03.22.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 8:48 am by timfarrar
As I noted last month, I found it very surprising that LightSquared chose to announce that it had “five customers” for wholesale fourth-generation service, consisting of “a national retailer, a device manufacturer, one Web site, and two carriers”, but declined to name any of them. Over the last five weeks, two of these names have emerged – Open Range Communications and today Leap Wireless. However, LightSquared is still to reveal the “major retailer that it will name before the end of March”.
Just like the deal with Open Range ten days ago, when everyone thought LightSquared would announce a major deal with MetroPCS, today’s release also seems to be a major let down. LightSquared had promised everyone that it had a network sharing agreement with Sprint to announce at CTIA. Perhaps this will still be announced tomorrow, but that would be a rather peculiar PR strategy, and PR is one thing that LightSquared has been very effective at. Given the complex array of choices now facing Sprint, as it decides how to respond to the AT&T/T-Mobile deal, it seems more likely that Sprint has taken a step back to reconsider what happens next.
As I understand it, the Leap Wireless roaming deal was agreed six months ago, leading LightSquared to claim at the SATCON conference in New York in October that it had already secured a 3G roaming partner to “augment” its network coverage. It also hardly seems likely to generate a meaningful amount of revenue for LightSquared, especially if it is a reciprocal roaming agreement. If 30% of Leap’s 5.5M customers opted for 4G roaming, and the net revenue flow to LightSquared was $2 per sub per month, then this would only generate about $40M of revenues per year for LightSquared, a drop in the bucket compared to its planned $14B investment.
The second major LightSquared announcement that was expected at CTIA was a network infrastructure deal with Ericsson. Its therefore surprising that an interview with a LightSquared executive has been published today on Telecoms.com, once again talking about LightSquared’s “deal” with Nokia Siemens Networks. As an aside, I’m told that the reason it is always referred to as a “deal” or an “agreement” with NSN, is because the original MoU, signed last July, has never been converted into a formal contract.
In my previous post, I wondered “which of DBSD/TerreStar, Clearwire and LightSquared will ultimately turn out to be the good, the bad and the ugly”. Given the results of the DBSD bankruptcy auction, DBSD certainly turned out to be good for its investors. Now we just have to wait and see what happens with TerreStar, Clearwire and LightSquared.
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03.20.11
Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 4:39 pm by timfarrar
There are known knowns; there are things we know we know.
We also know there are known unknowns;
that is to say we know there are some things we do not know.
But there are also unknown unknowns – the ones we don’t know we don’t know.
As Donald Rumsfeld’s famous speech pointed out, often the most important issues are not the known unknowns, but the unknown unknowns. There are many known unknowns in LightSquared’s plan, such as the eventual impact of GPS interference, and where they will find funding for the network buildout.
However, the ultimate outcome may in fact be dictated by things we didn’t know we didn’t know, like the negotiations that resulted in today’s deal for AT&T to buy T-Mobile. Although some observers are suggesting this would be bad for LightSquared, in fact I think its much better for them than the alternative, of Sprint buying T-Mobile, which would hardly have left much room for a new entrant 4G network. In addition, my understanding is that discussions between LightSquared and T-Mobile have not been particularly active for quite a long time.
Although the AT&T/T-Mobile deal will undoubtedly overshadow this week’s CTIA conference, it will force Sprint to respond in some way fairly soon. Sprint obviously will be in a better negotiating position vs both Clearwire and LightSquared, but if those negotiations are already at an advanced stage, as most people assume, the outcome may not change too much.
From my point of view, one of the most interesting facts to come out of the AT&T announcement is that AT&T’s expectations are for mobile data growth of 8 to 10 times between 2010 and 2015, very similar to (though slightly lower than) T-Mobile’s January 2011 projection of 60% data growth per year from 2010 to 2014. Though AT&T trumpets this statistic as evidence of the growing demand for spectrum, when two of the biggest carriers agree that growth will be far slower than the FCC’s October 2010 spectrum demand model (which was already subject to significant errors), it certainly demonstrates how out of touch the FCC Chairman was this week, when he highlighted Cisco’s projection of “a nearly 60X increase [in data traffic] between 2009 and 2015″ as evidence that “the looming spectrum shortage is real”.
