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LightSquared screams 'conspiracy' over leaky test results

Satellite net biz comes out swinging

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LightSquared's CEO is demanding an investigation into how draft test results on its technology were leaked from a government-assigned testing house to Bloomberg.

The testing was to establish if satellite broadband biz LightSquared's mitigation techniques will let it coexist amicably with equipment which relies on signals from the Global Positioning System, and the leaked results are uniformly pessimistic.

According to the data seen by Bloomberg three quarters of the GPS kit tested got knocked sideways when 100 meters from a LightSquared base station. The company maintains those results were based on hugely-inflated transmission power, and that the leak was deliberately "intended to damage LightSquared's reputation, spread false information in the marketplace, and prejudice public opinion against LightSquared".

According to the open letter from CEO Sanjiv Ahuja the test results leaked to Bloomberg were based on transmissions at 32 times the power LightSquared intends to deploy, and used theoretical models of signal degradation which LightSquared contends aren't accurate enough to be useful.

It's certainly true that the final results of the study haven't been published yet, and that preliminary results can easily be misinterpreted, but with so much resting on the results of the study one doesn't need a conspiracy to explain the media interest.

LightSquared's mad-as-a-box-of-frogs plan is to use radio frequencies formerly reserved for satellite communications to host a mobile-phone network. To do that it needs $7bn dollars, 40,000 base stations and 40 million paying connections, and is well on the way to achieving the first two of those with money from the Harbinger hedge fund and a network-sharing deal with Sprint.

But the frequencies LightSquared wants to use are very close to those used by the GPS system, and GPS kit often casts an overly-wide net in trying to pick up the faint positioning signals, so could get swamped by LightSquared's network.

LightSquared has already agreed to ratchet down the power, and use only the more-distant of the bands it owns (for a few years at least), to reduce interference to a manageable level. The company has also demonstrated filters which could be fitted to GPS kit to make it better at avoiding the swamping signal next door.

Despite all that, the FCC still hasn't agreed to let the network deploy, and agreed with LightSquared for another round of testing to be carried out by the National Executive Committee for Space-Based Positioning Navigation and Timing, know as ExCom. It is those tests which have been leaked, so upsetting LightSquared's CEO.

Ahuja is demanding an investigation into the apparent leaks, which threaten the company at a time when it's still seeking additional investment. He also takes the opportunity to point out that some of the individuals carrying out the testing are of the opinion that the whole process is a waste of time, and that no amount of testing will ever clear LightSquared for deployment.

LightSquared does have money, but still not enough to build the network it wants. The company was set up by investment fund Harbinger, which owns the vast majority in a most un-hedge-fund-like manner. Hhedge funds are supposed to invest in pairs of things, counterbalanced so if one pays off the other looses, making a margin with minimal risk. Pouring money into a fruitcake plan to built a national telephone network does not, by any measure, come in as "minimal risk".

Which is probably why the man behind Harbinger's, and its chief source of credibility, Philip Falcone is restructuring the Harbinger entity, and has been telling interviewers "Going forward, I’ve made a conscious decision to evolve away from a hedge-fund strategy. I am focusing on building a public company and want to do more long-term investing.” Falcone is also trying to fend off accusations that he violated securities law in giving priority access to specific investors back in 2007, though no charges have yet been brought and the accusations are strenuously denied.

But against such a background it's clear that leaked test data can seriously damage LightSquared, and that such damage would suit the manufacturers of GPS kit very well. They are frightened the FCC might let LightSquared go ahead, and make them responsible for avoiding the new network's transmissions - which will make GPS kit more expensive, but also open the way for customers to demand restitution for the cost of replacing or upgrading devices they bought in good faith.

LightSquared's position is that the GPS kit should never have been picking up the neighbouring signals, and that better filters will make the problems disappear. The industry argues that filters don't work, and therefore the bands around GPS should be permanently left fallow or restricted to satellite use, so the highly-technical question of if those filters and mitigation strategies work has become far from academic. ®

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