LightSquared files for Bankrupcy (Chapter 11)

     To the surprise of very few, LightSquared has filed for Bankruptcy protection under Chapter 11.

Given that the firm has virtually no path forward to use its frequencies to provide 4G-type services in light (no pun intended) of the apparently unresolvable GPS interference issues, Chapter 11 gives LightSquared a way to step back and see what it can salvage of their operations.

In a Chapter 11 bankruptcy proceeding, in most cases, the debtor remains in control of its business and operations as a “debtor in possession.” The day-to-day operations are subject to the oversight and jurisdiction of the federal court (and typically the trustee). The goals of a Chapter 11 proceeding is for the company to find the cash to emerge from bankruptcy having paid its creditors some portion of the amount due, cancelling or renegotiating some contracts, and then resuming normal operations after completing the bankruptcy.

It seems pretty clear to me that the $9B contract LightSquared entered into with Sprint will be a target for cancellation.  That will place even more pressure on Sprint to fund its Network Vision project.

A Chapter 11 bankruptcy proceeding is is very different from Chapter 7 proceeding.

In a Chapter 7 bankruptcy action the business ceases its regular operations.  The court-appointed trustee sells off all of the business’s assets and distributes the sale proceeds to the creditors. If there’s any money leftover after all the creditors are paid, that balance is returned to the owners/shareholders of the bankrupt company, and the company ceases to exist.

Sometimes a firm starting out on a Chapter 11 bankruptcy path can still end up shutting down.  It would not surprise me if that’s the case with LightSquared, especially if they are forced to sell off their licensed frequencies.

Time will tell.


AGL Bulletin: With GPS Complications, Short-Term Site Growth May Elude LightSquared

From today’s (4/15/11) AGL Bulletin.

With GPS Complications, Short-Term Site Growth May Elude LightSquared

The tower industry’s dreams of being a part of LightSquared’s plans to deploy 40,000 high-power transmitters may have to wait. Given the potential for interference to its spectrum neighbor, GPS, the proposed nationwide broadband network may not trigger significant site leasing activity in the near term, according to RBC Capital Markets.

LightSquared’s system proposes to operate in the 1525-1559 MHz band, right next to the GPS downlink frequencies in the 1559-1610 MHz band.

“Given LightSquared’s current spectrum impairment (GPS interference in one of its L-band slots, and Inmarsat clearing requirements in the other slot that are not slated for resolution until 2013) and the availability of spectrum in other bands, we believe a conservative stance is appropriate with respect to LightSquared actually building out a significant network, even if it were to reach an agreement with Sprint,” RBC Capital Markets wrote in its April Equity Research Industry Comment.

In January, RBC first voiced uncertainties about LightSquared, even though it had its funding in place, because it noticed the carrier was slowing its build out. Then the National Telecommunications and Infrastructure Administration sent a letter to the FCC warning it about possible GPS interference.

“LightSquared significantly slowed its network planning and site acquisition activities near the turn of the year, and we are aware of continuing progress in only three markets,” RBC noted.

The aviation industry is very concerned about the possibility of interference to GPS receivers, which provide planes with navigation, according to Aviation Week. Manufacturers and users are currently testing GPS receivers for susceptibility to interference from the planned nationwide broadband wireless network. The FCC’s waiver grant required LightSquared and the U.S. GPS Industry Council to work together to investigate the possibility of interference and to identify ways to prevent that interference to GPS, if necessary.

However, in an ex parte teleconference presentation to the FCC on Jan. 19, the U.S. GPS Industry Council already presented the potential for LightSquared service to cause severe interference to GPS users.

“Simply put, the U.S. GPS Industry Council’s testing discloses that LightSquared’s very high output power from its planned 40,000 sites, coupled with its proximity in frequency to the very weak GPS downlink band, forms a witch’s brew for catastrophic interference to GPS receivers,” Jonathan Kramer, principal, Kramer Telecom Law Firm, wrote in his blog. “LightSquared has stated that it can take care of the potential interference to GPS users using filters. It’s unclear whether the filters are sufficient, or who would be expected to pay for the cost of the filters.”

All eyes will be on that receiver testing with those filters, which will be completed at the end of May with a final report due to arrive at the FCC on June 15.

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LightSquared Turning Into LightQuartered

LightSquared, based in Reston, Virginia, is a nascent  provider of 4G services to wireless carriers.  Or, they’d like to be.  They are looking at some difficult times ahead in their initial roll-out.

The NTIA has expressed concern to the FCC that LightSquared will cause interference to GPS receivers, degrading or blocking location information for wireless handsets.  You can read that letter for yourself by clicking on the link below.


The government agencies concerned about GPS interference are  Departments of Defense, Transportation and Homeland Security.


Today, the aviation industry joined in expressing concerns regarding GPS interference.  The FCC has posted letters it has received from Hawker Beechcraft Corp., Diamond Aircraft Industries GmbH, and the National Business Aviation Association (a aviation-industry trade group).


This should be interesting!