LightSquared’s plans to deploy a terrestrial LTE network using L-band satellite frequencies was dealt a serious blow by reports that government testing found that its proposed LTE service caused significant interference with around 75 percent of general-purpose GPS receivers. Furthermore, another set of test results suggests that LightSquared will impair some aircraft safety systems. Research on the effects of precision GPS devices has not been completed, but it is hard to see how even positive results will help the company.

So what happened? How could this have been avoided? LightSquared blames GPS equipment manufacturers for being sloppy in their designs (and indirectly the FCC for allowing such products to reach the market). However, these problems may have a different source, the path by which Ancillary Terrestrial Component (ATC), or terrestrial use of satellite frequencies, and specifically LightSquared, followed to reach this point.

Originally ATC was inspired by the success of satellite radio’s terrestrial repeater networks that supplemented, but did not replace, Sirius and XM’s broadcast satellites. The same model was envisioned for MSS oriented ATC build-outs. The satellite would remain the primary communications node and the terrestrial stations would simply improve satellite coverage in areas without a good view of the sky.

From a purely technical perspective this made sense, but from a market perspective the ability to use a satellite phone in New York City’s urban canyons remained unappealing. The initial version of ATC failed because the small available MSS market was not dense enough to support the build-out of the required terrestrial infrastructure. Satellite radio could do this because the product it offered was used in cities and it is in cities where the repeaters were needed. For satellite radio repeaters they made sense, for MSS they did not.

It has been clear from the failure of the original Iridium and Globalstar that the MSS voice market was limited to a small subset of the population, largely first responders and a handful of people in remote locations such as resource extraction sites.

These issues were resolved in January 2011, when the FCC gave LightSquared a waiver allowing it to offer devices that did not have the ability to communicate with satellites at all. Previously, ATC service had required that the satellite be the primary service provider and that ATC enabled devices have both a satellite and terrestrial mode. With this change, LightSquared’s satellite spectrum became indistinguishable from the terrestrial wireless spectrum held by companies such as AT&T. The fly in the ointment appeared quickly, however, as the use of LightSquared’s L-band spectrum at terrestrial network power levels was found to interfere with GPS devices.

For LightSquared, the very same magic that turned relatively uninteresting satellite spectrum into valuable wireless spectrum also poisoned that spectrum. If LightSquared had used TerreStar’s S-band spectrum, rather than its sister company SkyTerra’s L-Band spectrum, the attempt to increase available wireless spectrum might have worked. Or, maybe not — the problem remains the tortured path by which spectrum that was allocated for one purpose was incrementally shifted to another without a full examination of the implications of that shift. The same incremental set of rule changes and waivers that made it possible for the FCC to introduce new wireless spectrum and support competition (LightSquared’s network would have been a wholesale affair, giving new players an opportunity to enter the market) also prevented the structured analysis that would have shown what a potentially bad idea the repurposing was.

It seems that both the FCC and LightSquared were trying to create more valuable wireless spectrum while avoiding the sort of tumult that a genuine recasting of spectrum use would have involved. They were not breaking the law, but each for its own reasons was pretending that this was a matter of degree not of kind. In fact, it was a transfer of spectrum from the satellite to the wireless industry. This might have been a good idea but the way it was done prevented the sort of thorough technical examination that would have ensured all of the users, GPS and wireless, could have gotten along. In trying to finesse the official spectrum allocation the FCC and LightSquared demonstrated why we have such allocations in the first place.

Max Engel is an experienced satellite industry and telecom industry analyst and founder of The North Star Consultancy. He can be reached at [email protected].