Is this lights out for LightSquared? The company has still not obtained clearance from the Federal Communications Commission to operate its 4G LTE network. And that is a real problem for LightSquared, as it needed to get that approval by Dec. 31 for its wireless-spectrum and equipment-sharing deal with Sprint Nextel
When those two companies signed that 15-year agreement last summer, Sprint's current 4G WiMAX network provider, Clearwire
First, Clearwire's high-wire balancing act worked. By threatening to default on its loan interest payment due in December, the company forced Sprint into a $1.6 billion funding agreement aimed at building out Clearwire's own LTE network.
And second, the latest U.S. government testing showed that LightSquared's wireless network caused interference in 75% of the global positioning system devices examined. Bloomberg reported that a draft report of that testing stated, "No additional testing is required to confirm harmful interference exists."
The country's No. 1 and No. 2 carriers have a head start on Sprint. Verizon's
But the Sprint-LightSquared deal isn't quite over yet. Sprint has agreed to a 30-day extension beyond the original Dec. 31 drop-dead-date. Why, when it seems that the deck is wholly stacked against LightSquared's success? Well, there are 13.5 billion reasons it's worth one last shot to try and make it work. That's $9 billion in cash and $4.5 billion in equipment for Sprint -- if the deal goes through.
But can LightSquared make everything right with its satellite-ground station hybrid LTE system in that short time period? That just doesn't seem likely, in my opinion. So now it's up to Clearwire to show what it can do with its newfound resources.
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