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, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 11:31 am by timfarrar
Today MetroPCS revealed that it plans to raise about $1B to pursue “opportunistic deals” for “more wireless spectrum”. Their CFO also indicated that he is “open and supportive of 4G wholesalers such as LightSquared and Clearwire” and that he “would be interested in buying nationwide spectrum”. Yesterday I questioned where the money would come from for the proposed Harbinger/Solus bid for DBSD and TerreStar and the subsequent network buildout of LightSquared and TerreStar. Today’s announcement from MetroPCS might provide part of the answer, given MetroPCS’s previously expressed interest in TerreStar.
It now seems plausible that MetroPCS could help to fund a Harbinger/Solus bid for both TerreStar and DBSD and even participate in a subsequent network sharing arrangement (perhaps involving both LightSquared and Sprint). It would certainly seem easier to find the $2.6B contemplated in Harbinger and Solus’s court submission if MetroPCS contributed $1B and took a major stake in the consortium. However, the possibility of MetroPCS joining with DISH should not be ruled out at this stage. Either of these options would probably make more sense than MetroPCS bidding for control of just DBSD or TerreStar in competition with Harbinger/Solus and DISH, and would avoid many of the risks currently associated with the L-band interference issues. As a result, it looks like the next two weeks will be filled with even more drama, as we learn more about MetroPCS’s intentions.
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03.02.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 1:13 pm by timfarrar
The last couple of weeks have been filled with news about LightSquared, with the company first disclosing that it had secured five customers, and then announcing that it had raised $586M to build out its network (despite indicating just a few days earlier that it was “not going to raise more [money] in the short term”). It has also been reported that LightSquared “is in discussions to use Sprint Nextel Corp.’s cell sites and equipment to help build out its network” and that Harbinger’s LightSquared holding is being restructured “to make it easier to make ‘direct investments’” in the company, or alternatively to “manage…redemption requests” so that “Instead of doling out lots of cash, [Harbinger] could give investors a combination of dollars and an interest in the new class of LightSquared shares”.
Most significantly, now comes news that Solus and Harbinger have teamed up to make an alternative offer to buy DBSD and TerreStar, at a total combined valuation for the two companies of $2.6B. Whether or not the “non-binding” bid for DBSD will be considered at today’s court hearing is unclear, as is the timing of when the bid for TerreStar will be made official. This comes after the withdrawal of Echostar’s bid for TerreStar, but at a point when DISH is still trying to get approval for its proposed takeover of DBSD.
Notably, Solus has been interested in both DBSD and TerreStar for a long time, making a DIP financing offer for DBSD back in October 2009 and providing DIP financing to TerreStar Corporation when it filed for bankruptcy in February. Solus has substantial holdings in TerreStar’s Corporation’s preferred shares (86,000 shares of Series B preferred stock) and TerreStar Networks’ 6.5% exchangeable notes, and also holds some amount of TerreStar Networks’ 15% first lien notes, although it is not clear if holds any of DBSD’s second lien notes.
The big question is what Solus and Harbinger would do with the DBSD and TerreStar assets if they were successful in acquiring both companies. This could be a defensive move on Harbinger’s part, seeking to prevent DISH from assembling a spectrum portfolio to compete with LightSquared. However, it could also be an attempt to acquire more spectrum to boost the capacity of the LightSquared network, while it waits for Inmarsat to make the Phase 2 L-band spectrum available in mid-2013, or perhaps even as a backup plan in case any limitations on use of its L-band spectrum result from the GPS interference issues.
The discussions between LightSquared and Sprint appear to be focused on a “network sharing agreement”, which would presumably allow both companies to save money on the costs of their network rollout/upgrades and share backhaul, etc. It is much less clear whether this would involve Sprint committing to purchase capacity from LightSquared, although it might well have the option to do so, and it does not appear that Sprint would become an investor in LightSquared (indeed the money might actually flow in the other direction to pay Sprint for use of its backhaul capacity). Likewise, its rather unclear whether the five customers apparently signed by LightSquared will guarantee a certain level of capacity purchases, or simply have the opportunity to buy capacity once it is available. Some of the mooted partners, such as MetroPCS, apparently envisage a mutual roaming agreement, where again the money might well flow from LightSquared to MetroPCS, at least until LightSquared’s coverage exceeds that of MetroPCS.