In the end, as Secretary Rumsfeld acknowledged, political decisions are made on the basis of incomplete and sometimes even incorrect evidence. To date, the FCC Chairman’s firm belief in a “spectrum crunch” has benefited LightSquared substantially, even if the reality is more likely something very different. However, as Secretary Rumsfeld found out, if momentous decisions are based on a faulty hypothesis, there will usually be a pretty significant backlash once the truth is revealed.
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03.16.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum at 7:20 pm by timfarrar
Back in the 1990s, the oft-repeated mantra from proponents of the Iridium, Globalstar and ICO projects, when asked where they would find subscribers and investors, was “build it and they will come“. Unfortunately, this Field of Dreams approach didn’t quite work out, when between them these projects lost over $12B of investors’ money.
It now looks like Phil Falcone may end up playing the role of another character from the film, and an even better known resident of Chisholm, Minnesota, Archibald “Moonlight” Graham, whose claim to fame is that he never managed to get a chance to bat in his only appearance in Major League Baseball.
At Satellite 2011 today, the consensus of industry observers and regulatory advisers alike was that GPS interference issues are likely to render much of LightSquared’s L-band spectrum unusable for years to come, as I noted last night. As a result, it is very hard to see where we go from here in terms of LightSquared’s network buildout, even if the plan was fundable.
UPDATE: LightSquared appears to be hinting that it plans to announce a network sharing deal with Sprint next week at CTIA. Though this would be an interesting development, it is a far cry from the planned deal with MetroPCS, which could have potentially ensured an ATC buildout in the 2GHz band. LightSquared would still have to raise the money to fund the buildout, and this will still cost billions of dollars, not least because Sprint only has the right to deploy majority owned spectrum (such as from Clearwire) on its leased towers (unless new agreements are struck with the tower owners). If GPS interference issues render much of LightSquared’s spectrum unusable, it will also be much harder to offer adequate security for any new fundraising.
After Harbinger’s unsuccessful attempt to gain control of DBSD, it may now prove difficult if not impossible to access the 2GHz spectrum. With MetroPCS apparently also unwilling to publicly announce its partnership with Harbinger, it appears more plausible that MetroPCS would decide to team up with DISH than to continue the pursuit of TerreStar in conjunction with Harbinger. As a result, it seems ever more probable that there may never be a LightSquared terrestrial network, and Mr. Falcone may have lost his chance to bat in the major league of mobile operators.
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03.15.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 8:24 pm by timfarrar
Yesterday at Satellite 2011, Harbinger’s bankers at UBS expressed enormous confidence that LightSquared was “ahead of the pack” in securing partners and in its future prospects. Given the ongoing auction for DBSD, I was not alone in finding that confidence somewhat surprising. However, the document filed by DBSD this morning summarizing the status and results of the marketing process helps to explain why that was the case. MetroPCS (referred to as the Alternative Bidder) had filed a tentative bid last Thursday which was “contingent on the completion of additional due diligence and securing sufficient financing” (because it had been unable to reach an agreement with Harbinger and Solus). This was the point at which LightSquared were forced to announce their deal with Open Range instead of the intended partnership with MetroPCS. However, on Sunday March 13, MetroPCS reached an agreement with Harbinger and Solus to jointly fund the bid, allowing the three companies to make a definitive offer ultimately amounting to $1.475B. This supposed “knock-out” bid was a major factor in allowing UBS to travel to Washington DC on Monday and advertise their confidence in LightSquared.
Unfortunately for Harbinger, late last night DISH made a higher bid of $1.485B for DBSD and secured the support of parent company ICO Global, knocking Harbinger out of the running (although there remains the remote possibility of a further bid). As a result, the plans of LightSquared are now subject to considerable confusion – will it focus on the L-band or will it instead bid for TerreStar?
As I noted last week, there are acknowledged problems with GPS interference in the L-band, which is apparently what forced Harbinger to bid for DBSD. I’m now told that this interference issue may well render LightSquared’s current L-band spectrum (as available under the Phase 1 agreement with Inmarsat) largely unusable in a terrestrial network for many years to come, until filters are fitted as a matter of course to GPS devices (assuming the FCC decides to mandate this). In addition, LightSquared’s Phase 2 L-band spectrum (leased from Inmarsat), which may have less interference problems, will not be available until July 2013. However, TerreStar’s spectrum also has its problems, not least the potential need to negotiate an agreement with DISH as the owner of DBSD for a joint approach to utilize the 2GHz spectrum.
