Sprint deserting sinking LightSquared ship

Here we go again. It's more bad news for embattled would-be LTE provider LightSquared. Now Sprint is kicking the company when it's down. But the consequences could be a long and expensive court battle: Bad news for U.S. taxpayers, as we'll see in The Long View, by Richi Jennings.

Yes, yesterday's WSJ rumors were true: Sprint is invoking a contract termination clause:

Sprint said today it will return $65 million in payments it had received from LightSquared. ... The loss of Sprint adds to concerns about the viability of LightSquared and the future of [the] $3 billion investment...[from] hedge fund Harbinger Capital Partners.
LightSquared paid Sprint $310 million in advanced payments. ... Sprint said...that it would keep most of that.

Why is this happening now? Simple: Sprint is fed up with extending LightSquared's chronically missed deadlines.

Anyone with a decent understanding of the real, analog world would have known this will never work. ... LightSquared's argument...is incredibly naive...[because] the LightSquared terrestrial power is...a million times stronger than the weedy GPS signal. ... The failure of its...signal to co-exist with GPS...on nearby spectrum was utterly predictable.

Correctly, the FCC put a stop to this stupidity, but not before it had granted a temporary waiver to permit LightSquared's bogus plan. Nobody seems to know of any coherent technical reason why the FCC initially did this. The only conclusion I can reach is that it was the victim of lobbying.

Yes, LightSquared talks a great talk, and seems to have been able to bamboozle regulators in the past into allowing it to execute this horribly flawed plan. So that's presumably why it managed to convince Sprint to give it more time to do it again -- to get the FCC to lift its ban.

In fact Sprint gave it two contract deadline extensions. That's some serious Kool-Aid you're drinking there, brother.

The third and final deadline ran out today. It must gall Sprint that it has to return $65M, but an agreement's an agreement. Still, the $245M balance will come in handy to pay LightSquared competitor Clearwire for more service.

Clearwire is of course already in bed with Sprint, with its ill-fated WiMAX network. But latterly, Clearwire has been adding LTE support to its towers, calling the standard, "the future of mobile broadband."

So is Clearwire the winner today?
Not so fast, sonny.

Sadly, the company has invested so much money in this WiMAX thing -- which few people actually wanted -- that it expects to make a loss of about $300M this year.

Of course, if it didn't have to do-over much of its cell equipment in the switch from WiMAX to LTE, it might have made a small profit, but that's what happens when you back the wrong horse.

Having said that, Clearwire is sitting on a fine few chunks of spectrum; not the least of which are the bands that AT&T was forced to sell when it acquired BellSouth.

So will LightSquared go quietly into the night?
Ha ha, you're so funny.

LightSquared now has Sprint's $65M payment in its war chest. It's hired some big-shot Washington lawyer types, Theodore "Ted" Olson and Eugene Scalia. Eliza Krigman calls them "two of the most prominent conservative litigators in the country," so stand by for a messy and overly-politicized courtroom battle, with the FCC and perhaps the National Telecommunications and Information Administration (NTIA) being accused of... I dunno, teasing?

We may have already seen the opening shots last month, when Senator Chuck Grassley (R-IA) complained that LightSquared and others may be trying to nobble his investigations, alleging improper influence.

And what of ex-CEO Sanjiv Ahuja?
You may recall he quit in a blaze of un-glory late last month. He seems to be concentrating on his other business, Augere, which describes itself as "delivering 'broadband for all'...fast, reliable broadband internet services in emerging markets using wireless networks."

Let's hope, for the sake of GPS users in Pakistan, Bangladesh, India, Uganda, Rwanda, and Tanzania, that it doesn't involve transmitting anywhere near 1.57542 GHz.

What's you take? Comment below...

Richi Jennings, blogger at large

Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and security. As well as The Long View, he's also the creator and main author of Computerworld's IT Blogwatch, for which he has won ASBPE and Neal awards on behalf of IDG Enterprise. A cross-functional IT geek since 1985, you can follow him as @richi on Twitter, pretend to be richij's friend on Facebook, Encircle richij on Google Plus, or just use good old email: TLV@richij.com. You can also read Richi's full profile and disclosure of his industry affiliations.


Copyright © 2012 IDG Communications, Inc.

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