There are few companies out there giving off as many contradictory signals as wholesale wireless carrier-to-be LightSquared. This week, we had no less than three news items that just left me generally puzzled. First there was the news that the company was talking with AT&T (NYSE:T, news, filings) about leasing 4G network capacity. The fact that it was one 4G network that doesn’t yet exist talking to another 4G network that also doesn’t exist about was dissonant enough, but the fact that it was AT&T that just a few weeks prior stated publicly that there just isn’t room for another upstart 4G network in the market just made it rather surreal.
But the AT&T talk swiftly died out when followup rumor came out saying that Sprint and LightSquared are close to a $20B deal for space on Sprint’s wireless network. That’s been rumored before, but $20B? Did LightSquared raise a few tens of billions I don’t know about yet? I know, it’s supposedly over eight years – it’s a bit early to be talking about eight years already isn’t it? And $2B per year would pretty much finish them off in a couple of years at this point even without any other expenses I’d think.
Which brings us to the GPS interference thing, which threatens to derail all the big plans if they can’t find a way to defuse the situation. John Deere (yes the guys with the tractors) is seriously ticked off about the fact that LightSquared’s usage of the 1525-1559Mhz band is going to interfere with GPS applications like those in the agricultural world. Their engineers say there is no solution in sight to fix the problem for existing devices. That’s actually because when the GPS guys made these things they took the cheap route and didn’t include filters to prevent such things from happening, meaning their devices are listening to stuff they shouldn’t be listening to on the assumption that there hadn’t been anything there yet.
One could argue at great length about who damaged who here. LightSquared’s buildout might require very expensive GPS equipment replacements all over the place in order for stuff to work right. But if they aren’t allowed to then havent’ the GPS folks done damage to the usability of spectrum LightSquared paid good money for? And of course, the two giants of the space, AT&T and Verizon, are looking on with glee if not more. It’s a mess and it’s probably only going to get worse.
But LightSquared is confident that their buildout will proceed on schedule of course. Such faith takes practice. Is there any way to clarify things? Yes of course. Find some consolidation route where Sprint provides the unified base stations, Clearwire keeps deploying its initial 4G WiMAX while committing to nextgen LTE (as we know they are thinking of), and LightSquared contributes its capital plus its spectrum to bring health to the balance sheet. The FCC can then slow down the use of the LightSquared spectrum to give time for some sort of GPS equipment transition for a few years but still make sure that the spectrum gets freed up. Then you have a much more viable 4G competitor in Sprint/Clearwire/LightSquared with enough spectrum and more in the wings which the FCC can then use to justify the AT&T/TMobile deal so all the lobbyists can consummate the party they are still gearing up for. Nah, that’s too simple.
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