LightSquared clears FCC hurdles

LightSquared Subsidiary L.L.C. received good news from the Federal Communications Commission that will allow the satellite communications provider to soon add terrestrial services to its offering.
The FCC noted in a report that while on a macro level LightSquared’s plans to offer both terrestrial- and satellite-based wireless communications to wholesale partners failed to meet the intent of the original FCC order, the company’s investment both in actions and finances in promoting the satellite-based aspects of its service was enough to garner the company a waiver from having to meet the original order. In addition, the FCC noted that the public interest would be served in that LightSquared’s proposed service would provide mobile broadband access for underserved communities.
“We find the totality of the facts and circumstances surrounding LightSquared’s proposal, including the specific commitments it makes in its filing and several unique circumstances of LightSquared’s activities in the MSS L-band, to be consistent with the public interest and the purpose of the MSS/ATC gating criteria. … We find good cause to grant LightSquared a conditional waiver of Section 25.149(b)(4) of the Commission’s rules for services provided by LightSquared using its MSS L-band spectrum,” the FCC noted in its report.
The FCC cited LightSquared’s assertion that it will promote both its terrestrial and satellite services equally when offering wholesale services to partners, including pricing models that will not favor a terrestrial-only service. In addition, LightSquared has said it providing $50 million to Qualcomm Inc. to help underwrite the development of chip technology that will provide products that can support both terrestrial and satellite services. The FCC noted that end-user prices of such products will need to be equal even if LightSquared is forced to provide additional subsidies.
In addition, LightSquard said it will utilize at least six megahertz of its approximately 20 megahertz of MSS spectrum for the satellite component of its network.
“LightSquared is pleased with the Federal Communication Commission’s grant of its request to allow its wholesale customers to provide either dual-mode or terrestrial-only devices as part of an integrated satellite-terrestrial broadband service,” the company noted in a statement. “The FCC’s grant of this application is an essential building block for our network as we build out to meet the rigorous construction timetable that the commission has made a condition of our authorization and reaffirmed in today’s grant of our request.”
GPS concerns to be addressed
LightSquared also received relief from the FCC in regards to concerns over whether the use of the 2 GHz MSS spectrum could impact ground-based GPS and navigation services. The FCC said LightSquared’s recent comments that it would work closely with the GPS community to ensure interoperability was a start and that LightSquared would be required to provide regular updates on that work prior to its ability to launch commercial services.
Earlier this month the National Telecommunications and Information Administration said it was concerned that LightSquared’s plans to sell wholesale terrestrial-only services could cause interference to navigation and E-911 systems. The agency said the situation must be assessed before any other action is taken.
LightSquared noted earlier this week that would cooperate with both government agencies and the GPS community to ensure interoperability.
LightSquared has said it plans to begin rolling out access to its satellite/LTE-based terrestrial network later this year. The company is planning on having wireless modems compatible with the network ready by the third quarter of this year and smart phones by the second quarter of 2012. Those devices will include embedded abilities to access both the terrestrial and satellite networks, though it will be up to the wholesale partner as to whether they will provide the access to consumers.
As for the network, LightSquared has said it plans to provide coverage to 100% of the U.S. population using the satellite component of its network upon initial launch, with its terrestrial component ramping from 100 million potential customers covered by the end of 2012 to at least 260 million pops covered by the end of 2015. LightSquared signed a $7 billion deal with Nokia Siemens Networks last July to build out the terrestrial component of the network, while last November it successfully launched a $600 million satellite to help bolster its satellite plans.
Now what?
While LightSquared seems to have its regulatory issues set to be taken care of, the company is still looking at considerable traffic in establishing its business model. The company’s plans to forgo a commercial offering and work strictly with wholesale partners is a business model that has a rocky history in the wireless telecommunications space. In addition, the current competitive environment among traditional wireless operators could prove a difficult nut to crack for a new entrant.
Published reports have indicated that LightSquared’s parent company Harbinger Capital Partners is already feeling a financial pinch from the operations, while many industry analysts have questioned the long-term viability of LightSquared’s plans. Some have hinted that Harbinger could be angling for an eventual out from the market in a similar fashion to NextWave Telecom/Wireless Inc., which after years of trying to establish its “carrier’s carrier” wholesale model and years of battling the FCC over control of its spectrum, eventually sold off its spectrum assets for billions of dollars to established wireless operators.