Just days after LightSquared hired an all-star team of legal experts, Sprint told the company to look for new partners. Sprint has extended the deadline for FCC approval of LightSquared's network several times. Patience is a virtue, but there's no point in overdoing it.
The original 15-year agreement came with some contingencies, allowing Sprint to pull out by returning $65 million of LightSquared's unused network-building funds. While hardly pocket change, that cost pales next to the $9 billion Sprint planned to pay for the hybrid tower-and-satellite network. It's also cheap in comparison to the $6.5 billion of cash and radio licenses AT&T (NYS: T) had to cough up when its proposed merger with T-Mobile USA died.
To steal a line from Jerry Maguire, nobody said that winning was cheap. Especially not in the smartphone market, where AT&T and Verizon (NYS: VZ) set the rules while smaller players like Sprint struggle to survive.
So Sprint has found a whole new level of commitment to Clearwire (NAS: CLWR) , which runs a more conventional 4G LTE data network on cell phone towers nationwide. The LightSquared deal was a thinly veiled attempt to become the biggest name in rural mobility. Covering the countryside in tower-based cell signals of high quality is not a cheap project. Just ask Alaska Communications Systems (NAS: ALSK) , which put the brakes on its superb dividends just to catch up on its 4G build-out costs in 2012.
Maybe LightSquared can regroup and just sell a satellite-bound solution to Sprint and others, forgetting all about the controversial land-based component and its impact on GPS signals. It certainly sounds better than giving up the ghost altogether. I'm just glad I don't have a financial stake in LightSquared's survival at this point.
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At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.
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