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Despite setbacks, LightSquared bullish on LTE prospects

Thu, 10/13/2011 - 8:10am
Maisie Ramsay, Wireless Week

LightSquared hasn't even received FCC clearance for its wholesale LTE network, but already the company is having an effect on the wireless industry.

Sprint has incorporated LightSquared into its LTE plans. AT&T has listed the company as a competitor to help justify its merger with T-Mobile USA. Twenty wireless operators and other businesses have signed up for its mobile broadband network, and electronics giant Sharp hopes its gadget deal with LightSquared will give it a key entry point to the U.S. wireless market.

But that's all tangential to LightSquared's biggest potential impact on U.S. operators: LightSquared's wholesale model could allow virtually anyone to sell wireless service under their own brand, allowing consumers to bypass incumbent carriers for mobile broadband access.

LightSquared could be a game-changer – if regulators allow it to launch. The venture-backed operator has to prove to regulators and politicians that it has solved problems with GPS interference before it can get the go-ahead.

Those who have watched the multiple congressional hearings on the issue know that there's virtually no chance LightSquared will be able to launch if its network affects critical GPS services, such as those used by the military and aviation industries. LightSquared's claims of a solution to the problem have been met with skepticism, to put it mildly, and its political ties to the Obama administration have not helped sentiment in the GOP-controlled House.

Time and again, regulators and politicians have said they will block any service that interferes with GPS. Despite this, LightSquared thinks it will prevail.

LightSquared brought some of its executives to San Diego this week, in part to pitch its optimism to CTIA conference attendees.

As expected, Frank Boulben, the company's chief marketing officer, was bullish on the company's prospects. As he frames it, the company fixed the interference issue for consumer GPS devices when it revised its deployment plan this summer and has a hardware solution from Javad for the sliver of high-precision receivers still affected by its service. All that remains is for the merits of the plan to be proved by a new round of government testing.

"We expect the re-testing to confirm what we observed during the first testing program," Boulben says.

LightSquared has pledged $50 million toward replacing and retrofitting high-precision GPS receivers that still have interference problems under its new plan. Testing of the prototype for high-precision receivers will begin "within weeks," and testing of LightSquared's revamped deployment plan is slated to be complete by the end of November.

If the FCC gives LightSquared the green light – and that's a big if – it could change the face of the U.S. wireless industry. AT&T and Verizon Wireless would have a new competitor for LTE services. Small, rural operators lacking spectrum and funding would finally have a viable way to provide mobile broadband to their customers. Retailers like Best Buy would have a viable way to sell house-branded wireless service.

"We're introducing new spectrum, more competition. Without LightSquared, there will only be two major LTE networks," Boulben says, discounting MetroPCS and Sprint's planned LTE network because of their limited spectrum resources. LightSquared's service will average 15 Mbps on the downlink and 8 Mbps on the uplink. "We are the only source of spectrum that's available now."

This week, Aircado became the 20th company to sign on to the wholesale service. Boulben says LightSquared is in negotiations with 27 other providers.

There's clearly demand for what LightSquared has to offer. The only question is whether regulators will allow LightSquared to provide it.

For now, LightSquared is planning its future as if it still has one. Boulben says the company expects to deploy in the second half of next year and will still meet the FCC's timetables. LightSquared's network pact with Sprint contains a clause that voids the contract if it doesn't get regulatory approval by year-end, but Boulben says that doesn't mean the deal is off – it will just have to be renegotiated.

Boulben paints a picture of a company with just a few minor hurdles to clear. But few, if any, in the GPS industry share Boulben's optimistic view, and politicians on both sides of the aisle have made it clear that GPS is a greater priority than LightSquared's mobile broadband ambitions. Even the FCC has shown no leniency on the interference issue, repeatedly stating the company will not be allowed to launch if it threatens GPS.

There are many who want to see LightSquared succeed. At this point, however, it's not clear how good its chances are.

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