UPDATE: As part of its March 15 GPS Working Group documentation, LightSquared has published full details of its terrestrial spectrum band plans. The Phase 0 spectrum (1 paired 5MHz channel) has its downlink at 1550.2-1555.2MHz. The Phase 1A plan adds another channel with a downlink at 1526.3-1531.2MHz and the Phase 2 plan extends both channels to 2x10MHz, with downlinks at 1526-1536MHz and 1545.2-1555.2MHz. As such, though LightSquared is likely unable to use the Phase 0 spectrum, it might be able to use the second (lower) channel under the Phase 1A plan without causing substantial interference to GPS. The Phase 1A spectrum is expected to be available in February 2012, although under the original Cooperation Agreement a “reasonable delay” of up to 9 months could be added to this date. Whether this timeline for availability is sufficient to support a buildout is unclear.
In the near term, what may overshadow these issues is the status of the $586M loan that LightSquared secured from UBS and JP Morgan in mid February. At the time it was indicated that this loan would bring LightSquared’s available cash up to “about $1 billion”, something that is very important in enabling LightSquared not just to go forward with its planned network buildout, but also to keep paying Inmarsat for rebanding of the L-band spectrum. I had assumed that much of this loan would be spent on the DBSD bid, otherwise it is hard to see why LightSquared would access money at this stage when only a few days before LightSquared had indicated that it was “not going to raise more [money] in the short term”).
The question now is whether this loan has been drawn down and whether LightSquared will be able to continue to spend the money on the L-band rebanding and future network buildout, in view of the challenges the company may face in utilizing its L-band spectrum in the near term. If there are any conditions under which the loan could be recalled, then UBS will have to decide whether its confidence in LightSquared still remains as high as on Monday, or if its exposure is now of more concern. With LightSquared’s current cash burn rate somewhere in excess of $100M per quarter (excluding any terrestrial network buildout costs), this could significantly impact how much time LightSquared has available to secure a partnership.
Next week, LightSquared has indicated it plans to announce “significant news” at CTIA. Will this give some indication of where the company goes from here? Is there a deal with Sprint, T-Mobile or some other partner to announce? Will further disclosure of a partnership with MetroPCS take place, or was that deal limited to a potential 2GHz venture? Many questions remain unanswered, but LightSquared will need to start providing some answers very soon, if it is to move forward with its plans, and meet its promises to the FCC.
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03.11.11
Posted in Financials, Globalstar, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 11:48 am by timfarrar
He came from a hardscrabble background, rising to prominence along with his flamboyant wife, who became a favorite of the tabloids. After raising hundreds of millions of dollars, his unstinting efforts to bring essential resources to millions of people in remote areas attracted the interest and favor of political leaders and government agencies alike.
No, its not the story of Phil Falcone, but the autobiography of Bob Geldof. After today’s announcement of a deal with Open Range, something that other MSS-ATC proponents openly scoffed at when Open Range signed its original deal with Globalstar, I’m also left asking “Is that it?”.
Its worth recalling that the prior spectrum lease contract between Open Range and Globalstar called for annual spectrum lease payments which in the first six years were projected to range from $0.6M to $10.3M, something that is little more than a Band Aid in the context of Harbinger’s $2.9B investment in LightSquared. I’m therefore left with the distinct impression that LightSquared intended to announce a much bigger deal with MetroPCS, as I suggested yesterday, but it has not yet been possible to reach agreement over a joint bid on the 2GHz MSS spectrum.
Given the pressure to reach a deal on any bid for the DBSD spectrum before the next hearing on Tuesday March 15, and DBSD’s intention to announce its preferred bidder the day before, we will have to wait and see if a MetroPCS deal can be struck over the next three days, or if Mr. Falcone will be the one left singing “I Don’t Like Mondays“.
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03.10.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 1:24 pm by timfarrar
It now appears that Harbinger may very shortly announce a change to the LightSquared business plan to focus first on development of its ATC network in the 2GHz band, through a joint $2.6B bid with MetroPCS and Solus for the DBSD and TerreStar spectrum. This could allow it to mitigate the growing chorus of opposition to its plans for deployment of an L-band network, including planned testimony by Trimble to Congress tomorrow (Friday).
