Conditions attached to an FCC order approving the acquisition of mobile satellite service (MSS) operator SkyTerra Communications by private equity concern Harbinger Capital Partners are being challenged at the FCC by AT&T and criticized by Verizon Wireless. Those carriers contend that the conditions will put them at a disadvantage in connection with obtaining wholesale access to L-band spectrum controlled by the merged entity. Issued last Friday, the FCC ruling will enable SkyTerra’s new owners to proceed with plans to develop a nationwide long-term evolution (LTE) terrestrial wireless broadband network that is slated for commercial launch by the third quarter of 2011 and that is expected to serve all major U.S. markets by the second quarter of 2012. Known formerly as Mobile Satellite Ventures, SkyTerra has offered MSS services to the U.S. and Canada via two satellites since 1996 and has contracted with Boeing for the construction and launch of two spacecraft to support its next generation LTE network. Acting on National Broadband Plan recommendations that the FCC accelerate development of L-band MSS spectrum that can be used for terrestrial broadband services, the FCC issued a companion order alongside the merger ruling that grants SkyTerra greater flexibility in the operation of its previously authorized ancillary terrestrial component service. Although Paul de Sa, the chief of the FCC’s Office of Strategic Planning and Policy Analysis, noted in a blog posting that the LTE network developed by the post-merger entity would open and would offer wholesale 4G services, the merger order requires SkyTerra to seek prior FCC consent “before leasing capacity to the largest or secondlargest wireless provider,” namely Verizon Wireless and AT&T. Charging the FCC with adopting “new regulatory restrictions that apply only to AT&T and Verizon and limit otherwise lawful secondary market spectrum and resale arrangements,” AT&T called on the agency to rescind the conditions as “unlawful in multiple respects.” Calling the restriction “troubling,” a spokesman for Verizon confirmed, “we are reviewing for options.”
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FCC conditions on SkyTerra-Harbinger merger face challenge
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