Sprint bails on LightSquared

posted at 1:05 pm on March 17, 2012 by Ed Morrissey

Yesterday brought good and bad news to LightSquared, which still wants to get an approval from the FCC that would swamp out most GPS receivers already on the commercial market and interfere with a critical aviation system used by commercial pilots to avoid obstacles like … mountains.  The good news?  Sprint paid LightSquared $65 million, cash badly needed by LSQ to pursue the waiver needed to roll out its network.  The bad news?  Sprint paid it as a severance, ending the partnership that drove the network plan:

Hedge fund manager Philip Falcone’s LightSquared lost its main business partner, Sprint Nextel Corp , but gained $65 million from the breakup that may help its last-ditch effort to get regulatory approval to establish a high-speed wireless network.

Sprint said on Friday it would exercise its right to scuttle the $9 billion agreement that would have allowed LightSquared to use a network Sprint is building to sell its own high-speed wireless services.

Sprint had the right to back out of the deal if LightSquared failed to get regulatory approval by a deadline that was twice extended, first by a month from its original December 31 date and then to mid-March.

LSQ has continued its public-relations blitz, the only other forum still open to them, claiming that the FCC’s decision amounts to “a bait and switch by the federal government of historic scale.”  That’s a reference to the FCC’s decision to grant the temporary, limited waiver that encouraged LSQ to ramp up its development rather than simply test the devices and networking itself, which the FCC had plenty of capacity to do.  In fact, Senator Charles Grassley has spent almost a year demanding answers to that question, which the FCC and its chair Julius Genachowski refuses to answer.  Now, however, the House Energy and Commerce chair Fred Upton has requested answers to those same questions, and Upton’s committee has jurisdiction over the FCC — which means Upton can subpoena their records if needed, and slap Genachowski with a contempt charge if he continues to stonewall.

The real bait-and-switch, though, would have been on users of GPS, including commercial aviation and the military, both of which objected from the beginning to LSQ’s plans.  GPS receivers have been built for years — decades, really, including military and aviation systems — on the understanding that adjacent frequency bands would only be used for low-power satellite transmissions.  Philip Falcone and Harbinger formed LSQ from satellite communications firms they consolidated or licensed, and attempted to use their licensed frequencies to built a high-power terrestrial 4G network, with a waiver from the FCC to allow them to use the frequencies despite the power restrictions on that spectrum.  That represented a bait-and-switch for millions of current GPS users, all of whom would have had to replace their GPS receivers, which would have worked much less effectively thanks to greatly-lowered sensitivity — sensitivity needed to receive and amplify those low-power satellite signals that allow the receivers to accurately pinpoint terrestrial locations.

The other forum still open to LSQ is the courts, of course, and it looks like LSQ is headed there.  According to this report, they have retained some very high-powered — and conservative — legal counsel: Ted Olson and Eugene Scalia.  People don’t hire Olson to avoid litigation, and Falcone can hardly afford to blow that kind of money on a whim:

When asked if LightSquared may pursue legal action against the FCC, Carlisle said the company is prepared to examine all options.

The company’s fate is critical to investors in Falcone’s Harbinger Capital Partners, which once controlled $26 billion in assets but is now down to about $4 billion.

A little more than half of Harbinger’s money is tied up in LightSquared. The hedge fund is the company’s single largest equity investor.

They don’t have a prayer in court of overturning the FCC denial of the waiver, thanks to the terms of the waiver itself.  LSQ had to show that their network didn’t interfere with GPS systems for the waiver to be granted permanently.  At least two rounds of testing by government agencies showed that LSQ substantially interfered with most current uses for GPS, and that it was so bad that mere mitigation wouldn’t solve the problem.  If LSQ goes to court, it will be to sue over the lost investment resulting from the waiver grant, and the plaintiffs will oddly find themselves on the same side as Grassley and Upton — challenging the FCC to explain why they didn’t just test the system themselves rather than have a year and many millions of dollars wasted on an obviously insurmountable problem.

Stay tuned.

