Sprint LTE ally LightSquared and satellite company Inmarsat are publically airing a dispute, the latest trouble that the hopeful 4G network has come into.
Inmarsat announced in a Feb. 20 press release that LightSquared has failed to make a $56.25 million payment, due upon completion of a "Phase 1 transition." Consequently, Inmarsat has issued a notice of default to LightSquared, in keeping with the terms of the pair's agreement.
The notice starts the clock on a 60-day period during which LightSquared can "remedy" the payment, said the statement, "before Inmarsat is entitled to enforce its rights and remedies... "
LightSquared, in its own Feb. 20 statement, said not so fast. While it has received the default notice, it believes all the Phase 1 conditions have not yet been met.
"LightSquared has raised several matters that require resolution before the first phase comes to a close," according to the companys statement. "The terms of the agreement allow for additional time to resolve pending questions before phase one is complete and the final payment is due."
Funded by billionaire Philip Falcone's Harbinger Capital Partners investment company, LightSquared first announce plans to launch an LTE network in July 2010, using untraditional spectrum that was originally allotted for public safety purposes and allows for the simultaneous use of cellular and satellite services.
LightSquared's initiative has been plagued, however, by reports that its network interferes with the signals sent to GPS devices. In December 2011, Bloomberg News leaked the results of tests reportedly showing the network to, despite adjustments, still knock out a "great majority" of GPS devices.
LightSquared CEO Sajiv Ahuja came out swinging, writing
letters to the Departments of Defense and Transportation, insisting the tests
were biased and calling on an investigation into the source of the leaked
In January, the National Space-based Positioning, Navigation and Timing Executive Committee told the Commerce Department that testing still found the LightSquared network to interfere with GPS signals, and additional testing wasn't necessary, since the problem was not correctable.
LightSquared soon after held a conference call, insisting that government agency had rigged its test and set them up for failure.
On Feb. 1, Sprint, which has a 15-year deal with LightSquared worth more than $9 billion, announced it would give the latter another 30 days to receive approval from the Federal Communications Commission.
On Feb. 14, however, the FCC said it would not lift a prohibition on LightSquared, following a letter from the Federal Aviation Administration stating that the LightSquared network would interfere with aviation safety-of-flight systems, with no immediate or pending resolution to be found.
In a Feb. 15 statement on the FCC announcement, LightSquared mimicked some phrasing of AT&T CEO Randall Stephenson, responding the FCC's findings against AT&T's proposed purchase of T-Mobile.
"The government decided to choose winners and losers," said the statement. "Politicians, rather than engineers and scientists, dictated the solution to the problem from Washington."
The statement went on to further echo AT&T complaints that the federal government is intent on hampering progress and preventing U.S. innovation and the creation of jobs. LightSquared wrote:
...[With] its action yesterday, the FCC has harmed not only LightSquared, but also the American public by making it impossible to build out a system that would meet public policy goals of successive administrations.
... After years of receiving regulatory approvals, the FCC approved LightSquared to build its ground network in 2005. In 2010, the FCC amended that plan, requiring LightSquared to build a national broadband network that reached 260 million Americans. ... Yesterday, after LightSquared had already spent nearly $4 billion, the FCC changed its mind. There can be no more devastating blow to private industry and confidence in the consistency of the FCCs decision-making process.
In its Feb. 20 statement regarding its disagreement in Inmarsat, LightSquared said it was "still committed" to it wireless broadband business plan and expects that Inmarsat will remain an important partner.