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Sprint grants LightSquared last-minute stay of execution

30 days to get FCC approval or wireless broadband dream is over

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Sprint Nextel has given wireless broadband biz LightSquared until the end of January to get FCC approval for its network, putting a hard deadline on the viability of its revolutionary plan.

LightSquared needs the regulator's thumbs-up to build its pan-US LTE network in bands formerly reserved for satellite comms, but it also needs Sprint to provide the cell sites and backhaul to make the dream a reality. So the pressure is on to get that approval, and justify the billions of dollars the company has already spent.

That money came from investors in Harbinger Capital Partners, which has been straying away from its "hedge" philosophy by pouring money into a plan to build a national 4G network and sell access wholesale. The business plan is based on LightSquared handling 40 million connections, a number that can only be achieved by adding connectivity to cars, fridges and record players, which in turn requires very cheap radios that rely on standard protocols and frequencies.

LightSquared obtained its frequencies by buying up satellite-phone companies, and lobbying the FCC to have the rules changed so that an effectively-ground-based network could be built in those bands. But the bands are very close to the US Global Positioning System (GPS), so the FCC required that LightSquared prove it could avoid interfering with those systems.

LightSquared reckons it has done that, by (temporarily) abandoning the band closest to GPS, and demonstrating that cheap filters can mitigate against the interference for even the most-sensitive of GPS systems. LightSquared contends that it can't be held responsible if GPS kit is picking up signals from nearby frequencies: that's up to the people making the GPS kit.

The manufacturers reckon they made devices that work, and want those devices to continue working, so they want the neighbouring bands kept clear of high-power signals indefinitely.

We're not talking about basic GPS stuff here - as long as LightSquared stays out of its upper band then GPS in phones or cars won't be affected, but high-precision stuff might be if it gets too close to a base station, and someone is going to have to spend millions of dollars fitting new filters. There's also the question of what happens if, and when, LightSquared does move into the upper band.

The debate started out as technical, then became political, and these days it's largely ideological. Everyone except the FCC has made up their mind which side of the camp they're on, and everyone is watching to see what happens next.

LightSquared is running out of cash: it has one operating bird (SkyTerra 1, which was launched back in November 2010) but will have a hard time raising any more money without that FCC approval. Building a network across America should cost $25bn or so, but LightSquared's deal with Sprint gives it access to such a network for only $9bn paid over 11 years, so is an essential part of the plan which for a while looked like it might actually happen.

The deal with Sprint was predicated on the FCC granting approval by the end of 2011, but Sprint has agreed to give LightSquared a 30-day extension while the FCC continues to faff. Everything comes down to that FCC decision, but the patience of partners, and investors, is fast running out. ®

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