LightSquared’s down-to-earth plan
Currently, LightSquared is one of many satellite-communications providers struggling to find a viable business model in the cutthroat mobile communications market. Much of the industry views satellite as a backup communications platform that should be used only when terrestrial networks are unavailable, such as during significant crises and natural disasters.
Given the ubiquity of cellular networks and their increased reliability, that means there are relatively few users on a satellite network during normal periods, which forces satellite companies like LightSquared to price their services significantly higher than a terrestrial cellular carrier, providing another disincentive for users to subscribe to a satellite network.
During its history under several different names (see timeline), LightSquared has carved a niche in the market as the only satellite provider that offered push-to-talk services similar to the traditional land-mobile radio (LMR) experience. But the economics of a satellite-only business — including the need to launch a $1 billion satellite every decade or two — proved daunting, according to Jeff Carlisle, LightSquared’s executive vice president for regulatory affairs and public policy.
“It’s very difficult to maintain an independent satellite company, because — by definition — you’ve got a small number of users,” Carlisle said. “The largest number of units we’ve ever had on the LightSquared system is 300,000, and that’s simply not a large-enough user base to continue to invest in this service.
“It costs us $1 billion every 15 years to put up replacement satellites. Part of the reason that you want an integrated service is because … it’s not just recovering that $1 billion; you’re recovering the cost of the entire network across a much larger set of users. Adding a satellite to a cellular network is not that significant in additional cost, and you can recover it over millions and millions of users. So, basically, you’ve created a situation where you can launch another satellite every 15 years without too much trouble. But, without that, I don’t know if this is sustainable.”
With this in mind, company officials decided to pursue a business model that included the rollout of a terrestrial cellular system that would leverage its satellite spectrum in the 1.5 GHz band. In 2003 and 2005, LightSquared — known then as Mobile Satellite Ventures — received the FCC’s approval to pursue ancillary terrestrial components (ATC) services that would let dual-mode devices access the terrestrial network deployed to supplement the company’s satellite-communications services.
While there were some interference concerns with the proposal, GPS manufacturers generally supported Mobile Satellite Ventures’ vision to fill coverage gaps with terrestrial networks, according to Jim Kirkland, vice president and general counsel for Trimble, a founding member of the Coalition to Save Our GPS.
“I think GPS and the government wanted to be supportive of seeing if there was a way to enhance mobile satellite service to make it better — as long as it was mobile satellite service and not something else,” Kirkland said.
“I think we worked very effectively with LightSquared’s predecessors to try to … work together as these network topologies evolve. We felt like we had a common understanding of what they were trying to do and a willingness to work on it.”
But this spirit of cooperation ended when LightSquared sought a waiver in late 2010 to remove the mandatory satellite portion of its proposed terrestrial offering, effectively transforming the spectrum into licensed airwaves equivalent to those for which commercial wireless carriers paid billions of dollars at auction.
Officials for the NTIA and the GPS industry subsequently raised concerns about interference to GPS operations and sought testing in advance of the FCC acting on the waiver. Instead, the FCC opted not to conduct a new rulemaking on the matter and granted the waiver in January 2011, with the caveat that LightSquared’s terrestrial network could not create harmful interference to GPS. LightSquared officials have said that the waiver approval was appropriate, because it primarily restated what the FCC had ruled in 2005.
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“We’ve known since 2005 that we could build a network with unlimited base stations, all using the power that we’re planning to use,” Carlisle said. “That’s been out there for six years, and the GPS community did nothing in response to that.”
But Kirkland said the 2011 waiver represented a fundamental change to the spectrum environment, introducing the possibility of higher-powered cellular signals throughout the nation to interfere with GPS operations.
“[GPS] receivers were designed for a purpose in a quiet neighborhood, and now you’ve changed the rules, and the receivers are affected,” he said. “It’s not that they’re listening to the band; it’s just that they were designed to work in the old regime.
“Now, you’re changing the regime, and the FCC policy is very clear: If you change the regime and you affect existing receivers, you bear the burden of addressing that interference.”