NTIA, FCC Deal a Deep Blow to LightSquared

Carl Weinschenk

LightSquared is a big concept project that aims (or perhaps aimed) to provide 4G Long Term Evolution (LTE) to third parties. It is backed by well-known hedge fund manager Philip Falcone, and had signed on Sprint and other high-profile companies. If it manages to come to fruition, it would be a big deal.

The stumbling block, which this week rose from problem to crisis from the company's perspective, is the possibility that the system as it now is constituted would impact GPS services. Such interference could impact military and aviation services as well as consumer devices.

This week, LightSquared suffered a heavy, and perhaps fatal, body blow: The National Telecommunications and Information Administration (NTIA) indicated that LightSquared's solution to the problem was insufficient. The Federal Communications Commission immediately said that it would move to indefinitely keep the service from launching.

BusinessWeek offered an early take on the fallout from the government action:

LightSquared's options include selling the spectrum, swapping it for better airwaves, suing the government and reducing costs to stay afloat until a solution is found, said Walt Piecyk, an analyst at BTIG LLC in New York.

The story provides background on both LightSquared and more on the bigger picture of what the demise of LightSquared would have on the wireless industry. The short version is that Dish Network and Clearwire will benefit. For Clearwire, it seems like some much-needed good news.

LightSquared issued a press release that suggests that at this point it is not ready to fold the tent. Of course, the initial reaction to an adverse ruling is dictated by the public relations team. A strong showing of defiance and placement of a serious setback in the context of a number of events - some good, some bad, but none absolutely final - buys some time for behind-the-scenes negotiation and for the real powers to decide on a path forward.

It remains to be seen how this will play out. At this point, however, the prohibitive odds are that LightSquared will never be lit up.

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