Dish Network is pitting itself against LightSquared. The company, which last month received final approval from a bankruptcy-court judge to purchase bankrupt TerreStar Networks for $1.375 billion, has now asked the FCC to allow it to combine its S-band satellite spectrum licensees it acquired from TerreStar and another bankrupt satellite firm DBSD North America. It then would offer terrestrial-only and satellite/terrestrial devices to consumers on a proposed hybrid satellite-terrestrial mobile broadband network that would leverage the next iteration of LTE, known as LTE Advanced.

Dish is banking on approval given LightSquared's success with the FCC. It wants to build out the hybrid network using 40 MHz of spectrum it acquired from the two bankrupt firms under a new subsidiary called Gamma. The initiative is similar to what LightSquared is proposing in the L-band, but that plan is coming under fire given the company's potential to interfere with GPS signals. And it's unclear when the FCC will issue a waiver given those circumstances. Dish Network said that its spectrum doesn't face any GPS interference problems.

Where does this leave LightSquared? Back in July I proposed that Dish Network become a partner with LightSquared to give the company an alternative source of spectrum for LightSquared's wholesale customers. As its proposal stands now, LightSquared only would use a 10-MHz swath of spectrum to avoid interference with GPS signals. But the FCC still needs to agree that this maneuver will be enough to protect GPS receivers.

LightSquared's new plan calls for the company to avoid launching service in the upper portion of the band, where interference reportedly has been discovered. Instead, it will use the lower-portion of the band, from 1526–1536 MHz. (LightSquared owns a total of 59 MHz of spectrum in the 1525–1559 MHz band.) As part of this revised plan, LightSquared also would modify its FCC license to reduce the maximum authorized power of its base-station transmitters by more than 50%. This action will limit LightSquared to the power it was authorized to use in 2005, which will provide additional protection to GPS, the company said.

Also, LightSquared is paying Inmarsat to transition parts of its airwaves, so that LightSquared has a contiguous block of spectrum. In its announcement, LightSquared said that it entered negotiations with Inmarsat — the satellite company that controls the alternative block of spectrum in the L band — to accelerate the schedule for LightSquared to begin using the frequencies.

But as TMF Associates analyst Tim Farrar, who has covered the satellite industry for some time, points out, it's in Dish Network's best interest to replace LightSquared rather than partner with the company, as Dish's 2 GHz of spectrum in the S-band has more scarcity value if the L-band never gets put to use. Moreover, LightSquared is burdened with debt and lease payments to Inmarsat.

Dish Networks noted in its FCC filing that it is "a well-financed, capable, and recognized innovator in communications technology [with] unique experience in developing an innovative and competitive retail operation and growing it from zero to approximately 14 million subscribers."

Still, running a mobile network isn't central to Dish Network's business. It will need partners, especially if the FCC puts some aggressive buildout requirements on the company. If it isn't LightSquared, who might it be? Sprint last month entered into a 15-year, $9-billion network-hosting deal with LightSquared, but that deal depends on FCC approval of LightSquared's plan.

Could Sprint then run to Dish Network? Meanwhile, MetroPCS, a regional flat-rate carrier that doesn't have a nationwide footprint, has yet to make any deals with LightSquared. That could mean, as Farrar has speculated, that MetroPCS could become a key partner for Dish Network.

At any rate, LightSquared's future looks cloudier than ever.

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