NEW YORK A dispute between Harbinger Capital's telecom start-up LightSquared and GPS makers flared on Thursday with each side blaming the other for interference between systems like aviation navigation and a high-speed wireless network that LightSquared wants to build.
LightSquared, a company backed by Philip Falcone's hedge fund, filed a report with U.S. regulators on Thursday with the results of GPS interference tests carried out by LightSquared and makers of GPS devices used in everything from navigation and cellphones to agriculture and construction.
LightSquared acknowledged that tests found interference between its high-speed wireless network and GPS devices, but said the device makers should fix the problem.
For their part GPS manufacturers dismissed LightSquared's plan for resolving the interference and argued that the company's proposal was presented too late to be included in the test report, which was filed with the Federal Communications Commission after a two-week extension.
LightSquared last week said that it would use a different swath of airwaves than it had originally planned, in order to eliminate 99.5 percent of the interference problems found in tests.
But executives for GPS companies including Trimble Navigation (TRMB.O) and Garmin Ltd (GRMN.O) and representatives from the aviation industry told reporters on a conference call that LightSquared's plan would simply not work.
They complained that LightSquared came up with a totally new plan right after the industry had worked with it for "tens of thousands of hours" on tests related only to its original plan, which GPS groups had also contested.
"It raises serious issues as to LightSquared's credibility and its technical acumen," said Jim Kirkland, Trimble's general counsel, referring to LightSquared's proposal made on June 20 to use different airwaves than it had originally planned.
Kirkland is also a spokesman for the Save Our GPS Coalition, which was set up to fight LightSquared's planned network from going ahead.
NEW PLAN DISPUTED
If LightSquared manages to overcome interference problems, it would also need billions of dollars in additional funding, on top of the $3.1 billion Harbinger has already sunk into the company, to build its network.
The FCC said it would examine the report but did not commit to a date for an official response. Interested parties now have until July 30 to send the FCC their formal responses to Thursday's report. Responses to those comments would be due by August 15.
Under its revamped proposal, LightSquared said that only 200,000 GPS devices out of 300 million would risk interference with its network.
But the GPS group rejected that proposal, arguing that they could not see how LightSquared came up with the 99.5 percent statistic without industrywide tests. Earlier this week, U.S. government officials called for more testing.
LightSquared said on Thursday that the interference problems stemmed from GPS manufacturers' design of products "that depend on using spectrum assigned to other FCC licenses." But the GPS group argued that their equipment was designed in line with regulations.
LightSquared promised on Thursday that it would not start its service unless the FCC and other government agencies are satisfied that it has resolved its interference problems.
"LightSquared is fully committed to finding a solution," the company said. "It is unthinkable that a nation which recently completed a complex digital-television transition involving nearly every household in the U.S. will be stymied by a problem posed by approximately 200,000 GPS devices."
LightSquared has told its investors that it struck an agreement to share wireless broadcast towers with Sprint Nextel (S.N) to reduce its network construction costs. Sprint has not confirmed or denied the agreement.
(Reporting by Sinead Carew; editing by Lisa Von Ahn and Matthew Lewis)