February 17, 2012, 4:51 PM — LightSquared's primary investor, Philip Falcone, is exploring possible lawsuits against the FCC and the GPS industry in the wake of the FCC's rejection of the carrier's plan for a 4G cellular network, sources familiar with the company's planning confirmed on Friday.
The U.S. Federal Communications Commission, which has the final say on LightSquared's plan to build an LTE (Long Term Evolution) network using spectrum next to the band used by GPS, acted to kill that plan on Tuesday. LightSquared is owned by Harbinger Capital Partners, the hedge fund run by Falcone.
Falcone has hired outside lawyers to study the potential lawsuits and is also considering ways to appeal the FCC's decision or possibly swap LightSquared's current spectrum for other frequencies assigned to the U.S. Department of Defense, according to Wall Street Journal reports that were confirmed by sources. Through a lawsuit, the company might seek to force GPS vendors to make their receivers filter out LightSquared's frequencies, the Journal said.
Any lawsuit or appeal of the FCC's decision would be a long shot for LightSquared's owners, according to industry observers. LightSquared was granted a waiver to sell wholesale services over LTE and satellite separately, a key part of its business model, only on the condition that interference with GPS receivers be resolved first. After a series of tests last year, the National Telecommunications and Information Administration said on Tuesday that it had concluded the two systems could not coexist.
LightSquared has repeatedly said the second round of interference tests last year was rigged by GPS equipment makers and government officials who it says are beholden to the industry. If the company appeals the FCC's action, it might argue that the decision was based on flawed tests. But even if such an appeal succeeded, the company might not have enough money to keep going until it received approval. LightSquared has said it has enough capital to operate for several quarters.
LightSquared and Harbinger Capital Partners declined to comment.