L-Band Decision in Limbo at FCC, but by Refinancing Debt Ligado Buys Time
Despite the broader focus on the C band and other mid-band spectrum, the FCC doesn’t appear to be moving toward action soon on the L band, industry and FCC officials said. But Ligado isn’t going away. As a result of recent financial developments, the FCC has until late 2020 to reach a decision. A lawyer close to Ligado said the company reached agreement with creditors on refinancing its debt, which buys time: The amendments extend Ligado’s cash runway and allow Ligado to defer its Inmarsat payments. All the FCC action at this point is in Chairman Ajit Pai's office and the Office of Engineering and Technology, officials said.
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Payments to Inmarsat total around $34 million per quarter, consultant Tim Farrar told us. “Ligado’s budget when it emerged from bankruptcy and renegotiated the Inmarsat agreement was based on receiving approval by that point in time,” he said: “The ongoing liability to Inmarsat may represent the biggest barrier to a successful reorganization of Ligado’s debts, because Inmarsat has little incentive to compromise … if there are no signs that Ligado will be able to monetize its spectrum assets or even achieve a resolution with the FCC.”
The likelihood the major wireless carriers will be able to address mid-band needs via the C-band auction “makes the possibility of Ligado selling out to one of them an even more remote prospect,” Farrar said. Inmarsat didn’t comment.
The FCC owes Ligado an answer, said Information Technology and Innovation Foundation Broadband and Spectrum Policy Director Doug Brake. “It's been years, just eating away value,” Brake said: “Ligado has already made so many concessions, for there to be just a vague ‘no’ from [DOD] and nothing more is pretty unsatisfying, on both substance and process. I get that the FCC has to pick its battles, but they already have so much momentum for C-band, 5.9, and other initiatives. L-band is another great opportunity, and I would expect they know the right answer here.”
In his “rant” about U.S. companies taking a bigger stake in Ericsson and Nokia two weeks ago (see 2002060074), Attorney General William Barr “included an oddly specific endorsement of L-band uplink for C-band downlink,” emailed MoffettNathanson’s Craig Moffett: “That could be seen as a wink to Chairman [Ajit] Pai, giving him air cover to finally give Ligado the green light.”
This year is shaping up to be a big one for spectrum but some proceedings, particularly Ligado and the C band, “are still hanging in the balance,” said Tom Struble, tech policy manager at the R Street Institute. “Any mistakes at this stage could lead to bankruptcies that substantially delay or entirely scupper the reallocation processes.” The C-band proceeding is “fully within the FCC's control,” but the L-band “impacts government spectrum users and therefore requires the FCC to go through the NTIA's interagency spectrum coordination process,” he said: “While that process is slow-moving at the best of times, the recent turnover in leadership at NTIA has drawn it out even further for the L-band.”
Because of GPS concerns, granting Ligado's pending petition carries some risks for the FCC, Struble said. NTIA said in December it couldn’t recommend Ligado's planned broadband terrestrial low-power service (see 1912090011) “without adding any new technical evidence into the record,” he said: “The FCC could take that feedback, consider it, and decide to grant Ligado's petition nonetheless, presumably citing technical evidence in the record showing the potential for interference to neighboring GPS systems is negligible.” There’s no easy answer for the FCC, Struble said. “Either the FCC will side with Ligado, risking potential interference to DOD and further delaying interagency spectrum coordination on other bands, or the FCC will side with NTIA -- sending Ligado into certain bankruptcy, but potentially expediting its work with NTIA to free up other spectrum bands,” he said.