Same Issues, Fierce Debate As Lightsquared Bankruptcy Ends
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WASHINGTON VIEW fter three years in Chapter 11, LightSquared, and its CEO Phil Falcone the company whose planned are to maintain a minority role. wireless broadband system It is now unclear, however, if the plan threatened to overload GPS will stand. Areceivers across the United States is pre- Bloomberg reported on May 12 that paring to emerge from bankruptcy. Ergen had filed a challenge to the plan Although the passage of time has in court, alleging the “bankruptcy plan done little to change the issues between gives hedge funds that invested in the Virginia-based LightSquared and the broadband company a leg up while GPS community, although the context blocking telecommunications firms from in which some of those issues will be competing with it.” decided has decidedly shifted. The Sen- Even if the exit plan withstands anoth- er challenge, the court’s approval was always just the first of two steps involved in emerging from bankruptcy. Light- Same Issues, Fierce Debate Squared must also convince the FCC to transfer its spectrum licenses to the as LightSquared Bankruptcy Ends; reconstituted company, called, appropri- ately enough, New LightSquared. The transfer request, which will be GPS Spectrum Battle Reappears published for public comment, was sub- mitted to the FCC on April 6. As of mid- DEE ANN DIVIS ate is now under Republican control, May, however, it had not appeared in the federal agencies are counting pennies, Federal Register. the Federal Communications Commis- sion (FCC) has a new chairman, the law Wanna Trade? governing the FCC is being rewritten, In the meantime LightSquared is waiting and the value of auctioned spectrum has on a different FCC decision — this one skyrocketed. on its proposal to modify its spectrum Perhaps most importantly, the heat- licenses. ed fight between the company and GPS The company had originally sought organizations in 2011 instilled a far deep- to repurpose frequencies allocated for er and wider understanding of satellite relatively low-powered satellite signals navigation. Decision makers who were to instead support a network of some unaware of the ubiquitous use of GPS 40,000 broadband ground stations. That — and, more broadly, GNSS — signals broadband capacity was to be sold whole- are now far more familiar with its deep sale, potentially fueling an entirely new integration into the nation’s economy level of competition — an approach that and critical infrastructure. This aware- appeared at the time to inspire strong ness is reinforced daily by fresh worries FCC support. over cybersecurity, signal jamming and LightSquared’s plan, which came satellite vulnerabilities. fully to light late in 2010, also dovetailed neatly with a pledge made by the White Dee Ann Divis has covered Court: Thumbs Up House. The Obama Administration, GNSS and the aerospace On March 26 Bankruptcy Judge Shelley heading into a mid-term election with a industry since the early C. Chapman, after considering a years- damaged economy, had promised to find 1990s, writing for Jane’s long string of proposals, approved an exit 500 megahertz of spectrum for the bal- International Defense plan for the firm that will largely put con- looning, and hopefully job-rich, broad- Review, the Los Angeles Times, AeroSpace Daily and trol of LightSquared in the hands of its band sector. other publications. She was the science and technology investors and pay $1.5 billion to major The project ran aground, however, editor at United Press International for five years, leaving for a year to attend the Massachusetts Institute creditor and broadband rival Charlie after tests confirmed that the Light- of Technology as a Knight Science Journalism Fellow. Ergen, president, CEO and of chairman Squared signals would overload the vast of the board of Dish Network. The Har- majority of GPS receivers. The FCC put binger hedge fund, the primary backer of the project on indefinite hold in Febru- 24 InsideGNSS MAY/JUNE 2015 www.insidegnss.com WASHINGTON VIEW LightSquared Lawsuits Linger ary 2012 and the firm filed for protection During the same period that LightSquared was working to emerge from bankruptcy, from its creditors three months later. it and its primary backer, Harbinger Capital Partners, between them sued the fed- LightSquared proposed a spectrum eral government, a number of GPS firms and associations as well as Dish Network swap in September 2012 to ameliorate chairman Charlie Ergen. some of the interference. The firm cur- Though the case against Ergen and most of the allegations against the business rently has licenses for two 10-megahertz community were dismissed, the lawsuit against the government is still active — well, bands of spectrum running from 1526 to if you use the word “active” loosely. The only action since the lawsuit was initiated in 1536 MHz