All of this brings us back to the question of where the money is going to come from for network buildout at either LightSquared or TerreStar. Back in the first half of 2010, TerreStar had contemplated a spectrum pooling agreement with Harbinger and LightSquared, but this was never consummated, in my view at least partly because it was unclear how a terrestrial network buildout in TerreStar’s spectrum could have been funded. While the recent debt raise at LightSquared is certainly good news, we’re still a long way from seeing some validation of the equity valuation that Harbinger has put on the company. It is also becoming less and less clear whether Nokia Siemens Networks will provide substantial vendor financing for the buildout as was originally expected.
Clearwire was lucky in that much of its original funding was provided by strategic equity investors, such as Intel, Comcast and Google, who (fortunately for Clearwire) were not just considering their return in terms of the increase in Clearwire’s share price. From what we have seen so far, LightSquared may need to rely more heavily on purely financial investors, who would expect to drive a much harder bargain. Perhaps LightSquared would be able to access large amounts of junior debt (as we saw with Iridium and Globalstar in the late 1990s and McCaw Cellular a few years earlier)? However, given the 12% interest rate on what is now $1.5B of first lien debt, any subordinated debt might be extraordinarily expensive, unless LightSquared can strike true take-or-pay contracts with its customers.
Thus the next test for LightSquared will be not only whether it can announce credible customers, but also whether these customers commit either to an equity investment in the company or to some take-or-pay arrangement which can be used to secure funding for the buildout. With LightSquared indicating that it “has an agreement with a major retailer that it will name before the end of March”, this might become clear sooner rather than later.
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02.16.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 11:25 am by timfarrar
Its curious that LightSquared’s Chief Marketing Officer has now disclosed that the company has “agreements with five customers to provide wholesale fourth-generation service” consisting of “a national retailer, a device manufacturer, one Web site, and two carriers”, but declined to name those customers “because the agreements aren’t yet public”. That doesn’t sound like a huge advance from last October, when LightSquared said it “is in advanced negotiations with a dozen partners — “we are exchanging term sheets with them??? — and has signed up others, but has been forbidden from naming them” and certainly nothing like the major announcement that many observers, including myself, had been led to expect.
UPDATE: LightSquared has indicated in another article that it “has an agreement with a major retailer that it will name before the end of March” and it “has signed wholesale deals with two U.S. operators and [is] in discussions with three more”.
Interestingly, LightSquared also indicated that “We’re not going to raise more [money] in the short term” because “The company has sufficient funding for the immediate future and will seek more as it achieves network buildout targets”. However, this funding is now stated as “about $1.75 billion in debt and equity”, which is less than the “more than $2 billion in equity and debt proceeds and in commitments” that LightSquared indicated in a press release last October.
LightSquared’s network buildout targets are now to “begin network trials this year in Las Vegas, Baltimore, Denver and Phoenix after completing testing in a lab in the Dallas area” which appears to represent a slowdown from the previous target to “trial the network in the first half of 2011 and launch commercial service in the second half”. Indeed Harbinger told the FCC last March that “Service will begin in two trial markets, Denver and Phoenix, with a commercial launch before the third quarter of 2011 providing service to up to 9 million POPs”. The FCC’s January 2011 Waiver Order, also mandates that “LightSquared shall ensure that integrated, dual-mode MSS/ATC-capable L-Band devices are readily available in the marketplace no later than September 30, 2011, for datacards and no later than the June 30, 2012, for smartphones” (although this does not necessarily require LightSquared to have an operational terrestrial network at that time). Apparently confirming this delay, Nokia Siemens Networks indicated this week that “LightSquared’s deployment, however, won’t get in high-gear until next year, assuming it gets fully funded, at which points NSN’s North American revenue picture could take a dramatic turn” (though that seems to me to be a suprisingly non-committal statement from a partner with a $7B contract).
Overall, today’s report appears to confirm my supposition last week, that LightSquared and Clearwire may now have to wait while T-Mobile takes its time to reach a decision on 4G spectrum. Let’s hope therefore that the fistful of dollars from Harbinger’s sale of its remaining shares in Inmarsat are enough to achieve LightSquared’s current “network buildout targets” and convince T-Mobile to choose LightSquared as its 4G network partner. However, with just one key potential partner, and at least three possible choices, I wonder which of DBSD/TerreStar, Clearwire and LightSquared will ultimately turn out to be the good, the bad and the ugly.
