Regulatory Slowdown Could Mean Trouble for LightSquared Investment
NTIA’s voicing spectrum interference concerns on LightSquared business plans in a letter to the FCC Wednesday (CD Jan 13 p3) may hurt the company’s ability to begin service relatively quickly as a 4G provider, said satellite industry executives. They said it’s still unclear how the FCC will handle LightSquared’s waiver request. A delayed approval could create major development worries for LightSquared, the executives said. The NTIA letter amounts to a strong brake on what has been a relatively quick regulatory process for LightSquared, they said. LightSquared is seeking FCC approval of its plan that could allow terrestrial-only service in spectrum currently allocated for mobile satellite services use.
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The FCC is “reviewing LightSquared’s waiver request and, as we would with any request, we would ensure that any approvals would not result in harmful interference to current licensed users,” said Chief Julius Knapp of the Office of Engineering and Technology. “We look forward to working with all interested parties and we remain committed to moving forward with an open and transparent process that will consider all concerns raised publicly."
NTIA’s objections complicate LightSquared’s efforts to find partners, said Tim Farrar, president of TMF Associates. LightSquared will likely need to spend about $1 billion this year on the rollout of its network to meet the FCC’s current milestone requirements, he said. The company is running now on the about $2 billion it has already raised, but will need to secure one or more major partners soon, he said.
The FCC requires the LightSquared network to serve 100 million people by the end of 2012, something that’s in real jeopardy if the commission decides long-term study is needed before the waiver is granted, Farrar said. The FCC could also delay the milestones, particularly since the rollout is being delayed by regulatory concerns, but that may not allay investor concerns, he said. The NTIA letter “just adds to the challenge of convincing partners that this is a low risk option,” he said. Farrar said he thinks its unlikely the FCC can grant the waiver in the face of NTIA’s concerns without further study of the spectrum interference issue beforehand.
Many satellite executives we interviewed said they're still uncertain as how the FCC will handle LightSquared’s waiver request. On one hand, NTIA explains that LightSquared’s spectrum use could have serious ramifications on the public safety spectrum needs, a difficult concern to overcome, said executives. NTIA also presents a pathway allowing the FCC to move forward if it decides to do so, pushing for a process that would ensure interference issues are resolved, others said. NTIA lists the Defense Department, the Department of Transportation and the Department of Homeland Security as agencies that wish the FCC would delay their decision pending more study on the effects of LightSquared’s service. Notably, NTIA didn’t go so far as to request a rulemaking notice on the matter. The Defense Department did in its letter of spectrum concerns sent to NTIA Administrator Larry Strickling on Dec. 28.
Some opposed to the waiver voiced dissatisfaction with the NTIA’s approach, saying they wished it had followed the DOD’s lead in asking for a rulemaking. To some, the NTIA letter leaves open the possibility of LightSquared, in conjunction with the FCC and NTIA, taking up the testing on its own. LightSquared CEO Sanjiv Ahuja sent a letter last week to Strickling that outlined the company’s willingness to undergo six months of testing, including $20 million to fund the group. That letter is footnoted in NTIA’s letter to the commission. The possibility of allowing LightSquared to undertake the testing is the equivalent of “putting the regulatory fox in charge of law and order in the chicken coop,” said a satellite industry executive.