Over the last month, LightSquared has been gradually changing its tune, from initially suggesting that Garmin’s tests were simply flawed, to admitting that there “may be some interference to GPS signals which…may require modification to some existing GPS units” to now conceding that some GPS receivers may need to be replaced.
As I’ve also noted over the last week, a partnership with MetroPCS has become increasingly likely, with a deadline for bids in the DBSD case of Tuesday March 15. On a very similar timeline, on Monday March 14 LightSquared will provide its response to the numerous Petitions for Reconsideration of its L-band ATC waiver that have been filed with the FCC.
UPDATE: I understand that LightSquared has not yet sealed the deal with MetroPCS. Given the upcoming deadlines, it may be a very busy weekend in Reston.
Assuming that Harbinger is able to pull together a bid for the 2GHz spectrum, I would expect LightSquared to propose that if it is given permission to build out its terrestrial network initially in the 2GHz band (with an associated waiver of the ATC gating requirements), it will take more time to resolve the GPS interference issues in the L-band. Because the key issue for GPS interference is that many existing GPS devices will be overloaded by the LightSquared signals within its own licensed spectrum (as opposed to LightSquared’s signal spilling over into the GPS band), a logical compromise would ultimately involve an order from the FCC that GPS devices sold after a certain date (say the end of 2012) will need to include filters that can prevent overload interference, while LightSquared will not operate at the upper end of the L-band spectrum until some time after this (perhaps 2014 or beyond), so that existing GPS devices can be replaced.
If MetroPCS funds the buildout of a 2GHz LTE network in its own coverage areas, then this may be largely sufficient to meet LightSquared’s initial buildout milestone of 100M POPs covered (although perhaps with a modest delay to the current objective of the end of 2012). Though there has been much talk about a deal between LightSquared and Sprint, it seems that the initial 2GHz buildout may not rely on that possibility. LightSquared and Harbinger would then presumably hope that something turns up, whether in the shape of a deal with Sprint, or something else, to fund the rest of the nationwide buildout in 2013 and beyond. Although details may not emerge for some time, it also seems plausible that LightSquared could eventually seek to renegotiate its Cooperation Agreement with Inmarsat, on the basis that Regulatory Changes have made it impossible for LightSquared to secure the originally planned benefits of the deal in the L-band.
Of course, if Harbinger only ends up with a minority stake in a 2GHz spectrum venture, and is unable to exploit the L-band spectrum to any significant degree in the next few years, then this would be a significant come down from its original plans. However, with MetroPCS potentially funding the initial rollout, this would push the problem of where LightSquared is going to get the cash to pay for a multi-billion dollar national network down the road by at least two years, allowing Harbinger to hope that spectrum values and data demand will grow enough for it to recover its $2.9B investment in the L-band and fund the rest of the nationwide buildout at that point.
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03.09.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 10:10 am by timfarrar
Today FierceWireless has confirmed that Nokia Siemens Networks will be “cut loose” by LightSquared and that LightSquared is instead basing its plans on completing a network sharing agreement with Sprint. Sprint’s has today also provided some limited detail on this issue, noting that “it is ‘technically feasible and possible’ to support different spectrum from a wholesale partner on its network”, but that “any wholesale deal would depend on how much Sprint had to pay to rent the spectrum versus what it makes on the eventual service”. This seems to imply that part of the deal would involve Sprint potentially leasing some of the LightSquared spectrum (perhaps as compensation for the hosting fees?), although it is uncertain if there would be a committed cash payment from Sprint to LightSquared and who would fund any incremental buildout costs.
Intrigiungly, FierceWireless also hints that “LightSquared will announce significant news at the upcoming CTIA trade show in Orlando” on March 23, perhaps involving its collaboration with Ericsson. It is rather less clear whether this would also involve a commitment from Sprint on network sharing (given that Sprint has indicated that we should only “expect more news by the middle of the year”), and could end up simply being a confirmation that NSN is out, to be replaced in some form by Ericsson.
It is worth noting that Ericsson is the LTE contractor for MetroPCS, and as I’ve noted previously, MetroPCS needs to decide whether to back the Harbinger/Solus bid for DBSD and TerreStar (as opposed to bidding on its own for TerreStar) by March 15. Thus, even in the absence of any Sprint deal, I would expect to see a tie-up between LightSquared and Ericsson announced at CTIA.
