LightSquared inks deal with Best Buy

Audacious wannabe network wholesaler LightSquared has inked a deal with Best Buy to provide connectivity for the retailer's MVNO offering, with testing to start early next year.

Best Buy joins Leap Wireless and Open Range in signing up to use LightSquared's yet-to-be-built LTE network. That network relies on radio spectrum previously reserved for satellite use, making it cheap, but the addition of the big brand retailer will be important, as LightSquared is still struggling to raise the $7bn it needs to build the network.

LightSquared has an obligation to provide service to 100 million US citizens by the end of next year, but is facing difficulties proving that its L-Band operations won't interfere with GPS systems. Fears of GPS failure have forced LightSquared to set up a working party with GPS kit manufacturers to address the issue, much to the delight of competing networks who paid full price for their spectrum.

The deals with Open Range and Leap Wireless work both ways, so a Leap customer roaming to LightSquared's network could also roam into Open Range, which will help LightSquared achieve that 100-million coverage. It has been suggested that a deal with MetroPCS would go a long way to achieving that coverage, and some expected a deal to be announced at the CTIA keynote today, but LightSquared's CEO Sanjiv Ahuja instead revealed the Best Buy deal.

That won't help achieve coverage – Best Buy is strictly a virtual operator – but it will give confidence to investors, who have been concerned that LightSquared lacked big name customers, not to mention that their money was supposed to be in a hedge fund rather than invested satellite communications.

LightSquared's business model is based on reselling its network capacity, and the company recently got the FCC to agree that end users won't have to have satellite-capable handsets, despite the spectrum they use having been allocated for satellite use.

Without that agreement it is very unlikely that Best Buy, or the others, would be interested in a deal. Even now those deals are subject to LightSquared achieving various milestones. The upstart operator still has a lot to prove, but at least it now has someone to prove it to. ®