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Stick a fork in it, its done. Thankfully.

clippermiami on March 17, 2012 at 1:07 PM

GOOD BYE LIGHTSQUARED, your 15 minutes are up!

itsspideyman on March 17, 2012 at 1:09 PM

I wonder if bho will somehow see to it these people get what they want? Afterall, bho is getting big bucks from the owner of the company isn’t he?
L

letget on March 17, 2012 at 1:09 PM

Deeeee-lish-us!

gryphon202 on March 17, 2012 at 1:10 PM

I genuinely like Ted Olson, but somethings happened to him. First, he handles the case to overturn the CA gay marriage ban and now he’s representing Obama’s cronies (and a firm Obama once invested in). Whassup Ted?

TXUS on March 17, 2012 at 1:14 PM

“The number you have dialed is not in service…..please check the number and try again….”

BobMbx on March 17, 2012 at 1:14 PM

Stick a fork in it, its done. Thankfully.

clippermiami on March 17, 2012 at 1:07 PM

Unfortunately, no, it is not done. There are literally billions of dollars at stake here. They do not mind blowing a few tens of millions more in hopes of somehow regaining the ultimate payoff.

climbnjump on March 17, 2012 at 1:16 PM

The good news? Sprint paid LightSquared $65 million, cash badly needed by LSQ to pursue the waiver needed to roll out its network. The bad news? Sprint paid it as a severance

and…bu-bye.

Not enough time to buy more Democrats before the elections to really effect anything.

Be interesting to see how much dinero their high-priced legal team squeezes out of the FCC though.

Tim_CA on March 17, 2012 at 1:17 PM

They don’t have a prayer in court of overturning the FCC denial of the waiver, thanks to the terms of the waiver itself.

Just like ObamaCare or mandated birth control insurance coverage.

If these things didn’t have a prayer in the courts, we wouldn’t know about them.

BobMbx on March 17, 2012 at 1:17 PM

I wonder if bho will somehow see to it these people get what they want? Afterall, bho is getting big bucks from the owner of the company isn’t he?
L

letget on March 17, 2012 at 1:09 PM

Not if, but how.

According to this report, they have retained some very high-powered — and conservative — legal counsel: Ted Olson and Eugene Scalia. People don’t hire Olson to avoid litigation, and Falcone can hardly afford to blow that kind of money on a whim

May be more going on here than meets the eye.

petefrt on March 17, 2012 at 1:19 PM

….JugEars people will somehow make things sticky for Sprint now.

KOOLAID2 on March 17, 2012 at 1:22 PM

They do not mind blowing a few tens of millions more in hopes of somehow regaining the ultimate payoff.

The ultimate payoff will be on the taxpayer’s dime. They’re going to sue the FCC for not testing the system at the outset (as they should have) and, thus, allowing LSQ to waste another year of investment in a product that couldn’t work. Another Obama agency boondoggle.

Dee2008 on March 17, 2012 at 1:26 PM

Falcone needs to be given an offer he can’t refuse. Because tens of millions of americans cannot afford to suffer what he is trying to foist on everybody.
Re-engineer it, solve the technical problems, or shove it, Falcone.

rayra on March 17, 2012 at 1:26 PM

challenging the FCC to explain why they didn’t just test the system themselves rather than have a year and many millions of dollars wasted on an obviously insurmountable problem.

Like the LSQ clowns with billions invested could not test their own systems and see that they would cause GPS systems to fail?!

The FCC tests are published and various labs will perform the tests for a fee. No wonder these ‘businessmen’ are such good friends of Obama.

WhatNot on March 17, 2012 at 1:28 PM

Slap him with a contempt charge. Yeah. Right. Why don’t we just admit that’ll never happen rather than pretending like there are options here. If they don’t answer questions -and they won’t- this will fade away fast & furiously.

BKeyser on March 17, 2012 at 1:32 PM

Heartache.

KeninCT on March 17, 2012 at 10:58 AM

Del Dolemonte on March 17, 2012 at 1:57 PM

A Pigford-like resolution is on the horizon:
LSQ will sue the federal government, We The People, and the government, per Obama, will settle for a billion dollars or so, to pay off his supporters, again.

GaltBlvnAtty on March 17, 2012 at 2:31 PM

Unfortunately, no, it is not done. There are literally billions of dollars at stake here. They do not mind blowing a few tens of millions more in hopes of somehow regaining the ultimate payoff.

climbnjump on March 17, 2012 at 1:16 PM

The Cloward-Piven strategy on all fronts, unfortunately, will continue…

Fallon on March 17, 2012 at 2:34 PM

I’m sure Barry will find some way to repay his campaign funding pals …uh….investors for their loss.

