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One More LightSquared Casualty: Vendors

Thu, 02/16/2012 - 12:18pm
Maisie Ramsay

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. 

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