LightSquared is no Solyndra

The continued growth of wireless broadband — with the attendant benefits to U.S. consumers, businesses and the federal Treasury — depends in large part on the availability of spectrum. A recent study estimates that by 2019 the U.S. will need more than 350 additional megahertz (MHz) of licensed spectrum to support projected commercial mobile wireless demand — 50 percent more than is currently available.

{mosads}Fortunately, some low-hanging spectrum fruit is ready to be picked in the form of the Mobile Satellite Service (MSS) spectrum licensed to LightSquared. LightSquared would not need any subsidies or special favors to begin using this spectrum, only the Federal Communications Commission’s (FCC) permission. This is why the recent Forbes piece by former FCC wireless bureau chief Fred Campbell comparing LightSquared to Solyndra — the failed solar panel company — was so surprising.

The LightSquared spectrum, because it is licensed and doesn’t need to be auctioned, can be deployed for mobile broadband far more quickly than other spectrum blocks. U.S. experience indicates that large-scale reallocations of spectrum such as the proposed incentive auction of broadcast spectrum have taken six to 13 years to complete. Indeed, it has already been five years since the National Broadband Plan proposed the incentive auction and three years since Congress authorized the FCC to do it. Moreover, there is some doubt that the auction will yield the 120 MHz projected by the FCC, making additional sources of spectrum even more valuable.

The MSS spectrum was initially allocated by the FCC for mobile satellite phone service, a service for which demand was (and is) extremely limited. As a result, the FCC subsequently modified the MSS licenses to permit their use for wireless broadband, for which demand is much greater. The National Broadband Plan counted 90 MHz of MSS spectrum, mostly controlled by Dish and LightSquared, toward its 2015 goal of an additional 300 MHz for wireless broadband. More recent tallies, however, count only 40 MHz of MSS spectrum, excluding the LightSquared spectrum. This is due to interference disputes between LightSquared and users of the adjacent government spectrum — GPS equipment — that have thus far made the LightSquared spectrum unusable. Failure to resolve this issue and obtain the necessary FCC approval forced LightSquared to declare bankruptcy in 2012.

Interference disputes between adjacent license holders are not uncommon, and solutions are routinely negotiated. Since the value of the LightSquared spectrum for mobile broadband is almost certainly substantially larger than the cost of retrofitting or replacing the GPS devices that are affected by interference, a solution that would permit LightSquared to go forward should have been (and should still be) possible. However, the GPS spectrum is government spectrum and its occupants seem not to have sufficient incentive to negotiate. In effect, the GPS equipment is using both the GPS spectrum and the LightSquared spectrum without bearing any of the costs of doing so. A resolution that permits this valuable spectrum to be used for mobile broadband requires FCC action, which thus far has not been forthcoming.

In this context, Campbell’s comparison of LightSquared to Solyndra is bizarre. When Solyndra failed, it left taxpayers holding the bag for $535 million in federal loan guarantees. In contrast, LightSquared has neither received nor asked for government subsidies. When it went bankrupt, the government incurred no liabilities.

As Campbell notes, Solyndra was the beneficiary of a politicized process at the Department of Energy. In contrast, LightSquared has been the victim of a politicized process favoring GPS interests.

The real victims, of course, are consumers. The failure of the FCC to do what is necessary to bring the LightSquared spectrum online is costing consumers an estimated $120 billion in foregone benefits. It is not too late to act, however. LightSquared is preparing to emerge from bankruptcy and still hopes to build out its wireless broadband network.

Lenard is president and senior fellow at the Technology Policy Institute.