LightSquared Battle Likely a Sign of Many Spectrum Fights Ahead

LightSquared has some powerful opponents. GPS interests, including the agriculture lobby with its many supporters on Capitol Hill, continue to raise concerns. Surveying companies are warning that even allowing the company to use just 10 MHz of its spectrum as proposed in the company’s latest plan will drive them out of business (CD Aug 16 p5). The Department of Defense and Federal Aviation Administration “are really pissed off about LightSquared, and one shouldn’t underestimate their clout,” said a LightSquared supporter. Even though LightSquared is proposing to use only a 10 MHz portion of its spectrum initially, few opponents are backing off in their criticism.

Virtually all of the bands being considered by the NTIA and FCC for reallocation for broadband use face difficult challenges. The 1755-1780 MHz band, a top target of carriers, is loaded with Department of Defense and other government systems, some of which already had to move to make way for the AWS-1 band. The 120 MHz of broadcast TV spectrum targeted by the FCC is considered beach front spectrum, but it is unclear how many broadcasters will be willing to sell off some of their spectrum, even if the FCC gets legal authority from Congress to hold voluntary incentive auctions. The Commerce Spectrum Management Advisory Committee (CSMAC) was asked by NTIA to make the agency’s ten year plan and timetable to find 500 MHz of spectrum a top priority, but faces a tough task, industry officials acknowledge.

"As spectrum gets more crowded these boundary issues will continue to come up more frequently,” said Michael Calabrese with the New America Foundation, who also serves on the CSMAC. “It demonstrates that the commission needs to make the rights of both incumbents and entrants much more clear both on the transmit side and on the receiver side. Licensees’ rights need to be defined much more clearly than they have been in the past, both in terms of both transmission and reception, or you just invite these kinds of obstacles to more efficient use of the airwaves."

"The FCC is caught between a rock and a hard place in every sense of the expression,” said Jeff Silva, analyst at Medley Global Advisors. “The LightSquared wholesale business model seems to advance key policy objectives insofar as expanding spectrum supply, bolstering competition in the wireless space and extending the reach of mobile broadband to rural areas. However, such prospective benefits will not be realized so long as key government and private-sector stakeholders believe safety-of-life, defense, commercial and other vital interests are compromised by potential GPS interference.” LightSquared puts the FCC in a tough spot, Silva said. The agency “seems duty-bound to keep LightSquared grounded until interference issues are satisfactorily resolved. It is a time-consuming dilemma that defies easy answers and one that probably makes LightSquared investors nervous."

Quick FCC action on LightSquared seems unlikely, said Sanford Bernstein analyst Craig Moffett. “There’s no question but that [the FCC] would love to see LightSquared come to market,” Moffett said. “But it’s just too politically risky to try to push this through over the objections of the FAA and the DOD. At this point, you almost have to take a breather and order more tests, or else risk the ire of Congress on yet another issue."

"This case has exactly everything that makes it hard to bring more spectrum online for broadband,” said Public Knowledge Legal Director Harold Feld. The spectrum is occupied by powerful incumbents, involves government users of spectrum who are resisting any change in how the spectrum is used and even raises the issue of receiver standards, he said. “The commission really wants LightSquared to work for all of the reasons one would expect,” especially the pro-competitive effects, he said, but will also feel it has to protect GPS. “At the end of the day it doesn’t matter who is right or wrong,” he said. “It’s not like the commission wants to see cars drive off cliffs."

TMF Associates President Tim Farrar said the implications of the FCC’s Aug. 9 press conference on LightSquared were highly negative for the future of LightSquared as a company. “What the hell can [the FCC] do other than order more tests given the deluge of requests from all these government departments and everyone else?” Farrar asked. “How can LightSquared move forward? ... It looks to me now even if the FCC wants to go ahead, things get pushed now until after the election.” Delay isn’t good for LightSquared, he said. “At that point will LightSquared still be around at all?” Farrar asked. “I can’t see how they raise money and how they move forward."

