Wireless operator Sprint has announced it is terminating its spectrum hosting deal with would-be satellite-assisted LTE operator LightSquared. Sprint signed the deal back in June 2011, and was to have built out a terrestrial network supporting 4G LTE technology utilizing LightSquared’s 1.6 GHz spectrum licenses. Given that the satellite portion of LightSquared’s operations has been all-but-killed by government regulators for interfering with GPS signals, there’s no sense continuing the terrestrial build-out. As part of the termination, Sprint is returning some $65 million to LightSquared.
“Sprint has been and continues to be supportive of LightSquared’s business plans and appreciates the company’s efforts to find a resolution to the interference issues impacting its ability to offer service on the 1.6 GHz spectrum,” the company wrote in a statement. “However, due to these unresolved issues, and subject to the provisions of the agreement, Sprint has elected to exercise its right to terminate the agreement.”
Sprint maintains that terminating the LightSquared deal won’t hinder it’s own efforts to roll out LTE. Sprint is currently racing to catch up with Verizon Wireless and AT&T in the 4G LTE game: Verizon currently has the most-broadly deployed LTE service in the United States, with AT&T struggling to catch up. Sprint is planning to launch its own LTE network by the middle of 2012.
Under the terms of its deal with LightSquared, Sprint was to have had the option of utilizing (and reselling) up to half the capacity of LightSquared’s LTE network. With that plan gone, industry watchers believe Sprint may have trouble competing with the broader spectrum holdings of Verizon and AT&T, as well as fueling the costs of upgrading its network.
LightSquared characterized Sprint’s move as “in the interest of both companies,” and indicated the cash infusion from Sprint will give LightSquared more flexibility. It’s not clear how LightSquared will be able to continue forward as a viable business if it cannot get regulatory approval for its satellite system. The firm does have spectrum holdings that would be of significant interest to other mobile operators, but for now, LightSquared says it remains intent on setting itself up as a wholesale operating of mobile satellite voice and data services.
Both companies indicated they would be willing to team up again if the regulatory situation changes.