01.28.11

Oh, the places you’ll go…

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 5:27 pm by timfarrar

Over the last few days, a new series of filings by the US GPS Industry Council have appeared in the LightSquared ATC waiver docket, making some fairly dramatic statements about the potential for interference from LightSquared’s ATC network. As an aside, it is rather curious that these filings didn’t appear to be available when I was writing about this issue on Monday (Jan 24), despite the fact that some of the submissions were received by the FCC as early as January 19.

The January 20 USGPS Industry Council filing includes an analysis by Garmin International of potential interference scenarios for a “very common” consumer automotive navigation device (the nüvi 265W) and a Generation Aviation GPS receiver (the GNS 430W) based on LightSquared supplied parameters for network operations using a 5MHz LTE downlink channel between 1550MHz and 1555MHz. The conclusion of the analysis is that the LightSquared network “will create a disastrous interference problem for GPS receiver operation to the point where GPS receivers will cease to operate (complete loss of fix) when in the vicinity of these transmitters”. Specifically, the report states that “the nüvi 265W lost a fix at a distance of 0.66 miles (1.1km) from the transmitter”, while the GNS 430W “will be completely jammed by LightSquared transmitters over 5.6 miles (9.0km) away”.

The study that has now been mandated by the FCC’s Order is tasked with “identifying near-term technical and operational measures that can be
implemented to reduce the risk of overload interference to GPS devices, and providing recommendations on steps that can be taken going forward to permit broadband wireless services to be provided in the L Band MSS frequencies and coexist with GPS devices.”

However, these instructions make it clear that the aim of the study is to decide how rather than whether to provide terrestrial broadband wireless in the L Band MSS frequencies, and note that “Because the GPS interference concerns stem from LightSquared’s transmissions in its authorized spectrum rather than transmissions in the GPS band, the Commission expects full participation by the GPS industry in the working group and expects the GPS industry to work expeditiously and in good faith with LightSquared to ameliorate the interference concerns.”

One possibility for “ameliorating the interference concerns” is that LightSquared could be required to use L-band downlink channels which are further away from the GPS band than the originally intended 1550-1555MHz channel. However, LightSquared is intending to use 20MHz of downlink, so it will need to operate up to at least 1550MHz and quite likely somewhat higher if it is to operate four 5MHz LTE channels (because the 1544-45MHz band is reserved for safety services so only 3x5MHz channels could fit into the 1525-1544MHz part of the band, and it is possible there will have to be some guard band between the bottom of LightSquared’s fourth channel and the 1544-45MHz safety services). LightSquared might also have additional limitations placed on its operations in the vicinity of airports (e.g. no use of the fourth channel there), while GPS manufacturers could be required to use improved filters in the future, so that their receivers are better protected. However, it will take many years before the billions of dollars worth of existing GPS devices reach the end of their lifetimes, and LightSquared needs to be providing widespread service under its current rollout mandates by the end of 2012 (albeit not on four channels, because Inmarsat will not make the Phase 2 lease spectrum available until mid 2013).

As a result, it will be very interesting to see how the two sides of this debate can be reconciled. Conceivably a worst case for LightSquared might be that it would only be able to operate its ATC network below 1544MHz (i.e. with just three paired 2x5MHz terrestrial LTE channels). In that case, it is far from clear whether LightSquared would be able to renegotiate its lease with Inmarsat to give up 10MHz of the roughly 18MHz it is now committed to leasing under Phase 2 of the Cooperation Agreement. If LightSquared continues to pay the full $115M per year to Inmarsat, then any requirement to limit terrestrial operations to only 30MHz of ATC spectrum would have a fairly dramatic impact on the residual value of LightSquared’s own spectrum assets.

Nevertheless, it seems that the FCC is determined to make sure that the L-band MSS spectrum will be used for terrestrial services and appears to have concluded that LightSquared’s plan is the only possibility for that to happen in the foreseeable future. Thus, channeling Dr. Seuss (who I’ve noted before, had many great insights into the MSS industry), the FCC message to LightSquared seems to be:

“And will you succeed?
Yes! You will, indeed!
(98 and ¾ percent guaranteed.)”

Now, let’s just hope that any remaining GPS interference doesn’t end up resulting in a slight variant on Dr Seuss’s original story:

“You can get so confused that you’ll start in to race
Down long wiggled roads at a break-necking pace
And grind on for miles across weirdish wild space,
Headed, I fear, toward a most useless place.

