The Federal Communications Commission (FCC) all but shut the door on LightSquared’s quest for regulatory approval to build and operate a wholesale-based terrestrial national wireless network using, via conditional waiver, mobile satellite service frequencies in the L band (1.5 GHz-1.6 GHz) (for more information, click here).
The outcome was anticlimactic and profoundly ironic on several levels, clearing the way FCC action on a Dish wireless proposal nearly identical to LightSquared’s, with the exception of the GPS-interference problem by virtue of a S-band (2 GHz) play and likely giving rise to a commission re-examination of a receiver standard issue championed by LightSquared.
The FCC’s decision to vacate the conditional waiver and suspend indefinitely LightSquared’s Ancillary Terrestrial Component Authority, prompted by a National Telecommunications and Information Administration (NTIA) letter concluding there’s no practical way to mitigate potential interference to military and other GPS assets, should benefit Dish, Clearwire and, at least on the surface, Verizon and AT&T.
The FCC’s LightSquared order was designed to provide spectrum relief to weaker wireless carriers (Sprint Nextel, T-Mobile, MetroPCS, Leap, U.S. Cellular) and thus improve their ability to compete against No. 1 Verizon and No. 2 AT&T. The latter carriers were required to have FCC pre-approval to lease spectrum from LightSquared.
If spectrum legislation (a component of the payroll tax-cut extension package agreed to by Congressional leaders yesterday) limits the FCC’s authority to craft eligibility rules governing future auctions of broadcast spectrum and in view of prospective cable-spectrum gains by Verizon, the commission might feel even more compelled to insist on Verizon and AT&T lease restrictions as a condition of Dish licensing/waiver approval.
Given the Obama administration’s test findings of harmful interference and the lack of a quick fix, LightSquared has few viable options to recover, even though the Harbinger Capital-backed wireless startup probably will continue trying. Throughout the LightSquared saga, hedge fund manager Phil Falcone has displayed a pugilistic prowess that’s apt to continue expressing itself in efforts to salvage the multi-billion-dollar wireless venture (See Editor’s Note at the bottom of this story).
The FCC’s decision potentially represents an existential blow to LightSquared, though there’s still a possibility the startup could rise from the ashes later if the agency were to rebalance receiver standards in such a way as to shift the interference burden to GPS users. But that appears to be a fanciful longshot.
Irrespective of LightSquared’s future as a going concern, Republicans are not likely to let die their concerns about the FCC’s handling of LightSquared and will continue attacks on FCC Chairman Julius Genachowski.
In that regard, initial indications are Sen. Chuck Grassley (R-Iowa) does not have immediate plans to lift his hold on Obama nominees to the FCC — Jessica Rosenworcel (D) and Ajit Pai (R) — over his demand for documents associated with the agency’s licensing/waiver grant to LightSquared.
While the process of Senate confirmation of both appointees is bound to be lengthier than usual, there still could be breakthrough down the road.
— Jeffrey Silva, senior policy director/Telecommunications, Media and Technology at Medley Global Advisors LLC, 202/434-0980
Editor’s Note: The following is a statement from FCC spokesperson Tammy Sun regarding the letter from NTIA addressing harmful-interference testing conclusions pertaining to LightSquared and global positioning systems:??
“To drive economic growth, job creation, and to promote competition, the FCC has been focused on freeing up spectrum for mobile broadband. This includes our efforts to remove regulatory barriers that preclude the use of spectrum for mobile services. To advance these goals, the Commission runs open processes – the success of which relies on the active, timely, and full participation of all stakeholders. ?
“LightSquared’s proposal to provide ground-based mobile service offered the potential to unleash new spectrum for mobile broadband and enhance competition. The Commission clearly stated from the outset that harmful interference to GPS would not be permitted. This is why the Conditional Waiver Order issued by the Commission’s International Bureau prohibited LightSquared from beginning commercial operations unless harmful interference issues were resolved.? ?
“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. ?
“This proceeding has revealed challenges to maximizing the opportunities of mobile broadband for our economy. In particular, it has revealed challenges to removing regulatory barriers on spectrum that restrict use of that spectrum for mobile broadband. This includes receivers that pick up signals from spectrum uses in neighboring bands. There are very substantial costs to our economy and to consumers of preventing the use of this and other spectrum for mobile broadband. Congress, the FCC, other federal agencies, and private sector stakeholders must work together in a concerted effort to reduce regulatory barriers and free up spectrum for mobile broadband. Part of this effort should address receiver performance to help ensure the most efficient use of all spectrum to drive our economy and best serve American consumers.”
And here is LightSquared’s response:
“For more than a decade, LightSquared and its predecessor companies have worked to bring a private sector solution to a public problem – expanding wireless broadband connectivity to every corner of this country – and in doing so, encouraging economic development, increasing competition and lowering prices for American consumers.
“Recognizing that America was not keeping pace with the rest of the world with respect to wireless innovation, the United States government encouraged, and in our case, mandated investment from the private sector to help solve this problem. They did this to help ensure that we no longer lose ground to global competitors and fall behind in a technology crucial for creating jobs and growing economies in the 21st century.
“Typically, when America has faced a challenge, the private and public sectors join together to help solve these problems to better serve this country. Unfortunately, with its action yesterday, the FCC has harmed not only LightSquared, but also the American public by making it impossible to build out a system that would meet public policy goals of successive administrations.
“Today, we ask the FCC to restore American values of rule of law and regulatory certainty to help America maintain its place as a global leader in both public safety and economic development.
“After years of receiving regulatory approvals, the FCC approved LightSquared to build its ground network in 2005. In 2010, the FCC amended that plan, requiring LightSquared to build a national broadband network that reached 260 million Americans. At the government’s mandate, LightSquared began investing billions of dollars in America’s infrastructure – without asking for any money from the American taxpayer. Yesterday, after LightSquared had already spent nearly $4 billion, the FCC changed its mind. There can be no more devastating blow to private industry and confidence in the consistency of the FCC’s decision-making process.
“It is not surprising that, as with all innovative new technologies, scientific concerns became an issue. In this case, the government decided to choose winners and losers. Politicians, rather than engineers and scientists, dictated the solution to the problem from Washington.
“To leave this problem unresolved is the height of bureaucratic irresponsibility and undermines the very principles that once made America the best place in the world to do business. 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. The American people send their representatives to Washington to solve tough problems and make our country better – not to undermine and pull the rug from under private enterprise.”