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LightSquared's GPS fix could cost industry $400M

The company said the GPS industry is responsible for paying for the upgrades, which would eliminate the risk of interference from its planned wireless network.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
4 min read

SAN DIEGO--It could cost the the GPS industry as much as $400 million for gear to protect its precision devices from interference caused by LightSquared's planned wireless network, although the company believes the figure will be ultimately be lower.

LightSquared Chief Marketing Officer Frank Boulben told CNET on Wednesday that there are roughly 500,000 commercial precision GPS devices in the U.S. He said his partner Javed GNSS has developed a device that costs between $300 and $800 and will protect GPS devices from such disruptions.

Boulben said Thursday that the cost could be dramatically lower, noting that only 200,000 to 300,000 precision GPS devices would need the fix. LightSquared also unveiled a filter on Thursday made by Partron America that would cost $6.

LightSquared is aiming to build its own 4G LTE wireless network, which the company plans to offer to other providers on a wholesale business. But the company has been hamstrung by concerns over crucial GPS equipment powering everything from planes to farming equipment. The company is working to appease the concerns as it seeks government approval to begin its network rollout.

But LightSquared and the GPS industry remain far apart on a resolution. LightSquared wants the GPS players to pay for the components; the company has argued that the GPS industry should have vacated the spectrum years ago, and is responsible for the upgrades. The GPS players have balked at the request, noting that its equipment is too crucial to risk interference.

The GPS industry has long relied on equipment that relies on spectrum which bleeds into the spectrum that LightSquared plans to use for its network. While the industry had been warned of its potential use, the GPS companies opted not to change the design of their devices or shield them against potential interference.

Boulben said that the GPS industry's stance has steadily changed over the past few months, from outright denial of LightSquared's right to exist to refusing to pay for the new components. He added he believes that the GPS companies will eventually change their minds and come to an agreement.

LightSquared has already committed to spending $50 million on component to ensure government GPS equipment is properly protected. The company previously showed off a full developed and protected GPS unit, as well as a smaller component that mounts on top of existing GPS antennas.

LightSquared is still awaiting the results of a final test of the components. Boulben said he was confident the tests would yield positive results.

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"I would be extremely surprised if there was a different result," he said.

The components only deal with the 0.5 percent of GPS devices that remain vulnerable after LightSquared laid out its plan to move to different part of its spectrum, which removed the risk of disruption to 99.5 percent of GPS devices.

The company is also undergoing a final test for its alternate plan, which Boulben said would be completed by November.

Boulben also backed the company's target of going live with its network--if it gets its approval--by the second half of 2012, with full completion by 2014.

Boulben, who was taking a few meetings at the CTIA Enterprise & Applications show today, also brought along a team from Sharp, who will be supplying LightSquared's reseller customers with smartphones and tablets.

Sharp marketing executive Takashi Shirasaki said that LightSquared provided the company with a chance to expand its presence in the U.S. Despite being a top supplier in Japan, it has never broke into the U.S. market, with the exception being the old T-Mobile Sidekick messaging phones.

"The partnership with LightSquared is a good opportunity for Sharp," Shirasaki said.

While the network isn't up yet, Shirasaki said he is talking to LightSquared's customers now about future phone plans. He said that the company would be able to accommodate a wide number of price ranges.

For now, LTE phones have largely been premium devices. Verizon Wireless' LTE phones have all began above the standard $200 benchmark for high-end devices.

Boulben said the attractive 4G LTE wholesale rates LightSquared plans to charge will allow its customers to pass the savings along to consumers. He added the rates will allow for the explosion of a prepaid 4G business.

Correction, 11:53 a.m. PT: The initial story inaccurately attributed the $400 million cost to LightSquared. The figure was based off a calculation of the number of GPS precision devices in the U.S. times the highest possible cost of a filter, both supplied by the company.

Updated at 6:26 p.m. PT on Wednesday, and 11:52 a.m. PT on Thursday: to include additional background on the GPS industry and include updated figures provided by LightSquared.