And if you go in, should you turn left or right…
Or right-and-three-quarters? Or, maybe, not quite?
Or go around back and sneak in from behind?
Simple it’s not, I’m afraid you will find,
For a GPS system to make up its mind.”

01.26.11

Order and confusion

Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 1:51 pm by timfarrar

Today the FCC has released a very carefully worded Order, granting LightSquared and its wholesale partners permission to offer terrestrial-only service to consumers. Despite LightSquared’s original assertion that its plan to provide “integrated service” to wholesale partners (who could resell terrestrial-only services to end users) complied with the ATC rules, the FCC found that LightSquared’s wholesale partners did not have the right to provide terrestrial-only services, unless LightSquared also had these rights. Nevertheless, the FCC decided that LightSquared merited a waiver of the rules, because “this is a promising opportunity to promote mobile broadband” which “increases competition and provides consumers with more choices”.

Importantly, the Order is written specifically to justify only giving LightSquared a waiver, without the FCC being obliged to provide a similar waiver to other MSS competitors. The FCC cites five reasons that the waiver would serve the public interest:

1) Provision of Ubiquitous, Nationwide MSS: the FCC notes “LightSquared’s current service offerings and demonstrated commitment to providing MSS” and that the company “is already a significant and substantial provider of MSS”. DBSD and perhaps even TerreStar might find it hard to provide comparable justification.

2) Rationalization of MSS L-band for Improved MSS and MSS/ATC Use: the FCC notes the large sums being spent by LightSquared “to rationalize narrow, interleaved bands of L-band spectrum”. Other MSS providers obviously do not have the same justification, and by way of contrast DBSD and TerreStar have disputed their band clearing reimbursement obligations to Sprint.

3) Investment in Dual-Mode Service and Device Offerings: the FCC notes LightSquared’s “commitment to developing an integrated MSS/ATC marketplace, including dual-mode devices”. While DBSD and TerreStar were originally parties to the LightSquared agreements with Infineon and/or Qualcomm, they have not continued to fund those development agreements since their bankruptcies. TerreStar has launched the Genus phone, but that device is not ATC-compatible.

4) Unique Terrestrial Buildout Obligations in the MSS L-band: the FCC notes LightSquared’s commitment to “significant terrestrial buildout milestones”. This is probably the most critical of all the elements in the eyes of the FCC, but it would obviously require huge expenditure for any other MSS operator to commit to a similar nationwide terrestrial rollout.

5) LightSquared Commitments: the FCC notes that “LightSquared offers numerous commitments, many of which we impose as waiver conditions, below, to ensure consistency with the purposes of the gating criteria and the integrated service rule.” Similar commitments would presumably be required of any other MSS operator.

One of the main outcomes of this ruling is that the 2GHz spectrum holders could face additional confusion and potential delay in both their bankruptcies and subsequent service deployment. Some creditors may see the FCC waiver for LightSquared as increasing the value of the 2GHz MSS spectrum, if they think DBSD and/or TerreStar will not have to resort to incentive auctions to remove the ATC gating conditions (and share the resulting proceeds with the government). This could mean further arguments in the bankruptcy courts over the appropriate valuation of these assets.

However, without a concrete promise to deploy a nationwide broadband network on a strict timetable (and to reimburse Sprint for their band clearing costs), it appears that the FCC is determined to deny DBSD and TerreStar a similar waiver of the ATC rules. Such a refusal might well set the stage for prolonged litigation, and potentially delay further the prospects of bringing the 2GHz spectrum into use.

Of course that would also be to Harbinger’s advantage, because it would limit the competition that LightSquared will face from the 2GHz MSS spectrum holders in the race to secure key partners like T-Mobile and MetroPCS. Nevertheless, it would be ironic if the FCC’s decision that “in the absence of a waiver, the substantial public benefit of rationalizing MSS L-band spectrum might not be realized any time soon” resulted in 40MHz of L-band spectrum being brought into use (despite worries about GPS interference) while leaving the 40MHz of 2GHz MSS spectrum (and perhaps even the adjacent 30MHz of AWS-2 and 3 spectrum, whose allocation was supposed to be coordinated with the 2GHz MSS band) languishing for years to come.

