Bloomberg News

LightSquared Says FCC Network Guidance Likely by Year’s End

October 13, 2011

(Adds LightSquared comment in third paragraph)

Oct. 13 (Bloomberg) -- Philip Falcone’s LightSquared venture said it expects guidance from U.S. regulators by year’s end on its proposed wireless network, which has sparked concerns that it may disrupt the global-positioning system.

The Federal Communications Commission may request changes to the company’s proposal such as deploying the network in stages or avoiding the placement of antennas in certain locations, Michael Montemarano, LightSquared’s chief financial officer, said during a conference call today.

From an “engineering perspective, there are ways to deploy around what the FCC would come forward with,” Montemarano said. He said in a later interview that he did not mean the company would evade FCC guidance and would work with whatever the agency requires.

LightSquared, backed by $3 billion from Falcone’s Harbinger Capital Partners hedge fund, is seeking FCC approval to offer wholesale wireless Internet service using airwaves previously reserved mainly for satellites. Makers and users of GPS devices, which rely on satellite signals, say LightSquared would disrupt navigation by cars, boats, airplanes and tractors.

The struggle has caught U.S. lawmakers’ scrutiny, prompting hearings before the House committees on transportation, science, armed services and small business. Seven Republicans on the Science Committee have requested records of contacts between the White House and Falcone, and others have called for an investigation by the House Committee on Oversight and Government Reform.

Additional Testing

The Reston, Virginia-based company envisions building a network of 40,000 antennas to serve 260 million people nationwide. It has faced months of tests that ended in June with LightSquared saying it would refrain, at least temporarily, from using airwaves nearest those used by GPS, a move the company said would resolve interference for 99.5 percent of devices.

Regulators have demanded a second round of tests that is to end by Nov. 30, according to the National Telecommunications and Information Administration.

LightSquared said today that three companies have developed filtering technology to solve interference with precision GPS devices, including a component that costs $6. The filters will undergo “extensive” testing by the NTIA and FCC in the coming weeks, the company said in a news release today.

“A majority of precision devices can be fixed by replacing the external antenna, others will require a factory retrofit, but in every case LightSquared has an affordable and efficient fix,” Martin Harriman, a LightSquared executive vice president, said in the release.

Oversimplified and Overstated

“LightSquared today has yet again oversimplified and greatly overstated the significance of the claims of vendors to have ‘solved’ the interference issue,” Jim Kirkland, general counsel of Trimble Navigation Ltd., a maker of GPS equipment, said in an e-mail.

“There have been many vendor claims that have not proven out in rigorous tests and the demanding tests of marketplace acceptance,” said Kirkland, whose company is a founding member of the Coalition to Save Our GPS, a group of GPS makers and users formed to oppose LightSquared’s plans.

LightSquared needs FCC clearance to use its airwaves by Dec. 31 or face a possible rupture of a 15-year, $13.5 billion cost-sharing agreement to build a network with Sprint Nextel Corp., Jonathan Chaplin, an analyst at Credit Suisse Group AG in New York, said in an interview last month.

“If they lose the Sprint deal the prospect of them raising capital, I would say, would be zero,” Chaplin said.

Montemarano, who declined to speak on Sprint’s behalf, said today that LightSquared doesn’t expect that the FCC’s eventual decision will send the two companies back to the negotiating table.

Tammy Sun, an FCC spokeswoman, didn’t immediately reply to requests for comment.

--With assistance from Todd Shields in Washington. Editors: Allan Holmes, Anthony Gnoffo

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net


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