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LightSquared’s 4G Plans Facing Dead Air

Broadband provider LightSquared’s ambitious plan to build a hybrid ground- and satellite-based 4G-LTE network that could cut wireless bills in half has triggered strong interference from the airline industry — and from within Washington’s corridors of power.

The “interference” in this case is actual radio frequency disruption to GPS receivers and integrated devices — particularly the flight safety technology used by commercial airlines like Delta (NYSE:DAL), United Continental (NYSE:UAL), AMR‘s (NYSE:AMR) American and US Airways (NYSE:LCC). Now the wholesale broadband wireless network LightSquared had planned to launch this year is at grave risk of not launching at all.

Here’s why: Since the FCC gave the privately held LightSquared conditional approval to launch the service last January, federal officials and major GPS stakeholders like commercial airlines have howled in protest. The concern: that LightSquared’s 40,000 high-power, earth-based transmitters will interfere with the GPS signals that airlines and others rely on for navigation and safety.

LightSquared has had a very bad week. Data gleaned from interference tests conducted Nov. 30 found serious interference with many GPS devices. The government’s National Executive Committee on Space-Based Positioning, Navigation and Timing (PNT) said that while tests show cell phones would largely be unaffected by the network, it “caused harmful interference to the majority of other tested general-purpose GPS receivers.” It doesn’t help LightSquared’s case that U.S. transportation and defense department officials chair the PNT committee.

Separate analysis by the FAA also found “interference with a flight safety system designed to warn pilots of approaching terrain.” Between 2014 and 2023, interference to the GPS-enabled Enhanced Ground Proximity Warning System from the LightSquared network could result in 794 passenger deaths and more than $72 billion in additional costs to taxpayers, the FAA’s navigation division found.

To make matters worse, now the U.S. Congress has put LightSquared’s plans on hold. Tucked into an obscure section of the $662 billion 2012 Defense Authorization Act passed by the House and Senate last week is a rule barring the FCC from approving LightSquared’s network for commercial service unless and until the DOD’s concerns about GPS interference are resolved.

Needless to say, LightSquared is far from pleased, and company officials came out swinging after the test results were released. “The statement that testing shows that most GPS devices would be disrupted by LightSquared’s operation is patently false,” LightSquared executive Martin Harriman said in a statement last week. “There is no way that such a conclusion could be drawn without deliberately ignoring a critical element in LightSquared’s mitigation proposal to manage the power from its network that GPS devices will be able to receive.”

The Nov. 30 test results are critical to LightSquared’s future because interference concerns forced it to forgo the 10 MHz of spectrum closest to the GPS band earlier this year. The company said using the lower part of its bandwidth would eliminate any interference with other devices. Unfortunately, the government’s test data disputes that view.

LightSquared disagrees. “While we are eager to continue to work with the FAA on addressing the one remaining issue regarding terrain avoidance systems, we profoundly disagree with the conclusions drawn with respect to general navigation devices,” LightSquared CEO Sanjiv Ahuja said in a statement. “The interference issues are not caused by LightSquared’s spectrum, but by GPS devices looking into spectrum that is licensed to LightSquared.”

LightSquared revealed Friday that it has retained another big Washington lobbyist to act on its behalf — Patton Boggs, the well-connected K Street power broker. The company has retained a total of 15 lobbyists to plead its case.

The company says it’s sitting on $14 billion in private investment that it will pour into job-creating infrastructure development once the FCC signs off on the network. Billionaire Phil Falcone sunk $3 billion into the service through his investment firm Harbinger Capital Partners, which launched LightSquared.

The company also has a major contract with Sprint Nextel (NYSE:S) to build and operate the network; and deals with Best Buy (NYSE:BBY), Airspan Networks (PINK:AIRO), Quantum Networks, EarthComm Solutions and others — all of which could lose if the network fails to launch.

Bottom Line: LightSquared investors and partners should brace for the biggest dead-air spectacle since Dan Rather walked off the set of CBS Evening News 24 years ago. The government won’t allow a wireless network that has the potential to crash planes and kill hundreds to enter service — even if it can wholesale wireless service at a mere $7 a gigabyte.

Airlines, aircraft manufacturers and avionics companies can’t — and won’t — abandon the integrated technologies they’ve been using for more than 15 years. And the FAA is not about to scrap its fuel-efficient, GPS-based NextGen system that is needed to handle increasing air traffic — and that currently is being tested by airlines like Southwest (NYSE:LUV) and JetBlue (NASDAQ:JBLU).

LightSquared’s one shot — and it’s a long shot at that — would be a spectrum swap of the L-band frequencies it acquired at auction years ago with an equal amount of spectrum in non-disruptive frequencies. LightSquared’s spectrum still is valuable — and usable — just not in the way it wants to use it.

As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2011/12/lightsquared-4g-network-plans-fcc-gps-flight-safety/.

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