Whether LightSquared will have more to announce is unclear, though the company has previously indicated that it “has an agreement with a major retailer that it will name before the end of March”. However, with Sprint apparently keeping its options open for the time being, it seems more likely that any news will be around the 2GHz band and it may take longer before we find out what is actually going to happen in the L-band.
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03.08.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 5:57 pm by timfarrar
According to Broadband Reports, “things have changed significantly” with Nokia Siemens Networks’ $7B contract to build the LightSquared network, and NSN is now “out of favor” because LightSquared is planning to work with Sprint and its contractors Alcatel-Lucent, Ericsson and Samsung. This appears to confirm my suspicions of a couple of weeks ago, when I noted that NSN was being lukewarm about the LightSquared network build and appeared to have suspended its tower permitting and siting work.
This report confirms MetroPCS’s interest in the 2GHz spectrum controlled by DBSD and TerreStar, although it is unclear whether MetroPCS would bid alone for TerreStar or partner with Solus and Harbinger in a joint bid for both DBSD and TerreStar. It also indicates that a joint build (i.e. spectrum pooling agreement) may be undertaken for the L-band and 2GHz spectrum in conjunction with the Sprint network upgrade.
Of course if Sprint did collaborate with LightSquared then that would “allow for LightSquared to deploy its network much quicker” and at lower cost, because the two companies would work together to develop and deploy cell sites. Sprint also appears to be looking at securing options other than relying on Clearwire for its 4G network, which would presumably mean having at least an option to purchase capacity from LightSquared. However, as I noted last week, the challenge here will be in the financing of the network. There is very unlikely to be any reason for Alcatel-Lucent, Ericsson and Samsung to grant vendor financing to LightSquared, something that was widely expected from NSN. If Harbinger is to fund part of the planned TerreStar/DBSD bid in addition to the LightSquared buildout, then that would be even more of a stretch for its resources.
The most fascinating question is whether Sprint would commit to a joint buildout with LightSquared regardless of the progress of its discussions with T-Mobile and Clearwire and before a resolution of the current GPS interference testing. My initial view on hearing news of the T-Mobile/Sprint negotiations was that these could hold up any decision by Sprint. On the other hand, that news could have been leaked by someone trying to derail a Sprint-LightSquared deal. Certainly Clearwire would suffer from such a deal, and its share price has been on a rollercoaster over the last week, as differing portrayals of Sprint’s intentions have emerged.
Given both the buildout obligations that LightSquared is committed to, and the timescales on which Sprint plans to begin its upgrades, any deal would certainly have to happen very soon, most likely before the resolution of either the T-Mobile/Sprint merger discussions or the current GPS interference testing. If LightSquared has basically fallen out with NSN as Broadband Reports implies, then it looks like it is putting all of its eggs in one basket with Sprint and this may now be the “cornerstone” on which LightSquared’s nationwide LTE ambitions will rest. As a result, it will be very interesting to see how much of a stake Harbinger plans to take in the proposed bid for the DBSD/TerreStar spectrum, and therefore whether that remains a viable backup plan.
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Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 10:09 am by timfarrar
But if you try sometimes you might find
You get what you need
With news emerging about early stage talks between Sprint and T-Mobile over a potential combination of the two companies, or some other deal involving Clearwire, it now looks less likely that either Sprint or T-Mobile would be willing to move ahead with any partnership with LightSquared in the near term. However, Harbinger looks rather better positioned with MetroPCS, whose CFO recently described LightSquared as “a wonderful option for us”. MetroPCS has also just raised an additional $1B for “opportunistic” acquisitions of “nationwide” (i.e. MSS) spectrum.
Harbinger and Solus have to formalize their bid for DBSD by no later than March 15, in order for it to be considered as a realistic alternative to the current bid from DISH. In addition, TerreStar Networks’ exclusivity period to propose its own reorganization plan is currently scheduled to expire on March 9, opening up the possibility for Harbinger and Solus to submit their bid for TerreStar at that point.
Given these tight timelines, Harbinger and Solus may now have to move forward in partnership with MetroPCS (assuming a deal can be struck for a joint bid) in an attempt to buy DBSD and TerreStar. The structure of such a venture might not include LightSquared’s L-band operations, given the high value that Harbinger has placed on those assets, plus its (GPS interference) risks and liabilities (to Inmarsat for the L-band spectrum lease). Indeed if Harbinger did ultimately move forward with a separate 2GHz joint venture (based on much cheaper spectrum), it seems more likely that Harbinger would instead seek to distribute its holdings in LightSquared to investors requesting redemptions.
