The original deal struck between Sprint Nextel and LightSquared was contingent on the FCC granting approval of LightSquared's request to terrestrial wireless service on the L-band spectrum by December 31, 2011. Today, it was announced that Sprint is allowing a 30-day extension to LightSquared to get approval from the FCC.
Political storm clouds have been steadily gathering against LightSquared in the past few months in its battles against the FCC and the GPS industry. And in December, things started to look even more ominous for LightSquared approval. LightSquared in the past week is near demanding the FCC give a ruling right away. Whether the answer is yes, or no, LightSquared wants to get on with the business of what it's going to do next. They have been stuck in bureaucratic purgatory.
Sprint is also stuck in limbo with LightSquared. They would love for LightSquared to get approval and host their terrestrial LTE network. Sprint stands to gain billions from a functioning LightSquared terrestrial network hosted on their Network Vision. However, Sprint cannot stand by and wait with LightSquared indefinitely. And that's what this new deadline will hopefully do. It will give LightSquared a little more time to get a definitive answer from the FCC.
It is possible that Sprint will extend the deadline again after this one expires. But it would probably require some movement be made on the issue. If things do not improve for LightSquared's position in this extension period, Sprint may be tempted to just let the deadline pass without another extension. And just go back to the negotiating table should LightSquared ever get federal approval. However, I'm not holding my breath for that to happen. It's an election year now, by golly!
Source: Wall Street Journal