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LightSquared has worked out a repayment plan with the satellite provider Inmarsat that will require the former to pay a portion now, making time for it to get federal approval for it’s new network plans. LightSquared has been caught up with accusations that the network will be problematic for existing GPS signals.
LightSquared has recently made an outstanding payment to Inmarsat as the first step of their new agreement. The company received two more years to get federal approval before it has to being paying the rest of their balance.
Inmarsat wasn’t sure that it would receive any more payments from LightSquared on account of the FCC‘s release indicating that LightSquared’s tech was causing problems with GPS signals. Recently, however, the two companies announced that they had an accord in which LightSquared would pay $56.3 million and Inmarsat would allow another two years for the wireless carrier to get federal approval for their new network.
That gives them until March 31, 2014 to pay back another $30 million that was originally due on March 31, 2012. The option for early payment is also there. Tom Surface of LightSquared said, “We feel it is a significant win for both organizations.”
FCC Takes a While
LightSquared hasn’t been very lucky in building their nationwide 4G wireless network. $4 billion has already been invested on account of the merit of the technology, but various outfits, like the National Telecommunications and Information Administration, purport that the 4G technology interferes with GPS signals. LightSquared is attempting to disprove this. So far, the FCC has offered a conditional waiver to continue the enterprise, but indicated that the technology needed to be tested to ensure no interference. In February, the FCC indicated that it was considering canceling the waiver, which would leave LightSquared high and dry. So far the commission has heard arguments from both sides, but has suspended judgment.
The wireless carrier initially wanted to serve 100 million Americans by the end of this year, and more than double that number by 2016. They haven’t commented on whether or not those are realistic now, but the extra time granted by Inmarsat was very helpful. Surface added, “Specifically for LightSquared, it provides us the opportunity to continue to focus on obtaining the necessary regulatory approvals we need to build our nationwide wireless broadband network.”
VP of external affairs of Inmarsat Chris McLaughlin believes that it’s a smart move. “The key thing is whether or not we’re better off helping them to keep going, or letting them fall aside, so from that perspective, it made excellent sense to help them. The objective would be to restart much earlier than March 2014, once they’ve got their other issues dealt with.”
Investors supported the decision, and the satellite provider’s stock rose after the announcement. “There was an uptick of about 20 cents on the share price, and I think the emphasis there was on clarity, since we had said before that we didn’t think there were going to be any more payments.”
While Inmarsat doesn’t have any say over whether or not LightSquared will be awarded the approval, McLaughlin said that, if possible, they would want to be sure to back the venture. “This sends a message that any business in the spectrum area needs to be coordinated with Inmarsat, and any solution that’s going to happen with LTE happens with Inmarsat. That’s the real thinking behind this deal.”