Lightsquared,
one of the biggest and also riskiest gambles in technology world today, is
dying.
Backed
up by $5 billion during its startup, Lightsquared was the biggest gamble in the
telecommunications world that appears to be in the process of losing
everything. The company wanted to become the fifth largest nationwide wireless
carrier that should compete with AT&T and Verizon. Lightsquared vision,
though ambitious, had a real chance of pulling off.
Today,
after a string of fatal regulatory setbacks, the company is mulling bankruptcy.
The head of the company's majority owner Harbinger Capital Partners, Phillip
Falcone, said that the company is trying to consider the option seriously.
While
the said consideration will not necessarily spell the end yet, it would move
the goal of the company farther away.
The
main reason for the company's demise is the government's prohibition of the
launch of its network. Lightsquared could not convince the Federal
Communications Commission and National Telecommunications and Information
Administration that its network will not disturb GPS signals.
Two
weeks afterwards, the company's CEO resigned. The following March, Sprint
Nextel, the company's biggest partner, ended its $9 billion agreement. The move
is in complete contrast during the time when most companies are adding cash to
their major investments.
The
bulk of the investment went to the building of a very expensive nationwide
wireless network. Harbinger provided a $3 billion investment while more than $2
billion came from other investors.
Investors
of the company believe that their billions would pay off since the company was
sitting on a truckload of valuable wireless spectrum.
Lightsquared
hoped to rival the current telecommunications giant in the US by providing 4G
service. Basically, the outline of the business revolves around letting its
business partners to sell the service while Lightsquared provides the
infrastructure and the network.
Many
investors signed on and about 40 partners like Best Buy, AirTouch, Leap
Wireless, and Sprint committed to provide the needed investment.
Lightsquared
planned to undercut the competition by selling only efficient 4G
service-ignoring 2G and 3G networks at all. The company said it could offer a
starting service of &7 per gigabyte.
The
main problem was the concern from the government side which believes that the
stronger terrestrial transmissions Lightsquared hopes to get their hands on
would interfere with millions of GPS devices in the country. In the end, the
government regulators decided that Lightsquared, if given control of their
needed spectrum would put GPS signals at risk.
The
company's end will most likely start at the end of the year if Lightsquared
will not be able to secure the license to launch its network. It is projected
that the company will run out of money and will be forced to sell off its
assets. The main reason is because of the company's relatively fixed costs with
or without customers.
Even
without customers, the company predicts that its infrastructure and network
will cost around $30 billion to maintain and operate over a five-year period.
The
eventual collapse of Lightsquared will be a big technology news especially in
the US that we should see in the coming months. Consequently, it will be a pity
to see a failure of the industry's best shot in trying to upgrade to a new
technology in mobile computing.
Ambing
allvoices.com
Business & Investment Opportunities
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