* Officials say want to promote broadband and protect GPS
* LightSquared proving to be risky bet for hedge fund
By Jasmin Melvin
WASHINGTON, June 23 U.S. government officials
called for more testing of hedge fund manager Philip Falcone's
satellite broadband start-up to address interference issues
with global positioning systems, but showed interest in finding
a solution rather than shutting the venture down.
Falcone's LightSquared has come under fire after months of
testing found its original plan for a high-speed wireless
network would interfere with GPS services connected to aviation
and maritime operations, emergency communications systems,
weather tracking, General Motors Co's (GM.N) OnStar equipment
and countless other government and commercials uses.
"We have now tested one proposal here, and we found
unfortunately that it did not work as originally hoped. That
does not mean the story is over," said Department of
Transportation Under Secretary for Policy Roy Kienitz.
"Our goal at DOT is to look for a win-win where we can have
much better broadband service nationwide, but to do so without
disrupting GPS and vital services it provides," he said at a
joint hearing of two House of Representatives Transportation
and Infrastructure subcommittees on Thursday.
LightSquared aims to sell wholesale wireless services to
companies such as Best Buy Co (BBY.N), which would then resell
the service under their own brand names.
Signals from the company's ground antennas overwhelmed most
GPS units tested, causing them to show inaccurate location
information or no data at all.
Rear Admiral Robert Day, chief information officer for the
U.S. Coast Guard, stressed the devastating effects to a
multitude of aviation and maritime operations that such
interference could cause.
But there is more work to be done, Day said. "We will
continue that testing and find out exactly what the
interference issues are," he said, committed to working with
LightSquared if a remedy is possible.
LightSquared unveiled a new plan for deploying its network
earlier in the week that it hopes will curb interference issues
and satisfy the Federal Communications Commission, which must
give its approval before the network can be built.
Falcone and investors in his Harbinger Capital Partners
hedge fund have gambled billions of dollars on the success of
LightSquared. To date, Harbinger has sunk about $3.1 billion
into the wireless venture, making the fund the company's
largest single equity investor.
LightSquared's new proposal would use a different block of
wireless airwaves for its network than originally planned.
These airwaves are 10 megahertz, located farther away from the
Kienitz said it is a well intentioned general strategy.
"Very preliminary thinking indicates that if they're
transmitting in a zone that's much farther away from the GPS
band, the interference is likely to be less," he said.
Department of Defense Chief Information Officer Teri Takai
noted that testing of this will have to await an official
filing of the plan with the FCC, which will direct federal
agencies on what to test.
"In aviation there's no room for error," House Aviation
Subcommittee Chairman Tom Petri said.
He urged thorough testing "to ensure the FCC does not
approve plans that would introduce unacceptable risk into the
aviation system or leave aviation GPS users with new and costly
The telecom start-up has become one of Falcone's riskiest
and most high-profile bets.
(Reporting by Jasmin Melvin; editing by John Wallace)