The FCC’s decision to block LightSquared from launching its network leaves it with few options, and the company has yet to give a clear answer on how it plans to proceed.
“We remain committed to finding a solution and believe that if all the parties have that same level of commitment, a solution can be found,” LightSquared Chairman and CEO Sanjiv Ahuja said in a statement issued late yesterday.
Ahuja did not say how LightSquared planned to find that solution.
Philip Falcone, who has sunk $3 billion from his Harbinger Capital Partners hedge fund into LightSquared, has yet to issue a statement.
The NTIA said this week there were no practical ways for LightSquared to move forward with its LTE network after a long series of government tests showed the service had a widespread impact on GPS receivers.
The NTIA’s conclusion prompted the FCC to pull LightSquared’s original waiver for its network and “suspend indefinitely” its ability to add land-based wireless services to its satellite communications, killing LightSquared’s ambitious plan to offer wholesale mobile broadband services. The FCC issued a public notice on the plan yesterday.
“No one knows what their next steps are going to be,” tech analyst Jeff Kagan says. “But this is not a company that’s going to turn around and walk away. They have too much invested.”
BTIG Research analyst Walter Piecyk speculated that the NTIA may arrange a spectrum swap with LightSquared, trading some of the spectrum used by federal agencies for LightSquared’s airwaves adjacent to GPS bands. A sale of the spectrum to another communications company could be difficult, since the NTIA essentially deemed it unusable.
“If the government could find other spectrum that could be vacated, you’re looking at a swap situation,” Piecyk said.
However, he warned that pressure to auction off spectrum to bandwidth-hungry wireless operators could make a swap difficult. “I think there would be some political pressure about why they aren’t auctioning it off,” he said.
Meanwhile, LightSquared’s 30 customers are looking for other sources of wholesale mobile broadband.
Leap Wireless International planned to use LightSquared’s network for roaming. A company spokesman said Leap’s LTE plans are still on track. “The LightSquared agreement was a complement to our overall LTE strategy, not the strategy itself,” he said. “The company remains on track with current plans to deploy LTE across approximately two-thirds of our current network footprint over the next two to three years.”
C Spire Wireless, which also signed up for LightSquared’s LTE services, did not reply to requests for comment.
At least one of LightSquared’s customers has already jumped ship. FreedomPop announced it had signed up for Clearwire’s wholesale WiMAX network less than a day after the NTIA’s decision was handed down.
FreedomPop marketing executive Tony Miller said the company decided to use Clearwire “as soon as LightSquared FCC issues started looking more serious, and its viability less likely.” Its arrangement with Clearwire isn’t exclusive, so to the extent LightSquared ever comes back, it could use both, Miller said.
When asked why FreedomPop didn’t go with Clearwire in the first place, instead placing its future with a still-unlaunched network, Miller said “Clearwire was in a different place just three months ago… it was locked into a deal with Sprint that was renegotiated in January and ‘freed’ them to do some more innovative deals like us.”
“Whether it goes live or not, LightSquared changed the dynamic in the wholesale space and laid out the model for Clearwire and others to follow,” Miller said.
Simplexity, another LightSquared customer, also recently forged a deal with Clearwire. But CEO Andy Zeinfeld said Simplexity’s relationship with Clearwire didn’t affect its arrangement with LightSquared. “Simplexity is in the business of providing end-to-end MVNO services to companies that want to offer their own private branded wireless offerings without the need to become an MVNO,” he said. “To that end, Simplexity is carrier agnostic.”
Zeinfeld said he had not spoken with LightSquared’s executives since the FCC announced its decision and could not comment on how its contract would be affected by the development.
“We believe the LightSquared offering would have been very, very compelling to the consumer and would have been well received,” he said.
VoIP provider netTALK had contracted LightSquared to provide LTE services for its customers. CEO Takis Kyriakides said netTALK was prepared for the FCC’s decision.
“We do indeed have a backup plan in place,” Kyriakides said, but declined to provide specifics.
When asked if netTALK was considering signing up with Clearwire, Kyriakides said, “We are not able to discuss contractual arrangements with third parties or future plans for the same.”
As for what Clearwire has to say about all of this, President and CEO Erik Prusch was cautiously optimistic during the company’s earnings call yesterday.
“As far as LightSquared’s concerned, what I would tell you is that we continue to field a lot of inbound inquiries in terms of wholesale deals,” he said. “We’re pleased with the pipeline of opportunities that we’ve got in front of us.”
Filed Under: Industry regulations