01.25.11

Take it from the top

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 9:04 pm by timfarrar

It has now been revealed that the FCC is poised to announce the approval of LightSquared’s waiver application on Wednesday, enabling its wholesale partners to “provide wireless broadband access without also having to sell satellite service”. The FCC is also suggesting that “LightSquared would be a new competitor and entrant into mobile broadband with new sources of capital…”, apparently confirming my supposition yesterday that the FCC would not approve the waiver without some reassurance that LightSquared “does have (or shortly will have) the partners and funding to move forward”. Indeed the Wall St Journal is already speculating that LightSquared will now be able to “lease its airwaves to wireless companies like T-Mobile”.

This announcement certainly may come as a surprise to some observers, but I’ve noted before that LightSquared has friends in high places, and this time the direction appears to have come right from the top, with the President announcing in his State of the Union address this evening “a National Wireless Initiative to provide 98 percent of Americans access to high-speed Internet…nearly doubling the amount of wireless spectrum available for mobile broadband (through incentive auctions and other mechanisms to ensure spectrum is used more efficiently)”. Of course authorizing LightSquared’s waiver is not necessarily compatible with promoting incentive auctions, explaining why the FCC apparently does not plan to propose these for the 2GHz band at this point in time. As a result, I still wonder whether this approval will end up becoming a political football for opponents of the recent FCC net neutrality decision.

The most critical long term issue here is whether LightSquared’s potential interference issues with GPS can be solved. Sources I have spoken to, involved in recent testing, suggest that existing GPS receivers (including those built into almost every new cellphone) may be vulnerable to overload interference within several hundred meters of ATC base stations, with older receivers faring the worst. This is why there might still be a problem even if LightSquared can easily fit filters to its own 4G handsets when these are sold, not to mention the potential cost implications if “more expensive” (and potentially more bulky) filters must be added to hundreds of millions of GPS devices and cellphones sold in North America each year. These issues are presumably what the NTIA was referring to when expressing its concerns about the implications of 40,000 ATC base stations being deployed (although given that the number of base stations has been known since March 2010, it remains a mystery why apparently no-one thought to test for this problem until the last few weeks). Is this a big enough issue for LightSquared to become “the great GPS killer“? Only time will tell on that front, but some news about LightSquared’s “new sources of capital” (note the plural!) should emerge very soon, now that the FCC has decided to support LightSquared’s request.

01.24.11

LightSquared’s interference issues

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 12:27 pm by timfarrar

LightSquared has now confirmed that it will not “continue to roll out our network and meet the rigorous construction timetable that the Commission has made a condition of our authorization” unless the FCC takes “quick, favorable action” to approve its updated business plan, which is described as “an essential building block for our network”.

This answers one of the questions I had last week, when Communications Daily suggested that LightSquared’s request “isn’t expected to be taken up right away”, as it repeats the statement that LightSquared made to the NTIA in its January 6 letter. However, as I noted then, the FCC would presumably need to be convinced that LightSquared is able to raise the funding to move forward before approving the application. Thus it seems there is a binary outcome – either LightSquared does have (or shortly will have) the partners and funding to move forward, in which case the FCC would most likely approve the waiver request quickly, or it does not, in which case the FCC would defer action, making it increasingly harder for LightSquared to attract the partners it needs.

It is interesting to note one subtle difference between the two letters that LightSquared sent to the NTIA and FCC, which perhaps reflects the different audience, but could also indicate that LightSquared is unsure whether the NTIA will ever be convinced to approve its network. The January 6 letter to the NTIA promises that the “final report [on interference issues] will be submitted to the FCC and NTIA so that those agencies may assess progress. If no progress, or insufficient progress, has been made, the FCC and NTIA would review the open issues and require resolution, giving due consideration to the public interest benefits of operation of the LightSquared network and the nationwide GPS system”. However, the January 21 letter to the FCC proposes simply that “we are willing to accept as a condition on a grant of our request the creation of a process to address interference concerns regarding GPS and, further, that this process must be completed to the FCC’s satisfaction before LightSquared commences offering commercial service”. In other words, the NTIA would no longer have control over the process of evaluating the interference concerns, and would therefore presumably be unable to veto the LightSquared network on interference grounds, if the FCC was determined to allow its operation.

One consultant suggests that it is the fault of the GPS community that receivers were not deployed with “proper” filters, which would have been “more expensive”. However, the US GPS Industry Council’s filing on January 7 highlights that GPS receivers may need relatively high sensitivity in the L-band satellite downlink (1525-1559MHz) because this band is also used for Differential GPS satellite broadcasts. As a result, it is hardly surprising that there could be the potential for problems (although the specific outcome will depend on whether GPS receivers actually become overloaded by any excess noise).

