Mobile startup LightSquared announced a deal with rural carrier Open Range on Friday that is designed to extend broadband into remote parts of the U.S. through satellite and terrestrial wireless networks.
Under the proposed plan, the companies expect that Open Range would lease L-band satellite spectrum from LightSquared and resell the company's satellite-based mobile service, once it's launched. In addition, the companies would work together to build out Open Range's network and would have a reciprocal roaming agreement between their respective networks. The companies said they have reached an agreement in principle and expect to complete a definitive agreement soon.
The announcement, which the carriers said represented a major step toward fulfilling the National Broadband Plan of the U.S. Federal Communications Commission (FCC), came a day after opponents of LightSquared's network plans formed the Coalition to Save Our GPS. The group charges that evidence shows LightSquared's network would interfere with GPS (Global Positioning System) because it would operate in the same frequency band at greater power.
The FCC approved LightSquared's network plan partly on the basis that it would use satellites to bring Internet access to 100 percent of the U.S. LightSquared already has satellites in the air and plans to build an LTE (Long-Term Evolution) network, selling one or both types of services wholesale to other carriers rather than operating a retail business of its own.
The Open Range agreement is the first deal with a retail partner that LightSquared has disclosed. The arrangement still needs to be reviewed by the U.S. Department of Agriculture's Rural Development Utilities Program, and the spectrum leases would have to be approved by the FCC.
Open Range, which has already built a WiMax-based, branded broadband service for underserved rural markets, should be able to help LightSquared reach those areas. The companies characterized their agreement as a move that would help bring fast Internet access to consumers, businesses, tribal organizations, public safety and other users.
But some critics have warned that LightSquared's base stations would interfere with GPS, and that the FCC should not have granted the company a waiver that it needed in order to build the network. On Thursday, 17 companies and industry associations involved with GPS formed the Coalition to Save Our GPS, which plans to fight the LightSquared initiative. The group includes GPS receiver vendor Garmin, positioning systems company Trimble Navigation, and heavy hitters including the Air Transport Association and the National Association of Manufacturers.
On Friday, Trimble Vice President and General Counsel Jim Kirkland testified before the Subcommittee on Commerce, Justice and Science of the House Appropriations Committee on behalf of the coalition.
"Initial technical analyses have shown that the distant, low-powered GPS signals would receive substantial interference from high-powered, close-proximity transmissions from a network of ground stations," Kirkland said in his testimony, according to the coalition. "The consequences of disruption to the GPS signals are far reaching, likely to affect large portions of the population and the federal government."
Kirkland told the House panel that LightSquared's network should not be deployed without a guarantee that GPS won't be affected.
When the FCC granted LightSquared's waiver, it tried to address such concerns by requiring that the carrier work with government agencies and the GPS industry to determine the potential for interference. That process is still under way.
The GPS interference issue will be central to LightSquared's success, said analyst Jack Gold of J.Gold Associates.
"If there's any significant amount of interference, the government's going to get involved and shut them down," Gold said. "Any time you've got a potential risk with a service that's that popular, then you've got a really serious issue."
Deals with reseller partners such as Open Range will also be critical for LightSquared, which by the time it goes commercial will be trying to compete against LTE services from Verizon and AT&T and other fast networks at Sprint Nextel and T-Mobile USA. Clearwire, which was first to build a national 4G network, also relies largely on wholesale partners and is struggling financially.
"LightSquared needs to go out and get a bunch of licensees so they can start making some money. They don't want to end up in the same situation Clearwire is in," Gold said.