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Sprint reportedly is giving LightSquared some slack, agreeing to extend the deadline by which the hopeful LTE 4G company must gain the approval of the Federal Communications Commission.
LightSquared, owned by billionaire Philip Falcone’s Harbinger Capital Partners hedge fund, first promised to have the matter of its untraditional network interfering with GPS signals resolved by a Dec. 31 deadline, which Sprint, at the final hour, agreed to extend by another 30 days. The new six-week extension will move the deadline into mid-March, according to a Jan. 31 report from the Dow Jones Newswires.
Sprint has good reason for such patience. Last summer the pair entered into a 15-year agreement that includes, over the course of 11 years, LightSquared paying Sprint about $9 billion in cash and offering the opportunity for Sprint to purchase up to 50 percent of LightSquared’s expected L-Band 4G capacity.
“Under the agreement, LightSquared will pay Sprint to deploy and operate a nationwide LTE network that hosts L-Band spectrum licensed to or available to LightSquared,” the pair announced in a joint July 28, 2011, statement. “As a wholesale-only carrier with separate core network operations, LightSquared can sell its 4G broadband capacity produced through this spectrum-hosting relationship to Sprint, other wireless carriers and retail partners.”
In December, Bloomberg News leaked the results of tests showing the LightSquared network, despite adjustments, is still capable of knocking out a “great majority” of GPS devices, which would result in public-safety risks if systems used by airlines, law enforcement and other industries were affected.
LightSquared CEO Sanjiv Ahuja quickly drafted letters to the Departments of Defense and Transportation, calling foul on the report, which he said was prejudicing public opinion. He called for an investigation into the source of the leak.
“We profoundly disagree with that conclusion,” Ahuja wrote. “To achieve [the level of failure reported], the leaked internal analysis assumes that the power levels of LightSquared networks are 32 times greater than the power levels at which LightSquared will actually operate.”
LightSquared also faces a ticking clock in the form of financing. The company has said it has enough money to make it through the next few quarters, but needs an additional $3.5 billion in cash to remain cash-flow positive through the next two years.
Carl Ichan-the billionaire investor rumored to be behind the Motorola decision to split into two companies-recently purchased $300 million in LightSquared debt. If the company goes under, Ichan could presumably make a fine deal of reselling it.
On Jan. 13, making matters even murkier for the LTE provider, the National Space-based Positioning, Navigation and Timing Executive Committee wrote to the Commerce Department, saying the network still interfered with GPS signals and that the problem couldn’t be corrected. Given this, it recommended no additional testing.
On Jan. 18, LightSquared officials on a conference call insisted that the government agency’s testing was rigged and set up for failure. A paid consultant on the call, a former engineer with the FCC, likened the testing to a student project, “with the curve [drawn in] before making the measurements.”
The spectrum was licensed to LightSquared in 1989, Jeffrey Carlisle, executive vice president of regulatory affairs and public policy, said on the call. “We’ve had authority to build a terrestrial network since 2005,” Carlisle said. “That’s not spin, that is black-and-white law. And if we cannot move forward because of the GPS industry is blocking us, we will enforce our legal rights.”
Dow Jones also reported that LightSquared officials have argued that the company “shouldn’t bear the cost of providing technology to companies to prevent any GPS signal-jamming.”