In this regard, another filing was made on Friday by Qualcomm, which indicated that they had examined some of the interference issues and determined that a phone using Qualcomm’s AGPS could “avoid self interference to the GPS receiver operating in the GPS L1 band when simultaneously transmitting data via terrestrial LTE on the L Band” by using a currently available filter. However, Qualcomm “has not determined whether this filter provides sufficient protection to avoid interference to the GPS receiver from LTE base stations operating on the L band”. The letter also notes that “Qualcomm is now in the process of evaluating the extent of interference from LightSquared L Band LTE base stations (i.e., downlink) into the GPS receivers of cell phones using Qualcomm’s AGPS solution, particularly legacy phones already in the market today, given the close proximity of the L and GPS L1 bands”.

Given LightSquared’s “record of concern and cooperation” and its “demonstrated…ability…to resolve potential interference issues” with GPS it is somewhat surprising that the potential for interference from LightSquared L Band LTE base stations into GPS receivers has apparently not previously been evaluated. It is also surprising that to date there has been no comment in the record from Nokia Siemens Networks, which is responsible for building and deploying the base stations for LightSquared and might therefore be expected to have a significant interest in resolving the issue (not least to protect its $7B contract).

01.21.11

What’s happening with TerreStar’s Genus phone?

Posted in Financials, Handheld, Operators, Spectrum, TerreStar at 11:09 am by timfarrar

TerreStar Networks has now filed its Monthly Operating Report for December, which gives details of its revenues and cost of goods sold (COGS). In December 2010, TerreStar reported total revenues of $113,479 against a total COGS of $615,155, which compares to revenues of $91,626 and COGS of $125,189 in November 2010. However, TerreStar has not stated whether it is in compliance with the terms of the DIP Agreement, which requires both the “Roam-in Revenue” and the “number of subscribers” to be no less than “85% of the amount set forth in…the Agreed Budget and accompanying projections” as of December 31, 2010. The target number of subscribers is not disclosed in the DIP Agreement, but the Agreed Budget details the Roam-in Revenue (i.e. excluding handset sales) as $89,000 for December 2010. Under the DIP Agreement, this information should have been made available to the “Administrative Agent and the Lenders” (although not necessarily disclosed publicly) within 3 business days after the end of each fiscal month.

Due to the lack of any breakdown for the December revenues in the Monthly Operating Report (and the completely inaccurate supporting comment that “Our revenue currently is derived primarily from a spectrum-leasing agreement”, when in fact it is TerreStar Corporation that has a spectrum leasing agreement with Harbinger), it is quite hard to determine whether TerreStar is meeting the covenants in the DIP Agreement. At an ARPU of $50 per month for the Genus phone as envisaged in the Blackstone business plan, then there would need to have been an average of 1780 Genus subscribers during the month to produce $89K of service revenues in December. However, my assumption is that the real ARPU for TerreStar (once AT&T’s share of the revenues is subtracted) is significantly lower than this figure, implying that potentially in excess of 5000 phones would need to have been activated by the end of December (to produce a month average subscriber base generating sufficient revenue) to meet this target.

It is hard to tell how many phones were shipped to distributors prior to November, as TerreStar has not filed a 10-Q for the third quarter of 2010 or a monthly operating report for October 2010. It is possible that no new phones and accessories have been sold to distributors, and the vast majority of reported revenues in December were “Roam-in” service revenues from AT&T. However, TerreStar reported COGS of over $615K in the month, and it would be somewhat surprising if this was all free equipment for demos, replacements, etc. (especially as we understand TerreStar did not originally intend to supply free demo phones to distributors). Notably, the Agreed Budget envisaged $321K of equipment sales during December, which far exceeds the total revenues actually generated during the month. Given the rapid expansion in “Roam-in” revenue in what was disclosed of the Agreed Budget ($10K in October, $40K in November, $89K in December) it also seems likely that the January 2011 budget target would require further substantial growth in sales, and therefore would be even more challenging to meet.

UPDATE: I’m told that no more than a few hundred Genus phones have been sold to end users (and many of these are likely to have been purchased just for an initial test of the service), so it is inconceivable that the DIP covenants related to “Roam-In” revenues and subscribers could have been met at the end of December.

FURTHER UPDATE (2/11): On February 3, TerreStar filed the third and fourth DIP amendments, confirming that the the covenants related to Roam-In Revenues (Section 6.11) and Minimum Subscribers (Section 6.12) had not been met at the end of December 2010 or January 2011.

