Deere & Company (DE), a member of the Coalition to Save Our GPS, released a report stating that a proposal under consideration by the U.S. Federal Communications Commission (FCC) will jeopardize the use of the Global Positioning System (GPS) in agriculture and construction equipment. If the proposal is approved, the company estimates that it will have a direct negative impact on the U.S. economy of $96 billion, tantamount to 0.7% of the U.S. economy.
Background
The proposal put forward by Reston, Virginia based LightSquared, sets out the creation of a new, integrated wireless broadband and satellite network that would deploy 40,000 ground stations in the U.S. using airwaves previously reserved mainly for satellite services including GPS.
The Federal Communications Commission earlier this year granted preliminary approval to LightSquared to proceed with the new wireless broadband network. The commission’s support was aimed at improving Americans’ access to high-speed Internet service.
Companies that provide global positioning systems, in addition to the United States Air Force, the operator of the GPS system, opposed the FCC waiver, saying that more time was needed to resolve concerns surrounding LightSquared’s proposed service that might interfere with their satellite-based offerings. The FCC had called upon the GPS industry to be a part of the working group to evaluate the proposal for possible interference to existing GPS systems, before granting final clearance.
Points of Concern
Deere in alliance with the representatives from a wide variety of industries and companies formed a group called the Coalition to Save Our GPS. The purpose of the collaboration was to evaluate the proposal by LightSquared. Findings from the study indicate that the proposed wireless broadband and satellite network could have a $96 billion detrimental impact on the U.S. economy. The $96 billion figure is the total of up to $87.2 billion in costs to commercial GPS users and up to $8.8 billion in costs to commercial GPS manufacturers.
According to the group, LightSquared’s plans to transmit ground-based radio signals would be at least one billion times more powerful than GPS’s low-powered, satellite-based signals, potentially causing severe interference impacting millions of GPS receivers – including those used by the federal agencies, state and local governments, first responders, airlines, mariners, civil engineering, construction and surveying, agriculture, and everyday consumers in their cars and on handheld devices.
Deere said its tests have shown that LightSquared’s wireless signal interfered with Deere’s GPS-dependent system more than 20 miles away. Deere objects to the proposal on behalf of agricultural and construction equipment customers who depend on GPS systems to deliver increased productivity, lower overall cost, and reduce their operation’s environmental impact. The use of GPS technology in agriculture helps farmers improve their accuracy in the use of seed, fertilizer, and fuel. In addition, the use of GPS technology allows farmers to collect data that leads to increased crop yields.
Degradation of GPS signals could significantly erode the strong competitive position of the U.S. farmers in the world agricultural economy. Deere estimates that signal interference would affect U.S. farmers to the tune of $14 billion to $30 billion annually. Crop yields would suffer without the use of GPS, causing higher prices for food at a time of increased demand for farm products.
In construction, GPS technologies assist owners in maintaining equipment, lowering fuel costs and providing a means to better design and manage large construction projects such as buildings, highways and shopping centers.
About GPS and its Economic Benefits
The Global Positioning System, or GPS, enables users on the ground to determine location by connecting to distant satellites using radio signals. The satellites are more than 12,000 miles away from the user and are solar powered, which necessitates a relatively low-powered radio transmission from space. GPS receivers therefore, need to be very sensitive to the very low-powered signals received on earth.
The study by the coalition group summarizes that the commercial adoption of GPS continues to grow at a high rate and is expected to annually create $122.4 billion by way of benefits creating 5.8 million jobs in the downstream commercial GPS-intensive industries.
This analysis is however confined to the economic benefits of GPS technology to commercial GPS users and GPS manufacturers, mainly high precision GPS users, and the economic costs of GPS signal degradation to only those sectors and does not capture the considerable benefits and costs to consumers of GPS, other noncommercial users and military users.
The analysis shows that GPS equipment revenues in North America in the 2005-2010 time period averaged $33.5 billion per year with commercial sales accounting for 25% of the total, while the consumer and military markets, respectively, made up 59% and 16% of the total. The U.S. government has already invested $35 billion in taxpayer money in the GPS satellite constellation and continues to invest in GPS at a rate of about $1 billion a year.
Illinois-based Deere & Co. is engaged in the production and distribution of agricultural and forestry equipment, construction equipment and engines worldwide. The company sells products in the U.S. and Canada through branch offices as well as through distributors and dealers for the resale of products internationally. Deere also competes with CNH Global NV (CNH) and Kubota Corporation (KUB). The company currently retains a Zacks #3 Rank (short-term Hold recommendation).
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