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02.05.11
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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02.04.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 11:28 am by timfarrar
Speculation is intensifying that a victor will be declared soon in the battle between Clearwire and LightSquared for a deal with T-Mobile, although developments in the 2GHz band remain interesting and could delay this process, as could positive noises about additional paired AWS spectrum (1755-1780MHz) being made available by the DoD.
UPDATE: Bloomberg is reporting that LightSquared “is considering bidding on satellite companies TerreStar Corp. and DBSD North America Inc.” because their “spectrum holdings would help LightSquared handle wireless traffic as it prepares to roll out a nationwide fourth-generation network”. This seems very curious, given that LightSquared will already have access to 40MHz of L-band ATC spectrum through its Phase 2 agreement with Inmarsat. It is also not obvious where the money for such a bid would come from. However, it does highlight the discrepancy in the cost of LightSquared’s spectrum versus DBSD and TerreStar. Of course, if Clearwire is prepared to sell 40MHz of spectrum to T-Mobile for “up to $2B“, it it far from clear that DBSD and TerreStar are worth much more than $1B each. Nevertheless, it appears this battle is a long way from being over, especially as DBSD’s second lien noteholders also appear to have reached an agreement with Sprint and will challenge the DISH bid for DBSD.
As I mentioned last week, it seems unlikely that the FCC would have approved the LightSquared waiver without some reassurance that LightSquared had the partners and funding to move forward, and journalists have apparently heard “rumblings that LightSquared may in fact be the partner of choice” for T-Mobile. On the other hand, other reports are suggesting that T-Mobile “may be close to a deal to buy wireless spectrum from Clearwire” which “could happen by the end of the first quarter”.
Obviously both sides are trying to shape media perceptions of themselves as the likely victor, while painting their opponents as being in dire straits. However, the battle is getting pretty ugly, with a request this week from a conservative watchdog group for a Congressional investigation into the FCC’s waiver grant to LightSquared, which appears suspiciously well timed, just like the news of an SEC investigation into Harbinger back in November. Nevertheless, it seems quite plausible that the request might be taken up by the Republicans, simply because it could provide a mechanism for “fishing expeditions” to question the White House, especially given the intervention of Democratic party officials on LightSquared’s behalf.
At this point, the most interesting question is whether we will now have to wait until the “end of the first quarter” or later to hear more about LightSquared’s plans to move forward, beyond the fact that it has exercised its Phase 2 option with Inmarsat to gain access to more spectrum in 30 months time. Even if the “end of the first quarter” is the timeline on which T-Mobile plans to reach a decision, it is unclear whether LightSquared will wait that long, or if it will instead be able to announce additional partners and investors beforehand, which would help to build confidence in the achievability of its buildout timetable and that it does not expect GPS interference issues to hold up its plans. More importantly, an early announcement would demonstrate some of the alternatives available to LightSquared, in the event that T-Mobile ultimately decides to go elsewhere for its 4G spectrum, and perhaps could even provide some indication as to the potential value of LightSquared’s spectrum assets.
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02.01.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 8:42 am by timfarrar
“I have heard there are troubles of more than one kind.
Some come from ahead and some come from behind.
But I’ve bought a big bat. I’m all ready you see.
Now my troubles are going to have troubles with me!”
(Dr Seuss, I Had Trouble in Getting to Solla Sollew)
I commented last week that the waiver granted to LightSquared risked causing additional trouble in the TerreStar and DBSD bankruptcies, which could potentially be to Harbinger’s advantage, because it could limit the competition that LightSquared will face from the 2GHz MSS spectrum holders in the race to secure key partners like T-Mobile and MetroPCS.
Today it has been announced that DISH has agreed to acquire DBSD for $1B. In conjunction with TerreStar, which is also valued at roughly $1B in its bankruptcy, this creates the opportunity for potential partners to consider using a rival 40MHz block of 2GHz MSS spectrum instead of investing in LightSquared or Clearwire. The FCC’s LightSquared ruling last week, laid out a roadmap for the 2GHz players to gain the same waiver (i.e. to sell terrestrial-only devices), namely committing to a national terrestrial rollout with strict deadlines, and settling the ongoing dispute with Sprint over clearance costs for the 2GHz band. If both of these conditions were satisfied, it is now hard to see how the FCC could refuse to grant a similar waiver.
I’ve noted before the challenges of achieving a high spectrum valuation in the current situation of oversupply. Now in addition to the Clearwire spectrum, apparently valued at “up to $2B” for 40MHz of spectrum, we may also have an even more direct comparison of 40MHz of MSS-ATC spectrum also valued at around $2B.
