FCC poised to give LightSquared's satellite broadband venture a boost

Jan. 21 (Bloomberg) -- Wireless is on the rise. Nielsen predicts that by the end of 2011, one in two Americans will own a smartphone. That means a lot of jockeying for space on the airwaves. This is part of a special report by Bloomberg Government in the latest isssue of Bloomberg Businessweek magazine. Bloomberg's Megan Hughes reports. (Source: Bloomberg)
Washington Post Staff Writer
Tuesday, January 25, 2011; 11:00 PM

With a wave of new smartphones and tablet computers threatening to overwhelm wireless networks, the Federal Communications Commission is preparing to take another aggressive step to ease the growing capacity crunch.

On Wednesday, the agency is expected to grant a crucial waiver to Reston-based LightSquared that would pave the way for the firm to create a mobile network offering affordable broadband service based on satellite signals.

LightSquared, backed by billionaire Philip Falcone and his Harbinger Capital hedge fund, would be a rare new entrant to the U.S. wireless market, in which six out of 10 subscribers rely on broadband networks run by AT&T and Verizon Wireless.

FCC officials say they see LightSquared's proposal as a way to spur competition in the sector and have already granted an overall operating license to the firm.

"This is a promising opportunity to promote mobile broadband," said a FCC senior official, who spoke on the condition of anonymity because the waiver had not been formally approved. "LightSquared would be a new competitor and entrant into mobile broadband with new sources of capital and a new kind of business model that consumers find appealing."

If granted, the waiver would allow LightSquared to provide wireless broadband access without also having to sell satellite service. Such an exemption is key to LightSquared's ability to attract business customers who desire Web access but don't want to spend extra to lease satellite connections.

LightSquared's proposal, however, has met with opposition from Global Positioning System operators and federal agencies, who have argued that the firm's service could knock out their signals. The FCC says that Lightsquared would be expected to resolve any concerns about GPS interference.

"We are requiring that the process be completed to the FCC's satisfaction before LightSquared offers commercial service under the waiver," according to the FCC official.

If granted, the waiver would follow other recent FCC moves aimed at freeing airwaves.

Earlier this month, FCC Chairman Julius Genachowski said the agency would push to redeploy television broadcasters' unused airwaves to meet exploding wireless demand that has been fueled by the surging popularity of iPads, Droids and other must-have handhelds.

For now, LightSquared does not plan to offer service directly to consumers. Instead, it would lease space on its network to a range of companies, such as Apple and Wal-Mart, that might want to offer wireless devices under their own brands.

For some consumers, the plan could spell the end of long service contracts. And the FCC likes the idea of more options for wireless users, who have increasingly complained of billing confusion and penalties for leaving their contracts early. The plan could also enable gadgetmakers to break free from exclusive partnerships with the carriers that sell their devices.

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