The FCC's plan to kill LightSquared's
wireless service will affect more than the 30-plus companies that planned on
using it.
It will also affect the vendors
LightSquared hired to build its network, chips and devices.
LightSquared announced in July 2010 that
it planned to pay Nokia Siemens Networks more than $7 billion over the next
eight years to design, manufacture and install 40,000 base stations blanketing
the country.
Nokia Siemens described the agreement as
"the largest of its kind" in the United States and said in October
2010 that it had begun acquiring cell sites and customizing its base stations
to accommodate LightSquared's L-band spectrum.
The massive contract is now on hold.
"While we have a contract with
LightSquared, they previously asked us to put our activities related to the
network build on hold while they resolve the GPS issues," a company
spokeswoman said.
She declined to say how much Nokia
Siemens had received in advance payments for the deal, or whether its contract
was void in the wake of the FCC's announcement.
The FCC announced this week that it
would pull LightSquared's waiver for its network and "suspend indefinitely" its ability to add terrestrial wireless services to its
satellite communications. The verdict leaves LightSquared with few options and will likely put an end to its wholesale LTE ambitions.
Qualcomm, Nokia, AnyDATA and BandRich
were hired by LightSquared to work on devices.
"The events of this week have dealt a serious setback to LightSquared’s business plan, but it is too early to comment on either the near or long term impact to BandRich’s work with them," said Jeff Hart, senior director of BandRich's North American operations.
Hart said BandRich has "worked closely" with LightSquared over the past 18 months on various LTE devices.
Qualcomm declined to comment. None of LightSquared's other vendors could be immediately reached to discuss on the impact of
the FCC’s decision.
A spokesman for LightSquared said its
existing vendor agreements are still in place, but declined to elaborate on
whether the vendors were still receiving payments or continuing work.
The latest setback for LightSquared is
particularly significant for Nokia Siemens, which is struggling for survival
after future support from parent companies Nokia and Siemens dried up. The
vendor has sold off a number of its businesses and late last year announced it
would lay off 17,000 workers, nearly a quarter of its employees.
Its sales dropped 4 percent
year-over-year during the last three months of 2011, and reportedly fell short of its recent fundraising efforts after lenders were spooked by the European
debt crisis.
Nokia Siemens must compete against both
entrenched incumbents Alcatel-Lucent and Ericsson, and Chinese vendors Huawei
and ZTE, which are known for offering lower prices than their European rivals.
Nokia and Siemens tried to sell off the
joint venture last year but failed to find a buyer for the company, prompting a
sell-off of Nokia Siemens' businesses.
DragonWave bought its microwave backhaul
operations, Adtran purchased its fixed line division and NewNet Communication
Technologies acquired its WiMAX business. The sale of the WiMAX business
occurred less than a year after Nokia Siemens closed its original purchase of
the unit from Motorola Solutions.