Short GSAT. TLPS In Perspective

 

This article is the opinion of the author. Nothing herein comprises a recommendation to buy or sell any security.  The author is short GSAT. The author may choose to transact in securities of one or more companies mentioned within this article within the next 72 hours. The author has relied upon publicly available information gathered from sources, which are believed to be reliable and has included links to various sources of information within this article. However, while the author believes these sources to be reliable, the author provides no guarantee either expressly or implied.

 

I continue to be fascinated by the action surrounding Globalstar (NYSEMKT:GSAT). The stock has been very volatile as a largely retail investor base tries to handicap the odds of spectrum riches vs. bankruptcy vs. distressed financing.

Jim Cramer recently highlighted the risks of Globalstar, sending the stock down a quick 15%. It was notable that Cramer did not try to handicap the prospects for the company’s technology. CEO James Monroe (who has recently been buying stock) subsequently appeared on Cramer to support the stock, but so far the share price has not been cheered.

In my past articles, I also deliberately tried to take a step back and evaluate Globalstar without delving into the technological minutia. I believe that there are bigger picture issues, which dominate the equation and that many people who are spending their time trying to decipher all of the techie details are missing the forest for the trees.

Today, however, I am looking at a technology aspect. But I am doing it in a different way so as to provide additional perspective for those who are trying to piece together the TLPS puzzle. Specifically I am looking at the origins and history of Globalstar’s involvement with TLPS and the involvement of the entity known as Jarvinian.

Back in January of 2013, Globalstar had a share price of around 30 cents and the company was basically in tatters. TLPS was the “brainchild” needed to resuscitate the company. But it was not the brainchild of Globalstar itself.

As mentioned on a January 2013 webinar, General Counsel L. Barbee Ponder said:

Now I’m pleased to be joined by John Dooley of Jarvinian. The TLPS opportunity is his brainchild, and we are grateful for all of his technical assistance in making TLPS a reality this year.

It should be noted that elsewhere within this webinar, Ponder noted that TLPS was on track to become a “reality by the end of the year.” Yet as we are approaching 2 years out, we still have no TLPS reality.

In order to better understand the prospects for TLPS, it is instructive to evaluate its history with Dooley and Jarvinian.

The key point from all of this is that Globalstar has relied heavily on Dooley and his Jarvinian to sell investors on the TLPS concept. In fact, it appears that they may have largely oversold Mr. Dooley as well as the TLPS concept.

Mr. Dooley is still heavily involved with the TLPS concept. Following the presentation of the short thesis by Kerrisdale Capital, Globalstar held a lengthy conference call to rebut the negative sentiment. Dooley was the key speaker on this call and his remarks were in fact more than twice as long as those from CEO Jay Monroe. This led to some confusion among listeners who assumed that Mr. Dooley must be a Globalstar employee. In fact, he is not.

On the conference call, CEO Monroe introduced Dooley as “the founder and managing director of Jarvinian, a spectrum and advisory practice that has been working with Globalstar for the last several years to develop the concepts around TLPS.”

Mr. Dooley wrote the technical appendix to Globalstar’s 2012 petition for rulemaking. But his background there is relayed in a different context:

I, John Dooley, am Managing Director of Jarvinian Ventures, a wireless investment fund. I am an Engineer with 17 years of experience in the development of advanced wireless technologies. I am qualified to provide the opinions and analyses presented in this Declaration. Under penalty of perjury, I hereby declare that the preceding is true and correct to the best of my information, knowledge, and belief:

So the first question about Jarvinian is: is Jarvinian a spectrum and advisory practice working for Globalstar, or is it a fund pursuing its own objectives as it stated to the FCC?

Finding out much about Dooley is a bit of a challenge. Mr. Dooley did author several self-promotional articles on himself on Wikipedia, but these were deleted after the self promotion was highlighted by other users. It appears that Dooley was using aliases (“B Manohar”) to attempt to try to create buzz around his own name (i.e. pretending to be someone else) before being discovered. Clicking on the link and viewing the history of changes to the article makes this clear.