This makes the $2.9B that Harbinger has invested to date in LightSquared look quite expensive, especially when considering that LightSquared must pay Inmarsat for its Phase 2 spectrum lease on an ongoing basis (amounting to a future liability of more than $2B). It will therefore be very interesting to see which way T-Mobile and other cellular operators decide to go now and whether this new development pushes back the decision point for any key potential partners.
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01.26.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 1:51 pm by timfarrar
Today the FCC has released a very carefully worded Order, granting LightSquared and its wholesale partners permission to offer terrestrial-only service to consumers. Despite LightSquared’s original assertion that its plan to provide “integrated service” to wholesale partners (who could resell terrestrial-only services to end users) complied with the ATC rules, the FCC found that LightSquared’s wholesale partners did not have the right to provide terrestrial-only services, unless LightSquared also had these rights. Nevertheless, the FCC decided that LightSquared merited a waiver of the rules, because “this is a promising opportunity to promote mobile broadband” which “increases competition and provides consumers with more choices”.
Importantly, the Order is written specifically to justify only giving LightSquared a waiver, without the FCC being obliged to provide a similar waiver to other MSS competitors. The FCC cites five reasons that the waiver would serve the public interest:
1) Provision of Ubiquitous, Nationwide MSS: the FCC notes “LightSquared’s current service offerings and demonstrated commitment to providing MSS” and that the company “is already a significant and substantial provider of MSS”. DBSD and perhaps even TerreStar might find it hard to provide comparable justification.
2) Rationalization of MSS L-band for Improved MSS and MSS/ATC Use: the FCC notes the large sums being spent by LightSquared “to rationalize narrow, interleaved bands of L-band spectrum”. Other MSS providers obviously do not have the same justification, and by way of contrast DBSD and TerreStar have disputed their band clearing reimbursement obligations to Sprint.
3) Investment in Dual-Mode Service and Device Offerings: the FCC notes LightSquared’s “commitment to developing an integrated MSS/ATC marketplace, including dual-mode devices”. While DBSD and TerreStar were originally parties to the LightSquared agreements with Infineon and/or Qualcomm, they have not continued to fund those development agreements since their bankruptcies. TerreStar has launched the Genus phone, but that device is not ATC-compatible.
4) Unique Terrestrial Buildout Obligations in the MSS L-band: the FCC notes LightSquared’s commitment to “significant terrestrial buildout milestones”. This is probably the most critical of all the elements in the eyes of the FCC, but it would obviously require huge expenditure for any other MSS operator to commit to a similar nationwide terrestrial rollout.
5) LightSquared Commitments: the FCC notes that “LightSquared offers numerous commitments, many of which we impose as waiver conditions, below, to ensure consistency with the purposes of the gating criteria and the integrated service rule.” Similar commitments would presumably be required of any other MSS operator.
One of the main outcomes of this ruling is that the 2GHz spectrum holders could face additional confusion and potential delay in both their bankruptcies and subsequent service deployment. Some creditors may see the FCC waiver for LightSquared as increasing the value of the 2GHz MSS spectrum, if they think DBSD and/or TerreStar will not have to resort to incentive auctions to remove the ATC gating conditions (and share the resulting proceeds with the government). This could mean further arguments in the bankruptcy courts over the appropriate valuation of these assets.
However, without a concrete promise to deploy a nationwide broadband network on a strict timetable (and to reimburse Sprint for their band clearing costs), it appears that the FCC is determined to deny DBSD and TerreStar a similar waiver of the ATC rules. Such a refusal might well set the stage for prolonged litigation, and potentially delay further the prospects of bringing the 2GHz spectrum into use.
Of course that would also be to Harbinger’s advantage, because it would limit the competition that LightSquared will face from the 2GHz MSS spectrum holders in the race to secure key partners like T-Mobile and MetroPCS. Nevertheless, it would be ironic if the FCC’s decision that “in the absence of a waiver, the substantial public benefit of rationalizing MSS L-band spectrum might not be realized any time soon” resulted in 40MHz of L-band spectrum being brought into use (despite worries about GPS interference) while leaving the 40MHz of 2GHz MSS spectrum (and perhaps even the adjacent 30MHz of AWS-2 and 3 spectrum, whose allocation was supposed to be coordinated with the 2GHz MSS band) languishing for years to come.
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