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LightSquared CEO Calls FCC 'Irresponsible'

LR Mobile News Analysis Dan Jones, Mobile Editor 2/16/2012

LightSquared 's CEO struck back at the Federal Communications Commission (FCC) 's decision this week to block the company's Long Term Evolution (LTE) network plan. (See FCC Moves to Block LightSquared .)

CEO Sanjiv Ahuja released a statement Thursday saying that leaving the GPS interference issue unresolved is "the height of bureaucratic irresponsibility," while stressing that the venture remains committed to finding a solution to the problem:

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.

Philip Falcone, head of the Harbinger Capital Partners LP fund that backs LightSquared, meanwhile, is reportedly seeking a spectrum swap so that the operator can try to push its plans forward. Bloomberg is quoting sources that the billionaire is seeking a swap with the defense department.

Why this matters
Despite a seemingly fatal blow to its plans from the FCC, it is becoming clear that LightSquared is not ready to give up on its plans just yet.

For more
Light Reading Mobile has followed LightSquared's regulatory roller coaster through its many ups and downs:

— Dan Jones, Site Editor, Light Reading Mobile

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joset01 12/5/2012 | 5:42:26 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

Always a good move to call out the only agency that holds any possibility (however remote) of saving your company's bacon.

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kaps 12/5/2012 | 5:42:26 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

This follows the brilliant strategy of accusing AT&T and Verizon for conspiring to get the gubmint to work against LightSquared. Whether it's true or not, by doing so you indirectly accuse Congress of being on the take. Again, not a recipe for success. But it does keep the LightSquared self-immolation streak alive.

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kaps 12/5/2012 | 5:42:26 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

This follows the brilliant strategy of accusing AT&T and Verizon for conspiring to get the gubmint to work against LightSquared. Whether it's true or not, by doing so you indirectly accuse Congress of being on the take. Again, not a recipe for success. But it does keep the LightSquared self-immolation streak alive.

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joset01 12/5/2012 | 5:42:25 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

Yep, this whole thing might be an economics/politics/technology 101 lesson in years to come.

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Flook 12/5/2012 | 5:42:24 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

I am not sure LightSquared is entirely to blame if, in fact, the FCC sent out the wrong signals, in effect stringing the company along--inadvertantly, of course. And there is this from the Washington Post: "...the company will soon have to cough up interest payments on $1.6 billion in secured loans and hundreds of millions in debt."

Still, given the compay's plan was to wholesale it services to operators that don't have the resources or do not want to take the risk of building out a national LTE network, I hope there is middle ground to work things out because, in the end, consumers will be the losers by this decision.

 

 

 

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kaps 12/5/2012 | 5:42:23 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

I don't know how much consumers are really losing out. We never, ever heard a compelling business plan from anyone involved... wholesale sounds great, but in a business where profit margins are tightening and the easy cash from voice/text is going away, a wholesale customer would have to:

1) Strike some sort of device deal to offer competitive handsets

2) Spend lots of dough on consumer marketing to explain the service

3) Figure out how to make money when it has to do the above, then figure out a payment/billing/support system AND pay LightSquared

4) and then compete against AT&T and Verizon, who could cut prices for a year or more and eat the loss in order to stave off anything truly competitive.

What wholesale brand could pull this off? I believe there are possible interesting plays out there like Wireless Republic but... hard to say anyone was harmed because this grab at spectrum didn't work out. 

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kaps 12/5/2012 | 5:42:23 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

I don't know how much consumers are really losing out. We never, ever heard a compelling business plan from anyone involved... wholesale sounds great, but in a business where profit margins are tightening and the easy cash from voice/text is going away, a wholesale customer would have to:

1) Strike some sort of device deal to offer competitive handsets

2) Spend lots of dough on consumer marketing to explain the service

3) Figure out how to make money when it has to do the above, then figure out a payment/billing/support system AND pay LightSquared

4) and then compete against AT&T and Verizon, who could cut prices for a year or more and eat the loss in order to stave off anything truly competitive.

What wholesale brand could pull this off? I believe there are possible interesting plays out there like Wireless Republic but... hard to say anyone was harmed because this grab at spectrum didn't work out. 

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3screenplanet 12/5/2012 | 5:42:19 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

Sorry Kaps, the harm to consumers is that the hosejob the FCC just pulled on LightSquared discourages future private investment.  Yeah, yeah.  You think that entrepreneurs will always take a shot.  And you're right.  But the shot they'll take isn't investing in a consumer-friendly business but focusing on which FCC member or Congressman to buy off (e.g. Tom Petri - head of the Aviation Subcommittee that also shafted LightSquared).  In that case, consumer good isn't just beside the point, it's non-existent. 

Whether LightSquared had any shot at success is irrelevant.  They invested billions in private capital and got hosed by the gubmint.  If only they were bankrolled on the taxpayer dime a la Solyndra.  Then LightSquared would've had a chance.

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krishanguru143 12/5/2012 | 5:42:15 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

How did the FCC string them along?  Did you actually read the CONDITIONAL waiver?  The word CONDITIONAL is a very clear sign that it is in no way the go ahead.  If you read the waiver, it laid the groundwork for what LightSquared was REQUIRED to accomplish to get approval to offer commercial services.

 

Here is part of the waiver:

"41. We agree on the need to address the potential interference concerns regarding GPS as

LightSquared moves forward with plans to deploy and commence commercial operations on its

network. 144 Further, we believe that establishing a working group that brings LightSquared and the GPS community together to address these interference issues expeditiously would serve the public interest.

 

We envision a working group in which cooperative and candid discussions can ensue, and where information, including proprietary information, can be shared among the participants with appropriate measures in place to protect the confidentiality of that information. Commission staff will work with NTIA, LightSquared, and the GPS community, including appropriate Federal agencies, to establish a working group to fully study the potential for overload interference to GPS devices and to identify any measures necessary to prevent harmful interference to GPS. As a condition of granting this waiver, the process described below addressing the interference concerns regarding GPS must be completed to the Commission’s satisfaction before LightSquared commences offering commercial service pursuant to this waiver on its L-band MSS frequencies."

 

The key part, the very last sentence.  LightSquared NEVER had approval, the FCC NEVER changed their mind.  It was LightSquared who failed to address the interference issues.  Is it the fault of the FCC that LightSquared was making these huge plans, launching a satellite, etc. in the anticipation of approval?  No, it was the fault of LightSquared.  The sole discretion was at the hands of the commission and clearly to get their approval, there could be no interference at all.  All LightSquared kept talking about was this waiver and not once did they even call it a conditional waiver.  This waiver was called a conditional waiver in it as well as by the FCC.  If LightSquared wants someone to blame, they need to look no further than themselves.

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Flook 12/5/2012 | 5:42:12 PM

re: LightSquared CEO Calls FCC 'Irresponsible'

In which case my question is how could LightSquared have been so dumb--that includes the hedge fund that provided the company $3 billion? And was Sprint that dumb too? Some of the stuff I've been reading, e.g. Forbes, indicates that old fashioned DC politics had a lot to do with this.

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