The concession gives Sprint additional security if a deal with LightSquared is finalized, but might also provide a path for Sprint to acquire the LightSquared spectrum in the event LightSquared fails. The issue, some might say, is whether Sprint would want to do so.
It isn't yet clear whether the Federal Communications Commission will allow LightSquared to use the upper part of its L-band spectrum, to avoid GPS interference problems which seem to be caused by signals in the upper part of the band. In that case, Sprint might be paying for about 20 MHz of LTE-capable spectrum.
If you have followed various mobile satellite ventures over the last two decades, you will remember that there has been more failure than success in the field, which is one reason why the satellite spectrum is available in the first place. If it turns out that LightSquared can use only about 20 MHz of its 40 MHz worth of spectrum, you would think there will additional repercussions.
At a rough level, wouldn't you say the venture is "worth" only about half of whatever valuation you thought it had before it lost half its spectrum?
And as far as Sprint's plans for additional spectrum, there is some growing speculation that Clearwire is getting ready to sell itself in any case. Sprint owns about 54 percent of Clearwire already, and if it were sold, Sprint would have all the spectrum it needs to build a new Long Term Evolution network, which clearly is coming. http://blogs.forbes.com/joanlappin/2011/06/09/clearwire-clearing-the-decks-for-sale/.
Wouldn't it be odd if LightSquared, which wanted to build a network, ultimately finds itself a tenant on Sprint's LTE network instead, with Clearwire history? What that would do to LightSquared's wholesale business plan is unclear. LightSquared might find itself using its satellite links mostly for backhaul, and using Sprint's LTE network (formerly Clearwire) for the actual terrestrial connections.
Even then, some analysts would have trouble coming up with a plausible, self-sustaining business model for LightSquared. The wholesale-only model hasn't worked all that well in the U.S. market, in any segment of the business, on a long-term basis.
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