is this an opportunity for leds
August 6, 2001
Energy-Saving Light-Bulb Maker Battles
With Satellite-Radio Firms for Bandwidth
By MICHAEL SCHROEDER and YOCHI DREAZEN
Staff Reporters of THE WALL STREET JOURNAL
A decade ago, a handful of scientists invented an ultrabright, long-lasting,
energy-saving light bulb. The cover of High Times magazine dubbed it the
ultimate "grow lamp" for marijuana. A Tennessee venture capitalist plans a
company to grow strawberries indoors with it. Vice President Dick
Cheney's energy plan pictures two of the bulbs illuminating the
240-foot-wide entrance to the Department of Energy.
There is only one small problem. The microwave-powered bulbs,
substitutes for conventional bulbs, emit radio waves that interfere with
another hot technology: satellite radio.
That inconvenient fact has sparked a battle over bandwidth that, so far, has
proved resistant to Federal Communications Commission attempts to
mediate it.
Two companies that plan to
begin using satellites to
broadcast radio later this year,
Sirius Satellite Radio Inc. and
XM Satellite Radio Holdings
Inc., are alarmed that paying
subscribers may hear static --
or silence -- if they drive within
a mile of highways lit by the
bulbs, now made by Fusion
Lighting Inc., of Rockville, Md.
They want the FCC to force Fusion to alter the bulbs to completely block
the interference. Fusion's response: We were here first, and there's room
for both us.
This is just one skirmish in the high-stakes war for control of spectrum, the
nation's most precious New Economy resource. Everyone from the
Pentagon to telephone companies eager to sell high-speed mobile Internet
access are vying to gain control over particular bands of airwaves. In this
dispute, the companies already have the spectrum they want. The problem
is that they occupy adjacent slices and -- like two radio stations too close
to each other on the dial -- waves from one are interfering with the other.
Last October, the FCC brought the combatants together, hoping to end an
endless exchange of engineering studies and lobbying. Fusion alone has
met 11 times with FCC officials and made 40 filings. The firms agreed that
an independent test might provide a basis for limits on microwave
emissions.
On Nov. 3, engineers from all three firms met at an independent testing
outfit in Columbia, Md. After haggling about what lights to test and at what
angle to measure interference, the testers put six Fusion lamps on a
turntable that rotated so a computer could take multiple readings. Each
bulb was tested four times, and when it was over there was no longer any
doubt there was a conflict. Kent Kipling, a Fusion senior vice president,
remembers one satellite-radio engineer gazing at a computer printout and
whispering, "This is going to be a big problem."
The test ended any hope of peaceful settlement. "There was just too much
anger and mistrust," says an FCC official. "We had hoped that the
engineers could find common ground, but that hasn't happened."
The high-stakes game of corporate "Survivor" has its roots in the 1970s,
when a corporate ancestor of Fusion Lighting got FCC clearance to sell
microwave-powered ultraviolet bulbs as a tool to dry ink on things like
beer cans; the bulbs use a slice of spectrum shared by industrial, scientific
and medical users.
The ultraviolet business was sold in 1994, and Fusion scientists founded a
company in Rockville, Md., to pursue the light-bulb technology for wider
use. The product looks like a glass lollipop: a golf-ball-size glass sphere
filled with gaseous sulfur atop a glass stem. The sulfur glows intensely when
bombarded by microwaves. Each bulb is 100 times brighter than a
100-watt bulb. Because there are no filaments (the innards of conventional
bulbs that burn out), sulfur bulbs operate as long as they are connected to
a power source.
Fusion says it is about a year from commercial sales. The bulbs, which sell
for as much as $2,000, depending on size, are being tested as far away as
a South African gas station and a Swedish airport. Investors, including
Minnesota Mining & Manufacturing Co. and Compaq Computer Corp.,
have put about $85 million into Fusion.
Fusion first got a whiff of a problem in 1998, when a consortium of
wireless-computing companies, known as Bluetooth, raised questions
about interference from the new-fangled bulbs. Later, the Coast Guard
asked the FCC to require labels to warn that microwave-powered bulbs
on boats and docks might disrupt radio signals.
But the satellite-radio companies are Fusion's most aggressive antagonists.
Each paid the government more than $80 million for rights to broadcast.
Each complains that bulb emissions threaten the clarity of satellite-radio
signals.
The FCC initially proposed requiring Fusion to reduce emissions by 85%
below current standards. The radio companies rejected that. Fusion
offered to reduce interference by 95% by putting metal casing around the
microwave generator and a metal reflector and coated glass over the light.
The radio companies rejected that, and asked the FCC to require
emissions 99.9% below current rules. Fusion says that would put it out of
business.
Tough, say the radio companies. Left unchecked, the microwave emissions
would "imperil the promise of satellite radio," Sirius and XM told the FCC
in May.
The companies aren't so blunt with their shareholders, though. XM filings
with the Securities and Exchange Commission note that it may not prevail
at the FCC in a dispute over "new radio frequency lighting devices that
would operate in an adjacent radio frequency band." Sirius says only that
"new devices may interfere with our service," and doesn't mention light
bulbs.
In February, Daniel Tessler, a former Lazard Freres & Co. investment
banker who is Fusion's chief executive officer, noticed the difference
between the words Sirius used in the FCC and SEC filings, and called an
old friend at Lehman Brothers Holdings Inc., which was selling $241
million in Sirius shares to investors.
In an interview, Mr. Tessler says he just wanted to be sure Lehman was
satisfied that Sirius had properly disclosed that tests showed radio service
could be knocked out by Fusion lights. In a subsequent lawsuit in
Maryland court, Sirius accuses Mr. Tessler of trying to "shakedown" Sirius
to force it to accept interference from the lights.
In any event, Mr. Tessler's friend, Andy Malik, wasn't involved in the
underwriting, but alerted his superiors. According to Sirius court filings,
they "understood Fusion's statements to charge Sirius with securities fraud
and dishonesty," not something bankers like to hear. Lehman phoned
Sirius, which insists its disclosures were adequate.
Within weeks, Sirius sued Fusion, alleging defamation and interference in
its business. Mr. Tessler calls Sirius's allegations "specious." Fusion
countersued in Texas court, alleging that Sirius defamed Fusion and
"artfully concealed" the threat that Fusion poses to satellite radio. "Fusion's
lawsuit is groundless," says Pat Donnelly, general counsel at Sirius.
No court dates have been set, and the FCC says it's months away from
deciding whether to restrict emissions from Fusion bulbs.
Meanwhile, Sirius is in a separate skirmish, this time on the defensive:
Wireless communication companies complain that Sirius radio-signal
amplifiers on building tops, towers and tunnels, erected without FCC
approval, could block wireless Internet traffic.
Sirius, in arguments that mirror Fusion's, says no new safeguards are
needed.
Write to Michael Schroeder at mike.schroeder@wsj.com and Yochi
Dreazen at yochi.dreazen@wsj.com |
