Falcone's LightSquared May Seek Airwaves Swap To Revive Plan
February 15 2012 - 4:37PM
Dow Jones News
Philip Falcone's LightSquared may seek to exchange its wireless
airwave licenses for similar ones operated by the U.S. Department
of Defense, in a last-ditch effort to revive its fourth-generation
mobile broadband service, according to people familiar with the
company's plans.
The possible strategy comes a day after officials from the
Federal Communications Commission said they planned to revoke a
waiver allowing the network to operate because of interference
concerns.
LightSquared had been criticized by the Defense Department,
legislators and makers of farm equipment and Global Positioning
System devices that its network signal operates too close to those
used for GPS and could interfere.
In comparison, the Defense Department airwaves--used primarily
for aircraft testing--operate on a frequency farther away from GPS
signals making it less likely to cause any jamming, the people
said. Such an airwave swap is among several options the company is
considering in response to the FCC action Tuesday, the people said,
and LightSquared may ultimately not pursue it.
A spokesman for the Reston, Va.-based LightSquared declined to
comment on the company's plans. Also, a Defense Department
spokeswoman had no immediate comment, and an FCC representative
declined to comment. It is unclear which agencies may need to
approve such a deal.
The move would represent a change in strategy for LightSquared.
The company has said it is the victim of incomplete testing and
that its proposed network would create thousands of jobs and ease
congestion on carriers' services as more Americans buy data-hungry
smartphones and tablet computers. Falcone also has invested
billions of his Harbinger Capital Partners hedge fund's money in
the venture.
The matter came to a head on Tuesday when the National
Telecommunications and Information Administration, a unit of the
Commerce Department, sent a letter to the FCC saying it could find
no way to lessen GPS interference from LightSquared. Shortly
afterward, the FCC said it would recommend against allowing
LightSquared to roll out its network.
LightSquared said on Tuesday that it "profoundly disagrees" with
testing that showed its network caused GPS interference.
LightSquared has argued that the GPS industry should have
anticipated any interference and should be required to pay for
filters that would block out the company's signal.
A Commerce Department spokeswoman said she had no immediate
comment.
The FCC granted LightSquared a waiver in early 2011 to operate
satellite wireless airwaves, or spectrum, for a land-based
nationwide network that would reach 260 million Americans by the
end of 2015. LightSquared hoped to compete with AT&T Inc. (T),
Verizon Wireless and others in selling its spectrum wholesale and
had agreements with Best Buy Co. (BBY), Leap Wireless International
Inc. (LEAP) and other companies.
LightSquared may lose an important partner in Sprint Nextel
Corp. (S) if it cannot get FCC approval to operate by mid-March.
The two companies reached a 15-year agreement to share network
resources and construction expenses that would have saved
LightSquared as much as $13 billion through the end of this
decade.
Sprint had recently given LightSquared two extensions to get
approval from the FCC. Sprint may have to return $65 million in
prepayments to LightSquared if it fails to meet its latest
deadline.
Falcone's Harbinger Capital, the primary financial backer of
LightSquared, reported the value of its largest fund dipped 47%
last year because of a write-down of the value of the wireless
company. LightSquared has said it has enough cash on hand to
operate for several quarters, without providing specifics.
The company faces additional competition from Dish Network Corp.
(DISH), which has a pending application with the FCC to also
operate satellite spectrum for a terrestrial wireless network. Dish
has said it expects the FCC to rule by the end of March, but that
it would take several years to build out a network after
approval.
-By Greg Bensinger, Dow Jones Newswires; 212-416-4676;
greg.bensinger@dowjones.com
--Amy Schatz contributed to this report.
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