Despite the curious background, Globalstar’s recent conference call presented him with significant accolades. But it appears that they largely oversold their conference call expert, saying that he:

· Developed regulatory and technological solutions for the reformation of previously unusable RF spectrum

· Assisted Globalstar in developing TLPS, made possible with Globalstar satellite spectrum

· Developer of a regulatory and engineering solution for Terrestar, opening up unanticipated new 4G spectrum in L-Band

· Founder of Nanoton; created advanced nanomaterials enabling next-generation wireless filters and antennas

· Holds numerous patents in wireless and intelligent computing technologies

In fact, Terrestar (OTC:TSTRQ) is a pink sheets traded company which is also being restructured. It business description states that Terrestar “seeks to launch a wireless communications system to provide mobile coverage throughout the United States and Canada using integrated satellite-terrestrial smartphones.” But so far, there has been no petition for rulemaking and Terrestar is currently realizing revenues of just $3 million per quarter while losing $60 million per quarter at the bottom line.

Nanoton sounds very advanced, stating that it is “developing advanced nano-polymer filtration capabilities for next generation wireless networks.” But its website still refers to Jarvinian’s old office address, as it has since 2010. The only real press release to come out of Nanoton was in January 2013, at the same time as the Globalstar webinar, which stated that

Jarvinian Wireless Innovation Fund has begun a long-term development and investment relationship with Nanoton, a producer of high performance nanomaterial derived RF filtration for wireless infrastructure. Jarvinian will help Nanoton accelerate the availability of high-selectivity filtration, which is critical to the efficient utilization of new spectrum.

Basically, it is a company, which is not engaged in commercial activity, which is simply founded by one arm of Dooley to interact with his other arm, Jarvinian.

As for the “numerous” patents, Mr. Dooley has received three according to Google’s patent search function. One in each of 1995 (expired), 2007 and 2013.

But Jarvinian and Dooley were clearly very important to the October 9th Globalstar conference call. A majority of the technical diagrams and analysis were directly sourced directly to information supplied by Jarvinian. This can be seen in the footnotes on each exhibit.

Jarvinian has been involved in a back and forth battle with the Engineers for the Integrity of Broadcast Auxiliary Services Spectrum also known as EIBASS. In 2013, EIBASS wrote Ex Parte comments to the FCC accusing Jarvinian and Globalstar of violating the terms of its test licenses by not contacting the relevant broadcasters for interference coordination. Jarvinian’s role is mentioned specifically throughout.

EIBASS has taken an aggressive stance against Globalstar’s testing of TLPS, stating (emphasis added):

In its reply comments, Globalstar once again incorrectly claims that the issue of grandfathered TV BAS Channel A10 at 2,483.5-2,500 MHz is a settled issue. It is not.

What is important is that this Globalstar filing constituted an acknowledgement, at long last, of the fundamental incompatibility between grandfathered TV BAS Channel A10 operations and MSS ATC operations. Adding AWS-5/TLPS only aggravates the problem.

Globalstar did not entertain the notion of frequency coordination being able to avoid interference between BRS1 base stations and MSS ATC base stations, even though both would be fixed-site stations. Why? Because the MSS handsets that would communicate with MSS ATC base stations are mobile devices, triggered by subscribers making telephone calls, web surfing, or other data requests, whose time-of-use and location is never known in advance. It is the identical conflict for co-channel grandfathered TV BAS Channel A10 ENG operations and MSS ATC/AWS-5/TLPS.

The response and rebuttal from Jarvinian on behalf of Globalstar can be found here.

EIBASS’s latest filing from November 2014 with the FCC can be found here. ABC and CBS Television networks have already come out in support of EIBASS’s position, stating:

This letter is filed on behalf of the ABC Television Network (“ABC”) and CBS Television Stations (“CBS”) in support of the ex parte comments of the Engineers for the Integrity of Broadcast Auxiliary Services Spectrum (“EIBASS“)… ABC and CBS wish to emphasize the critical role that BAS spectrum in the 2450-2500 MHz band, namely BAS Channels A8-A10 (“BAS Channels”), plays in the coverage of sports events and other events of public importance, e.g., breaking news, coverage of emergency situations, etc.

