updated 01:05 pm EST, Thu February 16, 2012
LightSquared considering DOD spectrum swap?
The LightSquared saga continues, with the latest having the company founder and billionaire Phil Falcone attempting to swap spectrum with the US Department of Defense, the Wall Street Journal claimed. The purported move is a last-ditch effort to make the network work, after the National Telecommunications and Information Administration said there is no way to make the network work without interfering with GPS signals. If the DOD spectrum swap doesn't go through, Falcone may look into selling the existing spectrum.
The Defense Department airwaves are used for aircraft testing and are on a frequency farther away from GPS signals, making potentially dangerous interference less likely. It's not known if the Defense Department is even interested in such a trade, and it would likely require the cash-strapped LightSquared to raise more money, according to the tipsters, who added that this is just one of the options available.
The choice to sell the spectrum would prove to be a money-losing one, however, as the spectrum is worth $1.5 billion according to Falcone himself and just $500 million if asking Bloomberg Research analyst Brian Miller. The amount is the same that the spectrum's original owner, SkyTerra Communications, placed on it as a book value. Back in 2004, the spectrum could only be used by satellites, but the FCC ruled in November of that year that it could be augmented by cell towers. When Falcone bought the licenses from SkyTerra in March of 2010, analysts said they were worth $9 billion.
Falcone insists the FCC's decision to deny the start of the service is politically motivated and not a matter of science or technology limitations.
"There are solutions to this problem that can and will address the needs of the GPS community," he wrote in an e-mail.
LightSquared is a $3 billion firm that plans on bringing a high-speed broadband network to 260 million Americans but is stalled because the FCC maintains it interferes with GPS navigation in vehicles. The company has routinely denied it's at fault and has even called for the FCC to demand GPS changes to make sure LightSquared's network can go ahead. It believes tests that found interference were rigged by people inside the agency who had a vested interest in protecting the traditional GPS business.