that the firm's service could knock out their signals. The FCC says that Lightsquared would be expected to resolve any concerns about GPS interference.

"We are requiring that the process be completed to the FCC's satisfaction before LightSquared offers commercial service under the waiver," according to the FCC official.

If granted, the waiver would follow other recent FCC moves aimed at freeing airwaves.

Earlier this month, FCC Chairman Julius Genachowski said the agency would push to redeploy television broadcasters' unused airwaves from and redeploy that spectrum to meet exploding wireless demand that has been fueled by the surging popularity of iPads, Droids and other must-have handhelds.

For now, LightSquared does not plan to offer service directly to consumers. Instead, it would lease space on its network to a range of companies, such as Apple and WalMart, that might want to offer wireless devices under their own brands.

For some consumers, the plan could spell the end of long service contracts. And the FCC likes the idea of more options for wireless users, who have increasingly complained of billing confusion and penalties for leaving their contracts early. The plan could also enable gadgetmakers to break free from exclusive partnerships with the carriers that sell their devices.

"Lightsquared has several important arguments in its favor," said Rebecca Arbogast, an analyst at Stifel Nicolaus. "We understand the [GPS] interference issues are real and complex, but may be resolvable."

Lightsquared says filtering technology can be used to prevent interference with GPS service, and an FCC task force studying the issue is optimistic a resolution can be found.

"We have common interests here with the GPS Community and want to work with them," said Jeff Carlyle, an executive vice president at Lightsquared. "Devices on our network will have GPS technology, so why wouldn't we want to make sure it works?"

GPS providers, however, doubt that filtering technology will be enough and have presented studies and tests to the FCC that show of interference.

"Not only us, but other government agencies have strong concerns of interference potential," said F. Michael Swiek, executive director of the U.S. GPS Industry Council. "That should be enough caution to say let's take a deep breath, let's not rush down that road."

The departments of Defense, Transportation and Homeland Security have all voiced concerns about possible GPS disruptions, and earlier this month, Commerce Department assistant secretary Lawrence Strickling wrote to Genachowski, saying LightSquared's proposal needs more time to be examined.

Slowing down the process is exactly what the FCC and LightSquared want to avoid, analysts say. LightSquared told the FCC it would commit $20 million for interference tests.

The FCC's decision on the waiver comes at a critical time for LightSquared, Falcone and his backers at Harbinger, who together have sunk more than $2.9 billion into the venture and are facing pressure from investors to produce returns on the broadband investment.



With more than $1 billion in debts and a $7 billion commitment by Nokia to build out the ground network, LightSquared has promised investors and regulators to build a network that will cover up to 100 million Americans by the end of 2012 and 260 million by 2016.

Source

http://www.washingtonpost.com/wp-dyn/content/article/2011/01/25/AR2011012505297.html

Notes.. Falcone in bed with the FCC, the FCC is humoring the NTIA.. to appease the Median and GPS. .truth is FCC wants Falcone in cuz of connections.. and spectrum use deals..

LightSquared, an upstart telecom company that is owned by Falcone's Harbinger Capital Partners, has asked federal regulators for permission to offer terrestrial wireless broadband services, which could involve a waiver to conditions around its current wireless spectrum licenses.

Last year the Federal Communications Commission approved an application from LightSquared to build a high-speed wireless network that would offer both satellite and land-based service for wholesale clients. The Virginia-based company is seeking to alter the original plan by allowing its wholesale customers the option to offer terrestrial-only phones.

But in a January 12 letter, the National Telecommunications and Information Administration told the FCC that if it allows such services they may interfere with global satellite systems for navigation, aeronautical emergency communications systems and receivers used by Federal agencies.

A fully terrestrial service would require more land-based stations than a combined satellite and terrestrial system and increase the likelihood of communications interference, according to the letter signed by NTIA Administrator Lawrence Strickling.

The NTIA is an agency within the U.S. Commerce Department that advises the administration on telecommunications policy and manages government use of the airwaves.

In response to the concerns raised by the NTIA letter, the FCC told Reuters in an email that it would "ensure that any approvals would not result in harmful interference." It said it is reviewing LightSquared's waiver request.

The NTIA said in its letter that it was willing to work with the FCC and LightSquared for a possible solution.

LightSquared, which analysts say needs to raise billions of dollars to build-out its network, declined to comment.

The company had said in a January 6 letter to Strickling that it would commit up to $20 million to fund an industry group to study interference problems with the Global Positioning System (GPS). It said the problem was "not unique" to LightSquared.

Even if the NTIA's worries fail to derail the plan, Jeffrey Silva, an analyst at Medley Global Advisors, said the government concerns would likely cause some delays.

"What it does is probably trigger a time-out where there's a lot of consultation on technical issues to investigate ... At a minimum it would probably cause delays," said Silva.

LightSquared aims to build a wholesale wireless network on which it would rent capacity to service providers looking to sell high-speed wireless services to consumers.

Companies such as T-Mobile USA, a Deutsche Telekom (DTEGn.DE) unit, and MetroPCS Communications (PCS.N) have said they may be interested in partnering with LightSquared if it gets its network up and running.

LightSquared would compete with another rival, Clearwire Corp (CLWR.O), which has already partially built a wireless broadband network, but Clearwire also need more funding in order to complete its network.

Clearwire, which is majority owned by Sprint Nextel (S.N), is estimated to need another roughly $3 billion in funding. Some analysts say LightSquared may need another $6 billion funding on top of the $2 billion it has already raised.