Sprint Nextel has given LightSquared about six more weeks to win regulatory approval for its proposed cellular data network, extending a US$9 billion deal under which LightSquared would operate on Sprint infrastructure.
LightSquared wants to deliver LTE (Long-Term Evolution) mobile service over frequencies right next to the spectrum used by GPS (Global Positioning System). Last year, Sprint agreed to host LightSquared's spectrum on its Network Vision infrastructure in exchange for cash and the right to use some of the startup's LTE capacity. The deal stands to save LightSquared billions in network deployment costs.
However, LightSquared's entire project is being held up by concerns about interference with GPS, which the U.S. Federal Communications Commission needs to see resolved before it will grant permission for the LTE network. LightSquared had hoped to win that approval before the end of 2011. At the end of last year, Sprint extended LightSquared's deadline for getting FCC approval by 30 days.
"Sprint and LightSquared have extended their agreement until mid-March to give LightSquared additional time to address issues associated with the 1.6 spectrum," Sprint said in a statement on Tuesday. It also gave more details about a temporary stop to work on the project pending the regulatory approval: "At the end of 2011, Sprint and LightSquared jointly decided to pull back on expenses and stop new deployment design and implementation. All work has been halted. This helps ensure Sprint's Network Vision project remains on schedule." Sprint intends to launch its own LTE service later this year.
Sprint spokesman Scott Sloat declined to comment on whether the company would be willing to extend the deadline again. LightSquared executives have said the company has enough capital to continue operating for several quarters.
The extension roughly coincides with the term of a public comment period about LightSquared that the FCC announced on Monday. The agency wants comments by the end of February on LightSquared's petition for a ruling that GPS receivers aren't entitled to operate in the 1.6MHz band free from interference. After that, it will seek responses to those comments for 15 days, until about the middle of March.