LightSquared Prepares To Sue Over Failed Broadband Plan

Aviation International News » April 2012
April 4, 2012, 1:15 AM

Recognizing that its plan to cover the nation with powerful Internet transmitters has failed, LightSquared has hired legal counsel, ostensibly to prepare for the possibility of suing those it now sees as the architects of its downfall. Its first target is expected to be the Federal Communications Commission (FCC).

At first blush, perhaps the words chutzpah, kamikaze and Mission Impossible come to mind. But that doesn’t appear to faze Philip Falcone, who owns LightSquared through his Harbinger Investments company. An up-and-coming professional ice hockey player before injuries took him out, Falcone moved on to Harvard Law School, graduated and became an investment banker, a profession where his new legal skill and his acknowledged up-and-at-’em drive brought him a reported $28 billion through daring investments in the sub-prime housing market. And while there is scuttlebutt that he is down to his last billion–excluding the three or four billion he still has sitting in LightSquared, with possibly more elsewhere–he still aims for the top, and he has retained two of Washington’s leading lawyers to lead his case against the FCC.

FCC Due Diligence Questioned

Does he have a case? No one seems prepared to bet either way. The lawyers’ strategy had not been published at press time, but observers believe it is likely to accuse the FCC of not performing due diligence in allowing LightSquared’s plan to move forward when the Commission’s own telecommunications experts should have objected to its feasibility. Instead, the FCC appears to have almost encouraged LightSquared, by removing regulatory barriers that would have normally halted the company’s progress. In one instance, it lifted the requirement that subscribers must use cumbersome satellite handsets. In another, the Commission reversed the rule that the system’s satellite must be the prime communications source, with a moderate number of ground transmitters allowed as secondary sources in areas of poor satellite reception, and allowed 40,000 ground transmitters to become the primary source and the satellite to become a secondary source. Furthermore, throughout the process the FCC’s handling of LightSquared’s requests appeared to be fast tracked, in an agency not known for prompt responses.

Yet in the many months that LightSquared’s plan was before them, it appears that no one at the FCC, ostensibly the public protector of the radio spectrum, questioned its feasibility, and apparently at no time did the FCC engineers go outside and run tests of the actual signals versus those of other adjacent users of the transmitting frequencies proposed by LightSquared. The FCC’s only cautionary step was to state that LightSquared’s license was dependent on not interfering with GPS. So Falcone’s suit is by no means fueled by desperation.

How much political influence was behind the FCC’s apparent lack of due diligence? That’s a subject of much conjecture. Unquestionably, the launch of the LightSquared project would have given a significant boost to President Obama’s National Broadband Plan and, not surprisingly, those associated with it would expect recognition for their efforts. At one time there was speculation that an Obama re-election in November could see FCC chairman Julius Genachowski appointed to the plum position of U.S. ambassador to China. Today, regardless of the election’s outcome, this now seems most unlikely. Notably, too, three senior FCC officials have resigned as the controversy boiled up during the past several months. Also, Senator Chuck Grassley (R- Iowa) is continuing his longstanding quest for records of communications between the White House and LightSquared and Harbinger officials, creating another embarrassment for the administration.

How will it all end? It’s anyone’s guess, with some speculating that Falcone might be offered a small block of more useful–or more marketable–satellite frequencies in a pre-trial settlement. He does, after all, still own a valuable satellite currently orbiting the earth, with a second one standing by, essentially ready for launch. For a savvy entrepreneur like Falcone, it isn’t even half time yet.

FILED UNDER: 
Share this...

Please Register

In order to leave comments you will now need to be a registered user. This change in policy is to protect our site from an increased number of spam comments. Additionally, in the near future you will be able to better manage your AIN subscriptions via this registration system. If you already have an account, click here to log in. Otherwise, click here to register.

 
X