Sprint on Friday announced that it had terminated its spectrum hosting agreement with LightSquared, representing the latest blow to a company whose plans for a high-speed wireless network have been thwarted by government obstacles.
Sprint axed the 15-year deal worth billions following a number of regulatory setbacks for LightSquared, which ultimately may need to resort to litigation in order to have a shot of launching a 4G LTE network that's integrated with satellite coverage. Government agencies have concluded that LightSquared's network would interfere with Global Positioning System devices, and the Federal Communications Commission has proposed blocking the company from moving forward with the launch.
"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," Sprint said in a statement. "Sprint has elected to exercise its right to terminate the agreement announced last summer. We remain open to considering future spectrum hosting agreements with LightSquared, should they resolve these interference issues, as well as other interested spectrum holders."
Sprint said the announcement wouldn't impact its customers and wasn't "material" to its "ongoing business operations". Sprint, the third-largest U.S. wireless provider, still plans to launch a 4G LTE network later this year.
Meanwhile, LightSquared has received back $65 million that it previously gave Sprint in prepayments.
LightSquared said Sprint's decision didn't come as a surprise and that it was "in the best business interests of both companies."
“These regulatory delays are unfortunate because they will deprive the American people of the benefits of additional competition in the wireless industry," said Doug Smith, chief network officer and interim co-chief operating officer of LightSquared. “For LightSquared, Sprint’s decision will enhance our working capital and provide more flexibility."
It was recently revealed that LightSquared has retained two high-powered lawyers – Theodore Olson, a former Solicitor General, and Eugene Scalia, son of Supreme Court Justice Antonin Scalia – in possible preparation for a fight with U.S. regulators over their plans to block the company from launching its network.
LightSquared has invested billions of dollars in the hope of selling network services on a wholesale-only basis to mobile-phone providers like Sprint and other types of companies that want to provide wireless services.