05.31.11

The Hans Christian Andersen strategy?

Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 11:08 pm by timfarrar

Although Charlie Ergen has his Seinfeld strategy for exploiting DISH’s new assets, including DBSD and Blockbuster, Harbinger’s plans for LightSquared are becoming ever harder to discern, with news today that LightSquared is “considering a deal with AT&T to buy network capacity from the carrier”. Presumably this story comes in response to concerns that LightSquared might be forbidden from operating its L-band terrestrial network indefinitely, if new language in the National Defense Authorization Act passed by the House of Representatives last week is ultimately included in the final bill. At the very least it now appears that the FAA will insist that LightSquared’s operations be confined to only the lower half of its 40MHz of L-band spectrum, while John Deere contends that “permitting LightSquared to operate its network as proposed or any variant of its currently proposed network will create massive interference into Deereā€™s StarFire system and other similar systems risking serious harm to the U.S. agriculture industry”.

This news marks yet another 180 degree turn in LightSquared’s ever-changing story, which over the last year has shifted from a $7B contract (or rather MoU) with Nokia Siemens Networks (which disintegrated in January) to a joint bid with MetroPCS for DBSD to a network sharing agreement with Sprint (which at one point was supposedly even going to supplant Clearwire) to now an “initiative” with AT&T, along the way apparently including talks with Cablevision, Time Warner Cable and any number of other companies. This extraordinary saga reads like something by Hans Christian Andersen, the only question being whether the final tale will turn out to be “The Ugly Duckling” or “The Emperor’s New Clothes“.

Meanwhile, the FCC appears to be doing its best to make the TerreStar bankruptcy auction even more confusing, releasing a Public Notice on May 20 which “invites technical input on approaches to encourage the growth of terrestrial mobile broadband services in the 2 GHz spectrum range”. Unfortunately for TerreStar, the FCC once again insists that “the public interest” requires that “any grant of terrestrial rights in the 2 GHz band [should] have ‘conditions designed to ensure timely utilization of the spectrum for broadband and appropriate consideration for the step-up in the value of the affected spectrum’” in the form of “Voluntary Incentive Auctions” or “Voluntary Return of MSS Spectrum Rights”, thereby potentially reducing the perceived value of TerreStar’s MSS spectrum in the upcoming auction quite significantly.

Of course, things are not looking that great for the FCC’s other attempts to bring additional spectrum into use for terrestrial mobile broadband (i.e. LightSquared and broadcast TV incentive auctions), so perhaps the buyer of TerreStar’s spectrum will simply tell the FCC to go pound sand, and continue to pursue a (loss making) satellite-based business plan until a better offer is on the table. However, in those circumstances, whoever buys TerreStar would need to have deep pockets, and be happy to wait for several years rather than seeking a quick flip of the spectrum. Given Harbinger’s experience with LightSquared, that might well put off some of the financial players who could otherwise have been interested in TerreStar’s spectrum.

2 Comments »

  1. pcouri said,

    June 2, 2011 at 11:21 am

    So, now that the Lightsquared deal with Sprint looks official, do you think that makes lightsquared in more need of spectrum?

  2. timfarrar said,

    June 2, 2011 at 3:19 pm

    Let’s wait and see if and when Sprint are willing to comment officially. We were here before in mid-March when we had exactly the same statements that LightSquared was about to announce a deal with Sprint at CTIA. The WSJ reported the same thing in mid April. I’m told not to expect an announcement from Sprint on its Network Vision strategy until July at the earliest. In the meantime Sprint could simply use the threat of a deal with LightSquared as another lever in its negotiations with Clearwire.

    Regardless, in order to move forward LightSquared needs to raise more money before it can even begin to think about supplementing its existing spectrum holdings.

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