Farrar agreed that almost every frequency band being looked at for broadband will prove difficult. He suggested the FCC may find it easiest to convert the spectrum formerly held by DBSD and TerreStar, recently purchased by Dish Network, under Chairman Charlie Ergen. “I would say the only easy win here is to give Charlie Ergen whatever he wants, give him a waiver and let him proceed in the 2 GHz band, if he’s saying we're going to do what LightSquared was going to do,” Farrar said. “The only easy win for Genachowski is to say, ‘Go ahead then, we'll let you have the same deal that LightSquared was going to do. ... We'll give you a waiver and let you get on with it.'”

LightSquared sees the eventual FCC decision as having a major impact on the agency’s ability to bring in other spectrum. “The issue is that the commission has never before recognized the ability” for a group of receivers to push one service out of licensed spectrum, effectively “blocking authorized service,” said Jeff Carlisle, executive vice president at LightSquared. That is “directly against” FCC rules and such a precedent “would make it extremely difficult to make any further spectrum available,” he said. Such a precedent would also hurt spectrum valuations for potential auctions, he said. Much of those prices are dependent on the certainty of spectrum rights and without that, “who’s going to bid on spectrum.” That would reduce the amount of funds that reach the U.S. Treasury and is “inevitable” if the positions of the GPS industry are adopted, he said.

The LightSquared issue is particularly tough because GPS spectrum falls outside of the FCC’s technical comfort-zone, said a former FCC employee now consulting for LightSquared. “If this were something next to a TV band,” for instance, the FCC would likely feel more within its expertise in making a decision. “This type of unusual technical issues could be resolved faster if the FCC had the resources to hire outside expertise quickly,” he said. While the issues aren’t unique to this fight, GPS poses an unusual service consideration for the agency, the consultant said. The fight also includes unique bureaucratic issues, because there are seemingly different views within several agencies within the administration, he said.

While other spectrum efforts do face complex issues, the LightSquared debate may be uniquely difficult, said Jim Kirkland, general counsel at Trimble and a leader in the Coalition to Save Our GPS, a group aimed at preventing LightSquared from causing harmful interference to GPS services. “Every band has valuable users, but when you look at the cost and penalty” of accommodating the new use, it’s generally far less than for services like GPS, he said. Given the ubiquity of GPS in the U.S., with about 500 million devices, very few other services reach that kind of scale, he said. After GPS and mobile phones, “the list gets real short after that,” he said. The FCC is likely considering its action on the LightSquared spectrum to be precedent-setting, which may be why the FCC has continued to move forward on getting LightSquared online despite the strong concerns that have been raised, he said. The LightSquared decision is “one of the toughest ones there will be,” he said of the FCC’s spectrum decisions.

Media Access Project Senior Vice President Andrew Schwartzman acknowledged that LightSquared presents some challenging issues for the FCC. “The bottom line is that LightSquared is proposing something that significantly advances the National Broadband Plan, and the principal opponents had ample warning that their devices should have been designed to anticipate that the adjacent band would be fully utilized,” he said.

"I hope the Commission is able to resolve these concerns fairly quickly in a way that allows LightSquared to move ahead with its proposed broadband service,” said Free State Foundation President Randolph May. “The additional competition provided by another well-capitalized market entrant would be a welcome public benefit.”

In a filing last week, New America Foundation, Public Knowledge, Free Press and the Media Access Project said the FCC must not drop the ball on LightSquared. “It is incumbent upon the Commission to actively intervene to broker or, if necessary, impose a plan that will not leave the L Band fallow, that will permit LightSquared to deploy its promised wholesale-only mobile broadband network, and that will safeguard essential GPS services, while calling on both parties to share the costs of a long-term transition,” the groups said (http://xrl.us/bmatdy). “Determining whether LightSquared’s alternative proposal, or some other solution, is feasible will no doubt require additional testing, and ultimately one or both sets of parties may resist any resolution. Nevertheless we urge the Commission to insist that the parties work cooperatively through a Commission-determined process and timeline toward, if possible, a short- and long-term resolution.”