The ABC and CBS filing with the FCC can be found here.

The battle has continued, even after the short thesis, which has been presented by Kerrisdale.

According to tvtechnology.com, “EIBASS Warns of Globalstar TLPS Interference Propose 2 GHz Wi-Fi said to pose problems“

The article notes that:

A group of engineers who actively rally for Broadcast Auxiliary Service spectrum say a proposed Wi-Fi service in the 2 GHz band would interfere with BAS. Globalstar of Covington, La., is proposing to build a terrestrial, low-power broadband network on its licensed spectrum at 2,483.5 to 2,495 Mhz….

The Globalstar ex parte filing spends pages explaining how TLPS/AWS-5 would be compatible with existing 2.4 GHz S-band WiFi operations, while ignoring how newcomer co-channel AWS-5 operations would avoid interference to grandfathered A10 TV pickup stations in many of the major metros, such as Boston, Chicago, Detroit, Los Angeles, New York City, Miami, Philadelphia, Phoenix, Sacramento, San Francisco and other areas,” the Engineers for the Integrity of Broadcast Auxiliary Service Spectrum said, also in an ex parte filing.

While the headlines focus mostly on Globalstar, the Ex Parte filings themselves have a heavy focus on the involvement of Jarvinian in conducting the testing.

For those who are determined to try to handicap the outcome of the FCC decision making process, I strongly encourage them to have a read through all of the Ex Parte filings, which can be found here.

Jarvinian and Dooley have a long history of ambitious plans. There is heavy marketing of the ideas and a strong sales pitch, but ultimately results have traditionally failed to appear. So far, this has also included Globalstar’s TLPS.

In 1993, prior to Jarvinian, Mr. Dooley filed for a patent for a “space lattice passive repeater,” or SLPR. The goal of this was to reduce interference from local cell base stations.

In 1996, he founded Novatics, Inc. and appointed himself CEO. By June, he had assigned his SLPR patent to Novatics. The website has since been taken down for Novatics, but a snapshort of it from archive.org reveals heavy promotion of this idea. For example, there was the following “press release“:

New Technology Allows Wireless Operators to Untether Broadband Internet

New York, NEW YORK – The Novatics corporation will today announce the unveiling of Conduit3G, the Wireless industry’s first new model for system development in over two decades.

“Conduit3G represents a dramatic leap forward in network capabilities,” says John Dooley, Director of the Novatics Advanced Systems Group. “For the first time, we will truly have to [sic] ability to bring high capacities and advanced applications, such as broadband Internet, to wireless users. Up until this point, many were questioning whether the promises made regarding mobile videoconference and Internet browsing were going to be viable. Conduit3G removes any doubt – such things are now possible with our technology.

Five years later, in 2006, Dooley was still posting white papers and a “pre-market technology briefing and disclosure.”

Like the TLPS concept at Globalstar, the need for Conduit3G was portrayed as being both indispensable and imminent. But I can find no reference to the technology having been adopted in practice.

Likewise, other projects came up with fancy sounding names and terminology, but which never ultimately resulted in any commercial activity. There was the “the Hyper-Sensitive RF Transducer Project,” “the recently announced 5-Year Initiative,” and “ultra-massively parallel supercomputing.”

The point is that, just like with Globalstar’s TLPS, there has been a tendency to present the adoption of new wireless technologies as being certain and imminent. The results then fail to materialize.

As with TLPS, the estimation of the timing appears to be right around the corner. There are subsequent delays. Then it is dropped altogether.

In 2004, the Novatics stated that “Fully [sic] availability of Novatics technology for next-generation commercial wireless networks can be expected by Q4 2005 in nearly all markets.” But by 2005, it was “by Q1 2006.” Then in 2006, it was “by Q2 2007.” This was the case until, 2009, when the Novatics website was finally taken down.

The point is that we can also see from the predecessor to Jarvinian a history of over-excitement and hype for an imminent technology adoption, which never happens.

I have no doubt that Mr. Dooley and Jarvinian hold the same level of excitement towards TLPS as they have with their past technological predictions. But if the past is any guide, then TLPS likely faces a challenging future.