Sprint: Out After LightSquared’s New Failure?

LightSquared Inc.'s partnership with Sprint Nextel (NYSE: S ) to build an
innovative, wholesale 4G wireless network is running out of minutes. Sprint had
given its embattled LTE network partner whose 40,000 high-power, earth-based
transmitters, opponents say, will interfere with GPS signals until the end of
January to gain regulatory approval to move forward with the network. But unless
the laws of Beltway politics and electromagnetic interference change in the next
12 days, LightSquared is out of luck. Last week, a government panel unanimously
concluded that new tests on the hybrid terrestrial-satellite network, which
promises to slice wireless bills in half, show that it still interferes with GPS
receivers and airline flight-safety systems. The government's EXCOM panel,
which represents nine federal agencies, concluded that there are "no practical
solutions or mitigations" that could enable LightSquared's network and GPS
devices to coexist over "the next few months or years." Get up to speed on
the LightSquared saga here . Even worse, the government has halted any new tests
of LightSquared's technology. LightSquared is hardly taking the defeat lying
down. In a conference call with the media on Wednesday, the company alleged that
the government's spectrum-interference tests were rigged by GPS manufacturers
to give "bogus results" and that the presence of an employee of GPS
manufacturer Trimble (NASDAQ: TRMB ) on the advisory board amounts to a conflict
of interest. During the call, I asked Jeff Carlisle, Executive Vice President
for regulatory affairs and public policy, about the impact on LightSquareds
partnership with Sprint. "We are advising Sprint of the events or the
developments as we're moving forward here, and we're continuing to speak
with them," he said. "We'll continue to look at alternatives with Sprint,
assuming this goes past the end of January." Separately, Sprint spokesman
Scott Sloat told me Wednesday morning that "nothing has changed in the
[LightSquared] relationship since the testing. The relationship still runs
through Jan. 31." Using Sprint's infrastructure would save LightSquared an
estimated $13 billion in new construction and operational costs over the next
eight years. So if Sprint does walk away at the end of the month, the aspiring
broadband wholesaler will have to build any new network from the ground up.
Although LightSquared says it has amassed $14 billion in private investment
including $3 billion from billionaire Phil Falcone's investment firm,
Harbinger Capital Partners it likely would need to seek other alternatives,
which