09.30.11

The first shoe to drop?

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 10:06 am by timfarrar

According to the terms of LightSquared’s January 2011 FCC waiver, today is the deadline for LightSquared to “ensure that integrated, dual-mode MSS/ATC-capable L-Band devices are readily available in the marketplace…for datacards”. However, LightSquared hasn’t even mentioned these datacards for months, let alone ensured that they are “readily available in the marketplace” and the FCC’s Public Notice on September 13 did not indicate that any provisions of the January 2011 order have been waived.

Of course LightSquared will presumably argue that while there is a lack of clarity on what spectrum it will be permitted to use, it is not possible to manufacture commercial dual mode devices, and I don’t think it is likely that the FCC would take enforcement action when it is not permitting LightSquared to operate a terrestrial network (though that might not be the case if LightSquared ultimately decides to sue). Nevertheless, it will give more ammunition to the GPS community, who have been protesting about the short timelines imposed by the FCC for testing, and want to test the interference from LightSquared devices, but can now point to LightSquared missing its own deadlines for provision of these devices.

However, of much greater concern must be the fact that vulture investors are circling LightSquared (now that its first lien debt is priced at roughly 50 cents on the dollar) and may be looking for any opportunity to assert that an event of default has occurred under the first lien indentures, before all of LightSquared’s current cash has been spent. That explains why LightSquared is making such convoluted statements about its intentions for the upper L-band spectrum (proposing a filter that is completely incompatible with any terrestrial upper band operation), because admitting that it has given up on any prospects of operating there (either through a withdrawal of its original proposal or an FCC ruling that it could not operate in that band) would very likely cause a default on its debt. Thus it will be interesting to see how LightSquared addresses the datacard issue, presumably via an FCC filing to request an amended timeframe for commercial terminal availability, and how the FCC responds to this request.

2 Comments »

  1. ORBITRAX said,

    September 30, 2011 at 2:09 pm

    I hope they don’t use the same excuses as Globalstar for failing to bring a dual mode High Speed MSS/ATC terminal as required by their authorization before or on July 1, 2011.

    As the FCC noted…

    ¶Given the delay in second-generation deployment, Globalstar contends it is “pointless” to meet the deadlines for distributing MSS/ATC terminals incorporating a high-speed, two-way MSS transceiver chipset, and for providing two-way MSS to customers with dual-mode MSS/ATC terminals. Globalstar argues that requiring it to deploy such user terminals “far in advance of the [second generation] constellation (network) availability.. would make no sense and would cause unnecessary expense for Globalstar when…. that equipment’s new, second-generation space capabilities (network) can not be used. Consequently, Globalstar also asks for a 16-month extension of the dates by which its MSS/ATC terminals must come into compliance.

    Our guess is…. A complete pass on the lack of mandated user terminals!! After all.. They didn’t ask for one piece of paperwork to validate the launch delay of Skyterra 1.

    Boeing provided a letter stating that the Satellite was delayed due to an antenna problem. That was the end of the investigation, even though we both know the storied funding path of Skyterra1 over the years.

    Just as Thales provided a letter stating that the Thruster delay from RAFAEL was the main impetus for the delay in delivery of the Globalstar satellites for launch.

    However the IB held court on Globalstar requesting hundreds of pages of justification for their launch delay

    In it’s ruling, the IB stated:

    ¶33 “The record indicates” that the thrusters for the first batch of satellites were delivered to Thales more than [REDACTED] after the delivery date specified in the initial manufacturing contract. However, the record NOWHERE INDICATES that late delivery of the thrusters impacted the deployment schedule of the second-generation satellites.”

    The interesting point is that the [REDACTED] information in the Order was indeed, contrary to the FCC IB’s statements, clearly available in “The Record” in Globalstara July 6, 2010 letter which Globalstar stated the first six thrusters were originally to be delivered by March 3, 2009. Whereby Globalstar stated that actual delivery of the first Thrusters were not completed until June 1, 2010. A delay of 15 MONTHS. Globalstar provided complete documentation from RAFEL/Thales to support this fact.

    But, Somehow the IB could not string together the concept that Thurster delivery delays from March 3, 2009 t June 1, 2010 could some how have delayed the first satellite launch which took place 12 months late and shortly after the delivery of the first batch of Thrusters in June 2010. After all the IB stated in the Order that…” The record NOWHERE INDICATES that late delivery of the thrusters impacted the deployment schedule of the second-generation satellites.” Perhaps the IB didn’t understand that Satellites require Thruster installtion…. “BEFORE THEY ARE LAUNCHED”.

    However, it is quite interesting that the IB intentionally REDACTED the publicly available thruster delay information from the Order that would have clearly contradicted their rational.

    ORBITRAX

  2. TMF Associates MSS blog » A watershed moment? said,

    November 10, 2011 at 10:09 am

    [...] semi-annual progress report, filed with the FCC on October 31, the company confirmed that it is ignoring the FCC mandated timeline (from the January 2011 waiver) to make devices available by September 30, 2011 and now has [...]

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