Wireless broadband company LightSquared’s fast-tracked approval process came to a screeching halt late Tuesday when the Federal Communications Commission decided to “indefinitely suspend” its conditional waiver to operate.
The decision came in the wake of a second government study confirming the concerns raised by congressional Republicans and global positioning system users about the potential for the company’s planned network to interfere with millions of GPS devices.
The FCC described its decision as a setback for competition in the wireless market. It is also a huge blow for Philip Falcone, a major donor to President Barack Obama, and his hedge fund, Harbinger Capital Partners, which owns most of LightSquared. Falcone has invested more than $3 billion in the venture.
Until recently, the administration had shown strong support for the politically connected company.
As the Center for Public Integrity first reported in July, the president was an early investor in LightSquared’s precursor company and is tight with many of its biggest backers. White House visitor logs and emails obtained by the Center showed that the company executives met with administration officials before the FCC fast-tracked LightSquared’s approval in January 2011.
The company also repeatedly mentioned the campaign contributions it had made to Democrats and the president in communications with White House staffers.
Sen. Charles Grassley (R-Iowa), members of the military, and the Federal Aviation Administration raised concerns about possible signal interference from LightSquared’s planned high-speed, fourth-generation wireless Internet network. The government conducted two studies to examine the risk.
The first multi-agency review, concluded on Jan. 12, found that there were “no practical solutions” to resolve the GPS issues. A second, released shortly before the FCC announced its decision, also said that “there is no practical way to mitigate the potential interference at this time.”
LightSquared ran into problems because GPS devices have not been built to effectively screen out the company’s signal. Falcone purchased the under-used spectrum to run the network in 2010. It had originally been set aside by the government for low-energy satellite transmissions, but the FCC strongly supported his bid to increase competition in wireless Internet market by repurposing the spectrum.
LightSquared accused its opponents of playing politics.
“The GPS industry has leveraged years of insider relationships and massive lobbying dollars to make sure that they don’t have to fix the problem they created,” wrote Executive Vice President Jeff Carlisle in a blog post Monday.
The company has vowed to challenge the suspension, but how long it can stay financially solvent is in question. For example, one of its biggest contracts — a $13 billion, 15-year deal with Sprint, the third largest U.S. wireless carrier — required that LightSquared resolve the FCC concerns about GPS before March. The value of Harbinger, which is heavily invested in LightSquared, fell by half last year.
Falcone and LightSquared have few options left, according to analysts. They can try to sell the spectrum, swap it for better airwaves, or sue the government and reduce costs to stay afloat until a solution is found.
Grassley cheered the FCC’s decision but vowed to keep investigating the agency.
“Now that the interference issue is settled, we need to find out more than ever why the FCC did what it did,” he said in a statement Wednesday. “The agency put this project on a fast track for approval with what appears to have been completely inadequate technical research. After all of this time and expense, still, no one outside of the agency knows why.”
Reprinted by permission from iWatch News
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