GarandFan on March 17, 2012 at 3:01 PM

Senator Charles Grassley has spent almost a year demanding answers to that question, which the FCC and its chair Julius Genachowski refuses to answer.

Now, however, the House Energy and Commerce chair Fred Upton has requested answers to those same questions, and Upton’s committee has jurisdiction over the FCC — which means Upton can subpoena their records if needed, and slap Genachowski with a contempt charge if he continues to stonewall.

Who awoke Fred Upton from his blissful sleep?

RJL on March 17, 2012 at 3:48 PM

This just illustrates the utter incompetence at the FCC. Will anyone be disciplined or have the courage to step down? Doubtful.

steved95 on March 17, 2012 at 4:20 PM

Receivers that were designed and built AFTER Lightsquared first received their right to build a terrestrial network on those frequencies.

blink on March 17, 2012 at 3:55 PM

Is there a sentence in your post that I am missing?

timberline on March 17, 2012 at 4:51 PM

Even when they lose, they still win. $65M is not chump change — except to our Government.

unclesmrgol on March 17, 2012 at 6:54 PM

While Ed is right about Lightsquared not having a pray getting this bandwidth back, we should all be honest about who got screwed in this whole deal.

blink on March 17, 2012 at 3:59 PM

I was on your side until I saw the side-lobe charts and realized that the intensity of a loud locally transmitted omnidirectional signal on adjacent bands could overwhelm a GPS receiver, no matter how well it was filtered.

The band Lightsquared tried to use was a satellite band. With satcom communications, local transmitters are not omni-directional — they are very decidedly directional toward a satellite target. Furthermore, the satellite’s own transmitter is many decibels lower in intensity — equivalent to GPS satellite intensities.

That was the problem — repurposing satcom bands for terrestrial communications.

http://www.gps.gov/multimedia/presentations/2011/03/munich/

unclesmrgol on March 17, 2012 at 7:03 PM

Heartache.

KeninCT on March 17, 2012 at 10:58 AM

Del Dolemonte on March 17, 2012 at 1:57 PM

Feeling the love…..ahahahahahahahahaha

DevilsPrinciple on March 17, 2012 at 7:49 PM

What I find alarming is the number of people that are outright Happy that there will be LESS competition in wireless Data.

We DESPERATELY need MORE competition in that market segment, when companies can get away with Charging $30 a month for a paltry 3GB of transfer this tells me something is very very very wrong.

With LTE and other Advanced Data Services Mobile Broadband should be only slightly higher in price (10-15%) than Residential Services. People love to Complain about the “obscene” amount of money Exxon is making but no one complains about ATT?????

the_ancient on March 17, 2012 at 9:37 PM

the_ancient on March 17, 2012 at 9:37 PM

The answer is to end the outrageous prices bandwidth is sold at through auctions, but the government gets hooked on that revenue stream. Find some other way to allocate new bandwidth so consumers don’t get killed. The way it works now is just an indirect form of taxation.

slickwillie2001 on March 17, 2012 at 9:53 PM

People love to Complain about the “obscene” amount of money Exxon is making but no one complains about ATT?????

the_ancient on March 17, 2012 at 9:37 PM

No one here (trolls excluded) complains about Exxon’s profits, because most of us can do simple math.

Where’s your evidence that $20-$30 a month for 2-3GB of wireless 3G data is obscene? What is the proper price, while also expecting coverage across the entire continent? And what is your evidence that it is the “proper” price?

strictnein on March 17, 2012 at 11:20 PM

Good job staying on top of this, Ed.

Keep it up.

jaime on March 17, 2012 at 11:35 PM

blink on March 17, 2012 at 3:54 PM

100% FACTUALLY WRONG!

blink on March 17, 2012 at 3:55 PM

ALSO factually wrong: LightSquared NEVER had any such “right”!!

blink on March 17, 2012 at 3:59 PM

Ridiculous spin!!

(sorry you lost your shirt on a speculative stock deal)

landlines on March 18, 2012 at 12:31 AM