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Future of LightSquared Network Remains Uncertain Due to GPS System Issues

LightSquared has been under major scrutiny after FCC tests concluded that the company’s high-speed broadband wireless LTE network was interfering with the global positioning system (GPS). LightSquared has now agreed to change their original plans and will use a different block of spectrum to avoid interfering with GPS system signals in space and on the ground.

The company told reporters that their new plan is expected to reduce the risk of interference to 99.5 percent of GPS devices.

However, some members of the GPS industry are still concerned that the LightSquared interference issues will continue. They believe that testing should continue to ensure public safety, as the GPS system affects thousands of applications that people depend on everyday.

“LightSquared’s supposed solution is nothing but a ‘Hail Mary’ move,” said Jim Kirkland, a founding member of the Coalition to Save Our GPS, which includes corporate giants such as FedEx (NYSE: FDX), Garmin, Delta Airlines and Caterpillar (NYSE: CAT). The Save Our GPS Coalition originally raised awareness for the GPS interference issue. Kirkland said that the move to a different block of spectrum would still interfere with many critical GPS system receivers.

LightSquared signed a deal with satellite provider Inmarsat to use lower frequencies that are further away from the GPS system spectrum. Originally, LightSquared already had plans to eventually move into that band of spectrum over the next couple of years as its business grew. But now the company plans to use those frequencies as soon as they launch their services.

Analysts say LightSquared still needs billions of dollars of more investment capital to finish building its network. The GPS system interference issues may make it difficult for the company to continue raising money.

Although a deal has not been signed, rumors are swirling and documents have been leaked to the press revealing that Sprint (NYSE: S) is going to absorb some of the cash required for LightSquared to build out its network. Supposedly Sprint would pay in a mix of cash and the right to use LightSquared’s spectrum. However, the Sprint network-sharing agreement hasn’t been signed and could still fall apart.