New LightSquared Plan Faces Attack, Uncertainty
The coast is not yet clear for LightSquared's hybrid satellite-LTE network despite the company's announcement on Monday that it has found a solution to interference with GPS.
The startup's new proposal, in which it would step away from the frequencies that it said cause the most interference with GPS (Global Positioning System), still needs regulatory approval and hasn't even been presented to the U.S. Federal Communications Commission yet. Meanwhile, one of the company's harshest critics slammed the plan as "bizarre."
LightSquared wants to build a hybrid network with both satellite and LTE (Long-Term Evolution) services, but some of the spectrum for its LTE network is in the MSS (Mobile Satellite Services) band, which is also used for GPS. It has to solve any interference problems before it can launch the network.
Though details are scarce, LightSquared presented an outline of its plan in a press release on Monday. It would abandon, for now, a 10MHz band that sits near frequencies commonly used by GPS devices, and in its place would use a lower 10MHz band that is farther away. In the new frequencies, LightSquared's network would not interfere with GPS except for "a limited number of high precision GPS receivers," the company said. The rollout schedule for the network, which the company has said will go live this year, did not change with the new band plan, according to LightSquared.
Like LightSquared's original plan, the new proposal would need to be approved by the FCC, though the exact process would be up to the agency. LightSquared did not disclose a timeline for any formal proposal to the FCC. The original plan requires LightSquared to work with users and vendors of GPS technology to ensure its network doesn't interfere with GPS devices. The original proposal still stands, and after a deadline extension, a report on this testing is due July 1.
The Coalition to Save Our GPS, which includes GPS vendors Garmin, Magellan and Trimble, as well as FedEx, Caterpiller, the Air Transport Association and others, dismissed LightSquared's claims of having solved the interference problem.
"Confining its operation to the lower MSS band still interferes with many critical GPS receivers in addition to the precision receivers that even LightSquared concedes will be affected," the group said in a statement attributed to Jim Kirkland, vice president and general counsel of Trimble. "It is time for LightSquared to move out of the MSS band."
"This latest gambit by LightSquared borders on the bizarre," the coalition said.
LightSquared's proposed operations in the lower band might have to undergo the same kind of testing that was required for its current plan, said analyst Roger Entner of Recon Analytics. LightSquared and an advisory group from the GPS community took about three months to develop a test plan, carry out tests and collect data in that case.
A shift to another frequency band might also force makers of future LTE mobile devices back to the drawing board to adjust them for the new band, said Phil Marshall, an analyst at Tolaga Research.
LightSquared already has a spectrum leasing agreement with Inmarsat, which controls the lower 10MHz band that the company would start using under the new plan. Last year the company announced it would pay Inmarsat a total of US$337.5 million to cover the first phase of that deal. LightSquared had planned to move into that lower band as demand for capacity grew over the next few years.
If it can win approval to operate the network, LightSquared plans to sell service only through other service providers, on a wholesale basis. Its satellite network would provide coverage in many rural areas where the nation's major carriers haven't deployed towers, while the LTE system would deliver a faster service in metropolitan areas. But some observers are skeptical about the profit in this scheme.
"I really struggle with the business model they're pursuing," Marshall said. "They haven't changed the business model sufficiently for it to work in many of these environments where large-scale service providers are challenged," Marshall said.
One component that might help LightSquared succeed is a reported long-term partnership with Sprint Nextel, under which Sprint would resell services on the LTE network. LightSquared declined to comment on the reports. It's not clear how Clearwire, which is majority-owned by Sprint and sells wholesale capacity to that company, would be affected by such a partnership.