US agency sees problems in Falcone's wireless plan

NEW YORK, USA:  A U.S. agency that manages federal use of the airwaves has warned that a wireless network proposed by hedge fund manager Philip Falcone could interfere with systems such as Defense Department communications.

LightSquared, an upstart telecom company that is owned by Falcone's Harbinger Capital Partners, has asked federal regulators for permission to offer terrestrial wireless broadband services, which could involve a waiver to conditions around its current wireless spectrum licenses.

Last year the Federal Communications Commission approved an application from LightSquared to build a high-speed wireless network that would offer both satellite and land-based service for wholesale clients. The Virginia-based company is seeking to alter the original plan by allowing its wholesale customers the option to offer terrestrial-only phones.

But in a Jan. 12 letter, the National Telecommunications and Information Administration told the FCC that if it allows such services they may interfere with global satellite systems for navigation, aeronautical emergency communications systems and receivers used by Federal agencies.

A fully terrestrial service would require more land-based stations than a combined satellite and terrestrial system and increase the likelihood of communications interference, according to the letter signed by NTIA Administrator Lawrence Strickling.

The NTIA is an agency within the U.S. Commerce Department that advises the administration on telecommunications policy and manages government use of the airwaves.

In response to the concerns raised by the NTIA letter, the FCC told Reuters in an email that it would "ensure that any approvals would not result in harmful interference." It said it is reviewing LightSquared's waiver request.

The NTIA said in its letter that it was willing to work with the FCC and LightSquared for a possible solution.

LightSquared, which analysts say needs to raise billions of dollars to build-out its network, declined to comment.

The company had said in a Jan. 6 letter to Strickling that it would commit up to $20 million to fund an industry group to study interference problems with the Global Positioning System (GPS). It said the problem was "not unique" to LightSquared.

LightSquared aims to build a wholesale wireless network on which it would rent capacity to service providers looking to sell high-speed wireless services to consumers.

Companies such as T-Mobile USA, a Deutsche Telekom unit, and MetroPCS Communications have said they may be interested in partnering with LightSquared if it gets its network up and running.

LightSquared would compete with another rival, Clearwire Corp, which has already partially built a wireless broadband network, but Clearwire also need more funding in order to complete its network.

Clearwire, which is majority owned by Sprint Nextel, is estimated to need another roughly $3 billion in funding. Some analysts say LightSquared may need another $6 billion funding on top of the $2 billion it has already raised.