Feb. 14 (Bloomberg) -- The U.S. Federal Communications
Commission said it won’t let Philip Falcone’s LightSquared Inc.
begin service after an Obama administration adviser found that
the wireless venture disrupts navigation gear.
Federal agencies have determined that LightSquared’s signals
interferes with global-positioning system devices, Tammy Sun, an
FCC spokeswoman, said today in an e-mailed statement. The FCC is
preparing to withdraw the preliminary approval it granted last
year for LightSquared to build a high-speed network serving as
many as 260 million people, Sun said.
“The commission clearly stated from the outset that harmful
interference to GPS would not be permitted,” Sun said. “The
commission will not lift the prohibition on LightSquared.”
The FCC’s action marks a blow to LightSquared and a setback for
Falcone’s Harbinger Capital Partners hedge fund, which has
invested $3 billion in the venture. Last year’s tentative FCC
approval sparked a year of lobbying by LightSquared and opposing
GPS companies, and set in motion U.S. testing that LightSquared
has denounced as flawed.
Those government tests found that LightSquared’s proposed ground-
based network would interfere with navigation equipment
including gear used by aircraft, Lawrence Strickling,
administrator of the National Telecommunications and Information
Administration, said in a letter today to the FCC.
“There are no mitigation strategies that both solve the
interference issues and provide LightSquared with an adequate
commercial network deployment,” Strickling said in the letter to
FCC Chairman Julius Genachowski.
LightSquared said in an e-mailed release issued before Sun’s
statement that it disagreed with Strickling’s findings.
The NTIA and the advisory board that informed its decision
“disregard more than a decade of regulatory orders, and in doing
so, jeopardize private enterprise, jobs and investment,” the
Reston, Virginia-based company said.
The company’s travails in Washington have weighed on Falcone’s
hedge fund, which in 2005 began investing in LightSquared’s
predecessor, SkyTerra Communications Inc.
Harbinger managed $4 billion at the end of last year, down from
a peak of $26 billion in mid-2008. It wrote down its
LightSquared position by 59 percent last year because of the
uncertainty over LightSquared approval.
Harbinger is paying a 15 percent interest rate for a $190
million loan, almost triple what the riskiest corporate
borrowers pay, said two people with knowledge of the loan.
LightSquared said it “fully expects” the FCC “to recognize
LightSquared’s legal rights to build its $14 billion, privately
The wireless company has pursued FCC approval since November
2010, and cited previous agency decisions that it says granted
permission to build towers for its network.