The epoch of belief or the age of foolishness?

Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 10:19 am by timfarrar

Sometimes when trying to understand Harbinger’s actions, I feel like I don’t just live in another city, but I’m from another planet altogether. That’s certainly the case with the latest revelation, that LightSquared “may bid” for TerreStar and DBSD. Just a few months ago, Harbinger was suggesting that “TerreStar is no longer critical to Falcone’s master plan”, so what has changed now?

Presumably Harbinger would say that TerreStar’s “spectrum holdings would help LightSquared handle wireless traffic” because there is so much demand for capacity on LightSquared’s network. Yet LightSquared is still to announce its wholesale partners, and 40MHz of spectrum seems to be enough for Verizon and AT&T to build out their own LTE networks (in the 700MHz and AWS-1 spectrum). Especially with this development coming immediately after the concerns about GPS interference, it is inevitably going to raise questions about whether LightSquared might be unable to use all of its L-band spectrum, even if, when all is said and done, the interference issues are not a major problem. (However, it is certainly the case that LightSquared is not expected to have access to its full 40MHz of L-band MSS-ATC spectrum until the end of July 2013, 30 months after it gave the Phase 2 notice to Inmarsat).

Harbinger’s move also raises the profile of the 2GHz spectrum band as an alternative source of spectrum for potential partners like T-Mobile and highlights that this spectrum is much less expensive than the cost basis of LightSquared’s L-band holdings.

Finally, its not even clear where the money would come from for a purchase of TerreStar and DBSD or whether the FCC would allow it, given the concerns they expressed last March that “Harbinger’s acquisition of SkyTerra does pose some risk of anticompetitive harm for users of MSS in the near future” (due to its existing minority ownership stakes in Inmarsat and TerreStar). Thus, while Harbinger’s intervention might be an attempt to cause more trouble in the DBSD and TerreStar bankruptcies, I wonder if in the end this will do more harm than good to LightSquared’s prospects?

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