The next question is where TerreStar goes from here with the Genus phone. Will it be able to reach agreement with suppliers such as Elektrobit to keep supporting the phone (especially when Elektrobit is owed a substantial sum of money by TerreStar)? Would any breach of the DIP conditions simply be waived, and decisions on the future of the Genus phone postponed until after the company emerges from bankruptcy? With all the uncertainty about what will happen on MSS-ATC spectrum, that would seem to be logical. However, the apparent lack of appeal for this supposedly game-changing phone also highlights why LightSquared is so keen to be granted permission for its partners to offer terrestrial-only services, and I would ultimately expect TerreStar to follow the same path.

01.20.11

Hanging on the telephone

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 10:38 pm by timfarrar

According to Communications Daily, it appears that LightSquared’s request for the FCC to approve its revised business plan “isn’t expected to be taken up right away”, and the FCC’s forthcoming order related to the July 2010 MSS spectrum NPRM will not propose a Further NPRM to deal with the issues raised in the Notice of Inquiry (i.e. relaxation of the ATC gating criteria) at this point in time.

Today’s T-Mobile USA strategy presentation also poured cold water on expectations that T-Mobile has a pressing need to acquire more spectrum, with the company stating that it would not need additional spectrum until 2014. Interestingly, T-Mobile also stated that it expected demand to grow at a CAGR of 60% p.a., drastically lower than the 93% p.a. growth in the FCC’s October 2010 Mobile Broadband Spectrum Forecast (to put this into perspective it would mean data demand increasing by a factor of 6.5 times between 2010 and 2014, not 14 times as the FCC model assumes, completely eliminating the need for any additional spectrum at all in 2014 under the FCC’s calculations). This lack of urgency will allow T-Mobile to run a pretty effective Dutch auction between Clearwire and LightSquared, to see who is prepared to offer the best deal, as both companies get increasingly desperate to secure a partnership.

It is also quite striking that even though T-Mobile is still a potential buyer of spectrum from Clearwire (and would presumably look to buy 40MHz of national spectrum), the amount that could be raised from Clearwire’s spectrum sale is stated as “up to $2 billion“, implying that T-Mobile would be prepared to pay no more than about $0.17 per MHzPOP for Clearwire’s spectrum. Although, as I’ve pointed out before, there are numerous differences that need to be taken into account in drawing comparisons with LightSquared’s 40MHz of L-band ATC spectrum, anything even remotely close to a $2B valuation for LightSquared would be disastrous for Harbinger, given it has contributed “$2.9 billion of assets” to LightSquared and the $850M secured credit facility that closed in October 2010 would be first in line for proceeds from any asset sale.

This leaves LightSquared hanging on the telephone waiting for positive news from both the FCC and T-Mobile. It wouldn’t be surprising if the two were closely connected, because T-Mobile would presumably want the flexibility to offer terrestrial-only service in order for it to invest, and the FCC wouldn’t want to stick its neck out for LightSquared unless it was sure of the company’s viability. In the interim, it will be interesting to see if LightSquared follows through on its suggestion to the NTIA that it “requires quick favorable action [on its FCC request] so that we may continue to roll out our network” or whether it continues to move forward with network deployment so as to meet its original plan to have “a commercial launch before the third quarter of 2011 providing service to up to 9 million POPs”. However, as the song suggested “If I don’t get your call then everything goes wrong…”

01.14.11

A tale of two cities

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 9:55 am by timfarrar

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity…”. That quote from Charles Dickens certainly seems a good summary of the current supposed spectrum crisis, and the last few weeks have been first the best of times and now the worst of times for Harbinger and LightSquared. Initially it looked as if luck was on their side, as their satellite antenna problem was resolved (something estimated to us as less than a 20% probability by technical experts) and the FCC seemed poised to approve an updated business plan that would enable LightSquared’s partners to offer terrestrial-only service and handsets. But now, an intervention from the NTIA and other US government departments has left observers wondering whether and how LightSquared will be able to move forward.

However, I’m more intrigued by the differences between the two cities of New York and Washington DC, as I wonder if, when all’s said and done, this will end up as a tale of how the ambitions of a New York financier were stymied by the bureaucratic and regulatory complexities of Washington DC. In that context, its particularly interesting to look at another contrast between the two cities, namely what you can get for $20M in each place.