and 1545.2 to 1555.2 MHz for July 2014 has been seven requests for extensions. More activity has taken place at the U.S. District Court. The remaining counts downlink and two 10-megahertz bands against the GPS business community are for negligent misrepresentation and con- at 1627.5 to 1637.5 MHz and 1646.7 to structive fraud and stem from LightSquared’s accusation that the GPS companies 1656.7 MHz for uplink. knew about, but failed to disclose in pre-2010 negotiations with LightSquared, their The company has offered to forego knowledge of and concerns about the “out-of-band reception” of GPS receivers that the use of the most problematic 1545.2 gathered GNSS spread spectrum signals in the MSS band as well as the GNSS L1 band. to 1555.2 MHz band, which is the one The remaining counts leave the parties — Deere & Company, Garmin Inter- closest to the GPS frequencies. It would national, Inc., Trimble Navigation Limited, and the U.S. GPS Industry Council also refrain — for an unspecified amount (USGIC) — open to discovery, Reuters noted in its reporting, which means that of time — from using the other downlink LightSquared could “probe the GPS companies’ books and records.” Any ability to band to allow GPS users to transition. In obtain business or technical data is potentially significant. LightSquared, for exam- exchange LightSquared is asking to be ple, has asserted that the ongoing Adjacent-Band Compatibility Assessment should only test top-selling devices. allowed to share a five-megahertz band Discovery, however, is a blade that cuts both ways, pointed out wireless spectrum (1675 to 1680 MHz) used by the National expert Tim Farrar. If the case continues, LightSquared could find its secrets revealed Oceanic and Atmospheric Administra- as well. tion. The firm happens to have rights to use an adjacent five megahertz band, so drew 70 qualified bidders, and raised Squared can use the less troublesome of it would have 10-megahertz block of fre- $41.3 billion in net bids — blowing past the two original downlink bands, it will quencies to balance out its set. the preset reserve of $10 billion and more add between $881 million and $1.22 bil- than doubling the $20 billion experts had lion to the company’s valuation. Money Hits the Airwaves expected. The recent auction results now sug- The FCC has yet to decide but the prac- Even if the FCC elected to forgo an gest much higher numbers and those ticalities of making a straight swap are auction and sell the spectrum directly to suggested by Moelis and go a long way murky given the current budget climate LightSquared, the price would have to be toward explaining the abiding interest and a sudden, recent surge in spectrum far higher than $230 million to prevent in LightSquared’s spectrum, interference values. The sequestration limits that other hopeful owners with broadband issues and all. upended federal spending in 2013 had aspirations from raising a stink. The numbers also put more pressure not been implemented when the com- “The reality is that spectrum is going on the GPS community, which is not pany first proposed the swap in 2012. to be auctioned,” said Tim Farrar of Tele- convinced that the latest LightSquared Now, any such deal is likely to face stiffer com, Media and Finance Associates, Inc., plan will work compatibly on a techni- headwinds. an expert in satellite communications cal basis with GNSS receivers. The challenge was underscored in the and wireless spectrum. president’s fiscal year 2016 budget, which “When you look at what spectrum has Cautious Comments is currently under consideration in Con- sold for this year, it’s hard to imagine that The organizations that posted feedback gress. Even though LightSquared’s pro- it wouldn’t be seen as a giveaway, if they during the FCC comment period on posal has been on the table for several were to give that spectrum or sell that LightSquared’s swap proposal gener- years, the White House factored auc- spectrum to LightSquared for $200 mil- ally expressed their support for finding tioning the band into its budget request, lion,” said Farrar. “It ought to be worth more bandwidth for broadband. They plugging $230 million in anticipated at least $1 billion.” were also generally deeply cautious about revenue into the FCC’s allocation. The good news for LightSquared is the proposal, particularly with regard to And that $230 million estimate is very that high spectrum prices could give the potential problems from having a large likely to be low. company some fiscal elbowroom. A valu- number of handsets operating in the two Auction 97 for “advanced wireless ation prepared by the investment bank uplink bands. services”, a spectrum auction that ended Moelis in 2014, completed before Auction The Department of Transportation this January, underscored just how valu- 97, put the value of LightSquared’s two (DoT), which represents non-military able every megahertz has become.