However, clearly Harbinger, Solus and MetroPCS would hope that the FCC will provide a similar waiver of the ATC gating criteria to that recently granted to LightSquared. Whether or not the buildout of a 2GHz terrestrial network then took place in conjunction with LightSquared’s buildout (through the sort of spectrum pooling/network sharing arrangement that has been discussed in the past between LightSquared and TerreStar) would presumably depend on whether and when the L-band GPS interference issues are resolved.
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03.03.11
Posted in Financials, Inmarsat, LightSquared, Operators, Regulatory, Spectrum at 3:52 pm by timfarrar
It now appears that Harbinger is focusing its energies on the 2GHz MSS band, with the potential assistance of MetroPCS in its $2.6B bid for DBSD and TerreStar. It is therefore interesting to note that LightSquared has a largely unrecognized way to get out of its spectrum agreement with Inmarsat if the uncertainty created by GPS interference makes it impossible to fund that deployment. According to the Cooperation Agreement filed with the SEC in December 2007, either party could terminate the Agreement if a “regulatory change” makes it impossible to renegotiate in a way that maintains “the benefit of the bargain”.
Section 7.3 Regulatory Change. Without limiting any specific provision herein to the contrary, if any court or federal, state or local government authority or international body with jurisdiction orders or takes any action which becomes effective and which requires the termination or material modification of this Agreement to comply with such action or otherwise with Applicable Law (a “Permissibility Determination???), the Parties shall use their respective best efforts to renegotiate this Agreement in good faith and recast this Agreement in terms that are likely to cure the defects caused by the Permissibility Determination while maintaining the benefit of the bargain to the Parties hereunder and to return a balance of benefits to the Parties comparable to the balance of benefits provided by the Agreement in its current terms and otherwise in a manner consistent with this Agreement. If the Parties are unable to recast this Agreement in a manner that cures such defects and otherwise is mutually agreeable to the Parties, this Agreement will terminate, subject to Section 7.4, effective on such date as the Parties’ activities are required to terminate pursuant to the Permissibility Determination.
Section 7.4 Force Majeure. If any Party is affected by Force Majeure it shall immediately notify the other Parties of the nature and extent of the Force Majeure event. No Party shall be deemed to be in breach of this Agreement, or otherwise be liable to another Party, by reason of any delay in performance, or non-performance, of any of its obligations under this Agreement to the extent that such delay or non-performance is due to any Force Majeure of which it has notified the other Parties and the time for performance of that obligation shall be extended accordingly. Each Party shall use its reasonable efforts to minimize the effects of or shorten the duration of any Force Majeure event and resume the performance of its obligations under this Agreement as soon as possible. If the Force Majeure in question prevails for a continuous period in excess of one hundred eighty (180) days and prevents any Party from carrying out any of its material obligations hereunder (which for the avoidance of doubt shall without prejudice to the generality of the foregoing include any obligation to pay money in excess of $1,000,000, any obligation to issue stock and any obligation to implement any Spectrum Plan), the Parties shall enter into bona fide discussions with a view to mitigating its effects, or to agreeing upon such alternative arrangements as may be fair and reasonable and failing agreement on the same within a further 90 days, any Party may unilaterally and in its absolute discretion terminate this Agreement with immediate effect by notice in writing to the other Parties.
Although Harbinger has invested a great deal in LightSquared to date, it is facing a major battle over GPS interference issues in the L-band. Indeed LightSquared now apparently “concedes there may be some interference to GPS signals which…may require modification to some existing GPS units”. If these problems cause a significant delay in its ability to roll out a terrestrial network in the L-band, it looks like LightSquared would have strong grounds to at least suspend its agreement and payments to Inmarsat, while it focused on rolling out an alternative terrestrial network in the 2GHz spectrum. Of course that would presumably require a waiver from the FCC to allow terrestrial-only devices, similar to the waiver LightSquared was granted in the L-band just a few weeks ago, but at this stage it wouldn’t be a surprise if the FCC came up with such a deal “to save GPS”.
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