01.13.12

No additional testing is warranted at this time…

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 4:53 pm by timfarrar

As I indicated in my post on Thursday last week, the PNT Excom has recommended today, in a letter sent to the NTIA Administrator, that the high precision testing be put on hold, because “there appears to be no practical solutions or mitigations that would permit the LightSquared broadband service, as proposed, to operate in the next few months or years without significantly interfering with GPS”.

This letter confirms that it will be impossible for LightSquared to move forward with its buildout plans in the foreseeable future. However, in the absence of any final decision from the FCC or NTIA, it seems unlikely that LightSquared will change its current course of pursuing approval by all possible means, for as long it has the money to do so. As a result, it may still be many months before this saga reaches a definitive conclusion.

The primary reason for my belief that this will drag on for many months is that Harbinger’s position in LightSquared’s capital structure (subordinate to at least $1.6B of debt) makes it inconceivable that Harbinger would receive any recovery in a bankruptcy situation, and the first lien lenders are unable to stop LightSquared simply continuing to spend the current cash on LightSquared’s balance sheet for as long as it lasts. The only exception would be if a Material Adverse Change (MAC) occurred under the terms of LightSquared’s first lien loan, which could allow the lenders to issue a notice of default before the money is gone. However, it is hard to imagine that a MAC could have occurred solely as a result of an advisory committee’s recommendation and even if a response was to be issued by the NTIA in the near future, it is far from clear that a triggering event would have occurred.

Nevertheless, this news does make it clear that my expectation about the ultimate outcome of a LightSquared bankruptcy (namely that no terrestrial network will ever be deployed) is rather more plausible than the assumptions made by Icahn and other new investors that they could ultimately force through an approval. They must feel pretty upset that LightSquared was assuring them as recently as Tuesday that the technical issues had been solved (despite LightSquared apparently being unable to offer any “practical solutions or mitigations” to the problems identified in the November tests) and that it was only the politics of the situation that were preventing the FCC from approving their network.

UPDATE: This presentation was also posted by NOAA on Friday, giving more details of the November 2011 testing. Apparently these tests did include some high precision devices, which were badly affected by the LS lower 10 signal, even at very low operating power levels. As a result, NOAA conclude that a new filter will be required for these devices, and that is presumably one additional reason why LightSquared’s latest “power on the ground” proposal was not deemed to be a “practical solution”.

2 Comments »

  1. TMF Associates MSS blog » I fought the law (of physics) and the law won… said,

    January 18, 2012 at 12:17 pm

    [...] with respect to interference, when their letter to Lawrence Strickling on Friday Jan 13, after the PNT Excom letter was released, noted that: LightSquared has communicated its concerns repeatedly to PNT EXCOMM, NPEF and Air [...]

  2. TMF Associates MSS blog » Grabbit, Runne and Sue… said,

    February 14, 2012 at 9:13 am

    [...] testimony of Mr. Porcari, Deputy Secretary at the Dept of Transportation, and co-signatory of the Jan 13 Excom letter could not have been more clear in stating that “[The Obama Administration has] concluded that [...]

Leave a Comment

You must be logged in to post a comment.