In New York, for example, $20M will cover less than half the cost of a mansion, especially if you need to pay for extensive renovations and hire a security guard to “push and jostle” nosy photographers. On the other hand, in Washington DC, $20M would pay for an entire federal agency for six months, given that the estimated annual budget of the National Telecommunications and Information Administration (NTIA) is only $40M for FY2010 and $46M for FY2011. Of course, despite what some people might suggest, it appears that not everything in Washington DC is for sale.

01.12.11

Moving towards the spectrum endgame

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 11:41 am by timfarrar

In the game of musical chairs being played by spectrum holders such as Clearwire, LightSquared, TerreStar, DBSD and NextWave, it looks like we may be approaching the point at which the music stops and we see who has secured a strategic partner and who hasn’t. At the moment there certainly appears to be a scramble to get into T-Mobile’s chair, as Clearwire reinforces its efforts to secure funding and Harbinger looks to move forward with its LightSquared buildout.

Clearwire’s newly appointed director, Ben Wolff, is taking the role of strategic adviser to secure a deal, with the most plausible outcome involving an equity investment from T-Mobile. In December, Sprint indicated it would be receptive to such a deal (and later turned down the chance to invest more money itself), after seemingly vetoing that prospect back in September, and pushing instead for Clearwire to move forward with a spectrum sale. However, the spectrum sale apparently went pretty badly, given that expectations were quickly downgraded from “$2.5 billion to $5 billion” to a more recent “up to $2 billion“.

LightSquared is also expected to announce its next moves pretty soon, given that LightSquared said last October it would “accelerate its planned implementation of the Phase 2 [spectrum lease] agreement [with Inmarsat], which now will take effect by the end of the year”. However, if a Phase 2 notice had been given to Inmarsat last month, then I understand Inmarsat would have been obligated to make a public release to that effect. LightSquared said at that time it had “already signed wholesale distribution agreements ‘and is in advanced negotiations with numerous potential partners’”, although with the exception of last summer’s 1.4GHz spectrum deal with Airspan, we are still waiting to hear about who those partners might be.

It seems that LightSquared may have to wait for approval from the FCC for the proposed change to its business plan before it is able to finalize its next round of investments and partnerships. Somewhat to my surprise, this did not get approved in conjunction with the FCC’s net neutrality ruling in December, apparently because of objections from the GPS Industry Council about potential interference with GPS receivers. In fact, the GPS Industry Council has now proposed that action on the LightSquared waiver application should be deferred (for what appears to be a 3-6 month period) until the NTIA has analyzed this interference question. Such a delay would clearly make it all but impossible for LightSquared to meet its objectives of launching commercial services later this year, and calls into question its ability to meet the FCC deadline of December 31, 2012 for LightSquared to offer service to 100M POPs. Of course, if delays in regulatory approvals caused LightSquared to miss this deadline, then the FCC would presumably issue a waiver. However, one key issue is that Inmarsat has 30 months from the point at which LightSquared issues its Phase 2 notice to make this spectrum available to LightSquared, and without this additional spectrum the capacity of LightSquared’s terrestrial LTE network would presumably be rather constrained.

How all these regulatory challenges are impacting the considerations of LightSquared’s potential partners is hard to tell, but this series of events (now potentially complicated further by the Mexican L-band satellite contract with Boeing in December) does help to explain why it has been so difficult for ATC spectrum holders to find strategic partners, and why MSS spectrum assets generally trade at a discount to similar terrestrial spectrum.

UPDATE: The NTIA has just filed a rather devastating letter with the FCC, indicating that “Several Federal agencies with vital concerns about this spectrum band, including the Departments of Defense, Transportation and Homeland Security, have informed the NTIA that they believe the FCC should defer action on the LightSquared waiver until these [GPS] interference concerns are satisfactorily addressed”. Its not clear whether the FCC will now be in a position to approve the Draft Order and Authorization that it had sent to the NTIA (according to the DoD letter attached to the NTIA submission) when it is already facing significant criticism for supposed overreach in the net neutrality proceeding. If that doesn’t happen, then it will be interesting to see where Harbinger goes from here.

FURTHER UPDATE: LightSquared’s CEO sent a letter to the NTIA on January 6 offering $20M to fund a six month study of the GPS interference issues. Obviously LightSquared wants this study to take place after FCC approval of its new business plan (which it notes is “an essential building block for our network and requires quick favorable action so that we may continue to roll out our network”), whereas the NTIA has requested that this approval should not be granted until after the study has been completed and their concerns addressed.