LightSquared Broadband Plan Is Dead for Now

The Federal Communications Commission has effectively killed LightSquared’s plan to build its own terrestrial wholesale 4G data delivery system. The FCC’s action followed a letter from the National Telecommunication and Information Administration (NTIA) that found LightSquared’s original and modified plans for its proposed mobile network would cause harmful interference to the nation’s GPS receivers.

The Feb. 14 NTIA letter also noted that the Federal Aviation Administration had concluded that the LightSqared proposed data network would interfere with aviation safety-of-flight systems, and that no practical solutions or mitigations would be found over the course of the next few years.

With mounting evidence that the company’s plan was unworkable, the FCC announced that LightSquared’s time was up.

“The Commission will not lift the prohibition on LightSquared,” said FCC spokeswoman Tammy Sun. “The International Bureau of the Commission is proposing to (1) vacate the Conditional Waiver Order, and (2) suspend indefinitely LightSquared’s Ancillary Terrestrial Component authority to an extent consistent with the NTIA letter. A Public Notice seeking comment on NTIA’s conclusions and on these proposals will be released tomorrow [Feb. 15].”

While the FCC proposal to end LightSquared’s operation is in the form of a proposal, the reality is that this effectively kills the LightSquared application for its 4G LTE (Long-Term Evolution) data system.

LightSquared, as one may suspect, disagrees with the FCC’s actions. According to LightSquared spokesman Chris Stern, the company plans to fight on and prove that its proposed system and GPS can co-exist.

However, it’s hard to see how LightSquared’s protestations are anything but empty promises from a company about to fail.

The current failure of LightSquared to gain regulatory approval for its operations has cost its primary owner, Harbinger Capital Partners, more than half its value, and has forced the company to borrow operating funds at interest rates—more than 15 percent—closer to those charged by payday lenders than even junk bonds. A number of financial observers have suggested that LightSquared only has a few months left before it runs out of cash. This means that the FCC’s actions will almost certainly kill LightSquared long before it has a chance to find a reasonable solution to GPS interference, assuming one exists.

Next: LightSquared Is Unlikely to Be Able to Convince a Count That Testing Was Unfair >>