Kerrisdale Takes Its Globalstar, Inc. (GSAT) Short To The FCC

Kerrisdale Takes Its Globalstar, Inc. (GSAT) Short To The FCC
Globalstar GSAT

Globalstar, Inc. (NYSEMKT:GSAT) shares are taking a beating once again as Kerrisdale Capital Management presses its short thesis, this time sending a letter to the Federal Communication Commission (FCC) arguing that opening Channels 12 and 13 would be a more effective way to deal with Wi-FI congestion than Globalstar’s Terrestrial Low Power Service (TLPS). GSAT is currently down 10%, with plenty of volatility over the last few hours.

“Globalstar’s TLPS concept is technically and commercially defective and will do nothing to expand wireless broadband capacity. By contrast, easing the existing restrictions on out-of-band emissions in the 2.4 GHz Band will free up a fourth channel for legacy Wi-Fi and thus smooth the transition to the far more attractive 5 GHz Band,” writes Kerrisdale founder Sahm Adrangi. “We have no objection in principle to permitting TLPS and newly usable Channels 12 and 13 alongside one another; the market can then decide which approach is more attractive.”

Adrangi asks FCC to open up additional Wi-FI channels alongside TLPS

According to Adrangi, Wi-FI Channels 12 and 13 are already widely used outside the US, and that Channel 13 in particular would be useful because it gives network engineers more options when planning a new wireless local area network (WLAN). Since these channels are in the 2.4GHz range, they could also be put into use right away.

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Globalstar, Inc. (NYSEMKT:GSAT) has argued against these Channels being opened up because, “[o]ut-of-band emissions from . . . Channel 12-13 Wi-Fi deployments would seriously degrade and disrupt Globalstar’s licensed MSS offerings in affected areas.”

But Adrangi points out that Globalstar, Inc. (NYSEMKT:GSAT) already has to to deal with this type of interference in major jurisdictions outside the US, and if Channel 12-13 Wi-FI were disrupted its mobile satellite service (MSS) we should have heard about it before now.

Of course an FCC decision not to go forward on TLPS would be a coup for Adrangi, but that doesn’t seem to be his real aim here. If he can convince the FCC to open up Channels 12-13 alongside TLPS it would create more competition for Globalstar, Inc. (NYSEMKT:GSAT) and possibly make their spectrum less valuable.

Adrangi says Globalstar did a ‘predictive survey’ instead of an actual TLPS test

Adrangi also attacks Globalstar, Inc.’s (NYSEMKT:GSAT) TLPS testing, saying that the results that have been presented so far are inadequate.

“We do not believe that these heat maps reflect the results of actual tests. Rather, they are the output of a computer simulation – a ‘predictive survey,’ as Wi-Fi engineers call it – that did not involve real devices at all,” he writes.

Adrangi says that the tests don’t tell what device was used in the tests, whether it was single- or multi-stream, how the speeds were measured, whether the speeds represent physical-layer data rates or user throughput, or what MIMO was used. This lack of detail makes him question the validity of the testing.

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