Lightsquared: what happened, what's next, and why it matters

It would have been a stirring success story: an upstart company building its own wireless network to compete with telecom giants Verizon and AT&T. But things aren't looking great for Lightsquared.

The company's plan was to build a wholesale 4G network -- a system that would bring fast Internet access to the entire United States -- using a combination of land-based towers and satellites. The company has already launched a satellite into orbit, paid for frequency to be used for the project, and even struck a $65 million deal with Sprint to build and operate its network for the next 15 years.

Now, a technical hiccup could bring it all to a halt.

It turns out that the frequencies on which Lightsquared would build its network bump up against those currently used by many consumer GPS devices. The portions of the spectrum are close enough, in fact, that this week the FCC rejected Lightsquared's application to build its network, saying that it would cause "irrevocable issues" with GPS equipment.

Let's back up for a second and look at how "the spectrum" works. Radio signals -- including wireless data -- can be broadcast only across a finite amount of the electromagnetic spectrum. The FCC (and equivalent departments in other countries) makes sure that services such as TV, cell phones, and GPS don't interfere with each other by occupying overlapping portions of the spectrum. In this case, Lightsquared and GPS manufacturers share adjacent (but not overlapping) portions of the spectrum. So what's the problem? The FCC states that in practice, the airwaves are close enough that Lightsquared's network would interfere with some GPS devices.

Lightsquared isn't going down without a fight, however. According to the Wall Street Journal, it's looking to strike a deal with the Department of Defense, which owns a portion of the spectrum farther away from GPS signals. An LTE network on those frequencies wouldn't cause any interference with GPS. But for the deal to work, Lightsquared and the DoD would basically have to swap frequencies -- and the DoD hasn't given any indication that it's interested in trading. If the deal falls through, Lightsquared will have to look elsewhere -- or to try to sell off its spectrum.

Readers, what's your take on Lightsquared? Do you think the DoD will bite -- or balk -- at the proposed deal? Will a wholesale 4G network ever get off the ground? Share your thoughts in the comments section below.

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