The LightSquared machine continues to implode as CEO Sanjiv Ahuja and Executive Vice President Martin Harriman resigned last week in the wake of the NTIA recommendations against LightSquared rolling out their system. This week, Bloomberg reported that Sprint will end its infrastructure sharing deal with LightSquared. Meanwhile, the FCC is accepting public comments on the NTIA’s recommendations.
On February 28, 2012, LightSquared announced that CEO Sanjiv Ahuja and Executive VP Martin Harriman resigned. Forbes reported that Ahuja will remain as LightSquared board chairman. LightSquared announced that Harbinger Capital Partners CEO Phil Falcone was appointed to the LightSquared board of directors. Chief Network Officer Doug Smith and Chief Financial Officer Marc Montagner will serve as interim co-chief operating officers while the search for a new CEO is underway. Amid the announcement, Falcone remained steadfast that LightSquared is focused on finding a solution.
“We are, furthermore, committed to working with the appropriate entities to find a solution to the recent regulatory issues. We, of course, agree that it is critical to ensure that national security, aviation and the GPS communities are protected. I am confident that working together, we can solve this problem…,” said Falcone.
In the week prior, on February 20, Reuters reported that LightSquared missed a $56.25M payment due to satellite partner Inmarsat. While LightSquared stated that Imarsat hadn’t completed it’s obligations, Inmarsat said it was negotiating with LightSquared but didn’t know if or when a payment would be made. Inmarsat issued a notice of default, starting the 60-day clock in which LightSquared has to resolve the issue. Inmarsat is a vital partner as LightSquared needs rights to certain MSS spectrum that Inmarsat has rights to. LightSquared has paid Inmarsat a total of $420M under their agreement, of which $260M was paid in 2011.
Inmarsat isn’t the only vital partner not happy with LightSquared. Yesterday (March 6), Bloomberg reported that Sprint will opt out of its infrastructure sharing agreement with LightSquared. LightSquared had planned to use 31,000 Sprint towers, in addition to contributing 3,400 of its own towers, to roll out their system. Building its own towers from scratch would be prohibitively expensive and would not allow LightSquared to meet the roll out schedule detailed in the January 26, 2011, FCC order.
The LightSquared-Sprint agreement is contingent on LightSquared gaining FCC approval. The original agreement expired December 31, 2011. Sprint agreed to grant a 30-day extension, some speculating for ~$20M. At the end of January, Sprint granted another extension, this time for 45 days, to March 15. Rumors are circulating that Sprint is done granting extensions. To date, LightSquared has paid Sprint $310M in prepayment for work. Sprint’s SEC filing last month stated that if LightSquared doesn’t achieve FCC approval by the agreed date (now March 15), Sprint is allowed to keep all but $74M of LightSquared’s deposit. MSS industry expert Tim Farrar called the $236M ”the most expensive press release in the world” stating that Sprint had done “basically nothing in terms of deployment apart from some initial network planning.”
If Sprint pulls out, LightSquared is in a really tough spot. Although LightSquared owns its satellites for satellite-to-earth communications services, they are relying heavily on Sprint’s infrastructure for its terrestrial service.
Obviously, LightSquared investors aren’t happy about how their money was squandered. On February 17, 2012, a LightSquared investor filed a lawsuit against Harbinger Capital Partners and Phil Falcone. Investor Lili Schad, daughter of the inventor of the snowmobile and noted film director, says she invested $4M in Harbinger and that they “implemented a very different investment strategy, which bore little or no resemblance to the investment strategy described in the Offering Materials.”
Furthmore, the lawsuit states “By going all in on LightSquared, Defendents materially deviated from the Offering Material’s representations that the Fund would seek to achieve attractive returns by investing in distressing debt, special situation equities, and private loans and notes. The risks, rewards and time horizon implicit in the LightSquared investment were not those attendant upon an investment in a hedge fund with the objectives and investment strategy described in Harbinger’s Offering Materials.”
FCC Seeking Comments on NTIA Recommendations
The more than year-long battle between wireless start-up LightSquared and the GPS industry peaked on February 14, 2012 when the National Telecommunications and Information Administration (NTIA), tasked by the Federal Communications Commission (FCC) to study the potential interference problem between LightSquared’s mobile wireless proposal and GPS receivers, issued a statement and report with the following conclusion:
“The federal agencies and LightSquared have invested significant time and resources to identify and analyze proposed solutions to address the impact of LightSquared’s planned network implementations. Based on the testing and analyses conducted to date, as well as numerous discussions with LightSquared, it is clear that LightSquared’s proposed implementation plans, including operations in the lower 10MHz would impact both general/personal navigation and certified aviation GPS receivers. We conclude at this time that there are no mitigation strategies that both solve the interference issues and provide LightSquared with an adequate commercial network deployment.”
The FCC subsequently issued a statement including the following paragraph:
“NTIA, the federal agency that coordinates spectrum uses for the military and other federal government entities, has now concluded that there is no practical way to mitigate potential interference at this time. Consequently, the Commission will not lift the prohibition on LightSquared. The International Bureau of the Commission is proposing to (1) vacate the Conditional Waiver Order, and (2) suspend indefinitely LightSquared’s Ancillary Terrestrial Component authority to an extent consistent with the NTIA letter. A Public Notice seeking comment on NTIA’s conclusions and on these proposals will be released tomorrow.”
As promised, the FCC subsequently opened a Public Notice seeking comments based on NTIA’s report and conclusions. View the Public Notice here. Public comments close on March 16, 2012. If you have invested in GPS technology, you should enter your comments to protect your investment.
Submitting your comments to the FCC only takes five minutes. You don’t need to write an essay. Just state that you support the NTIA’s conclusion.
You can compose your comments in a text editor like Notepad, then save the file and attach it. Once you go to the FCC comment submission website, it will make sense. If you have any problems, email me.
Go to the FCC comment submission website by clicking here.
Type in the following information:
- Proceeding Number: 11-109
- Name of Filer: Enter your name
- Address Line 1: Enter your address
- City: Enter your city
- State: Enter your state
- Zip: Enter your zipe code
- Attach your comments
That’s it. Five minutes and you’re done.
You might have heard about another Public Notice that the FCC issued regarding LightSquared. It is in response to LightSquared’s petition to rule that GPS receivers are not entitled to interference protection. I wrote about it last week. You can read my article here. At that time, I was planning to submit my comments, but that was before the NTIA released its report and conclusions this week. I wouldn’t suggest you not enter a comment to the earlier Public Notice, but certainly I’d focus on entering comments on the latest Public Notice in support of NTIA’s report and recommendations.
March 15 Webinar: “Everything Else but GPS: How GLONASS, Galileo, and Compass Will Affect High-Precision Users”
In a rapidly changing world — which is the world of GPS and GNSS — those who invest significant amounts of their operating capital in hardware must plan carefully for the future,” said Gakstatter, who serves as moderator of the webinar. “Will your survey receiver remain relevant and up to date long enough for you to recoup your investment? How could taking advantage of newly operational constellations improve your efficiency and competitiveness? GLONASS is operational now. Compass has put forward a very aggressive schedule for regional and then global operations. Galileo is moving steadily forward.
The webinar will be held at 10 a.m. Pacific (1 p.m. ET/6 p.m. GMT); registration is free.
Thanks, and see you next time.
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