LightSquared, the L-band satellite operator planning to deploy a 4G-LTE (Long Term Evolution-a preliminary 4G standard) Ancillary Terrestrial Component (ATC) telecommunications network, has run into controversy since the milestone launch of the Skyterra 1 satellite last year. A powerful coalition of service providers and users of the global positioning system (GPS) are opposing the deployment of LightSquared’s approximately 40,000 planned terrestrial repeaters, which are critical to the ATC network, on the grounds that the repeaters’ use of much stronger signals on neighboring frequencies to GPS signals will interfere with GPS operations. LightSquared, which in late July announced a 15-year, $13.5 billion deal with wireless carrier Sprint-Nextel to build and operate its terrestrial network, finds its business plan menaced by the concerted opposition of the GPS lobby. Where is this dispute likely to go, and what are LightSquared’s chances of successfully deploying its network in the face of GPS community opposition?

In addition to public safety, homeland security and law enforcement operations, GPS has become a widely used consumer-level service, with more than 500 million receivers in operation, enabling smartphone, and civil and commercial terrestrial, marine and aeronautical navigation. The GPS coalition is too large to ignore, despite the FCC’s predisposition to allow the LightSquared network to go live. Following published concerns from public safety groups and other GPS service provider and user groups, LightSquared, at the FCC’s direction, submitted to a six-month study in January by a technical working group on the potential interference problem. In June, the National Public Safety Council reported that LightSquared’s terrestrial repeaters would cause interference with public safety operations using the neighboring spectrum.

Since then, the kid gloves have come off and a public relations war has erupted. LightSquared claims that GPS devices have been designed to use and bleed into neighboring spectrum for years and that problems could have been resolved by use of inexpensive filters on GPS devices that the GPS industry never bothered to install. Notwithstanding its assignment of blame, LightSquared, recognizing the powerful forces aligned against it, proposed a filtering solution for its repeaters in July. The company claims that the filters will eliminate more than 99 percent of interference with GPS signals, including those of all smart phones. FCC engineers are now reviewing the proposed solution.

The GPS industry, through the “Coalition to Save our GPS,” voiced its implacable opposition to the deployment of LightSquared’s network in a June 30 statement. The industry also expressed doubts that a technically feasible work-around to the interference problem could be found. The problem for LightSquared is not only the power and diversity of the interests arrayed against it, but the fact that the FCC has been so solicitous of LightSquared and its sunk capital. The Commission really has nowhere further to go in trying to smooth the road in front of the company. The FCC’s steady retreat on ATC requirements — granting a waiver to LightSquared in January to permit terrestrial-only service in diametrical opposition to the basis on which LightSquared’s ATC license was granted — has gone to the point that this column asked whether it was the terrestrial component or the satellite component that was still ancillary. The FCC cannot go much farther in its support without clear evidence that the interference problems can be not only substantially, but also completely addressed.

Harbinger Capital Partners, the hedge fund that owns LightSquared, has attempted to diversify its ATC portfolio and expressed interest in acquiring its bankrupt competitor S-band operator TerreStar Networks, despite losing out to Dish Network’s $1.375 billion bid. Dish will pursue an S-band merger of TerreStar and its previously acquired, also formerly bankrupt, S-band operator DBSD North America. Harbinger, which earlier this year decided to sell its Inmarsat stake, now finds itself with its chips down on a highly menaced ATC L-band bet, with potential exit strategies depending on the solution. LightSquared and Harbinger have few options but confrontation with the Coalition. The FCC is well disposed, but figures to be a tough sell.

Owen D. Kurtin is a practicing attorney in New York City and a founder and principal of private investment firm The Vinland Group LLC. He may be reached at [email protected].