While Phil Falcone’s LightSquared has run into a lot of static, the wireless start-up sent a clear signal yesterday that it is prepared to sue should the government block the company’s proposed wireless network.
A defiant LightSquared blasted the Federal Communications Comission’s decision last month to pull the plug on the venture because of GPS interference issues, calling the move a “disastrous bait-and-switch” and a violation of its “constitutional rights.”
Less than a week after hiring a pair of powerhouse lawyers, including former US Solicitor General Ted Olson, the company, revealing its legal strategy for the first time, said the FCC will be in violation of its pact if it does not OK the network.
In addition to Olson, who won Supreme Court approval in the controversial Citizens United case, LightSquared last week also retained fellow Gibson Dunn attorney Eugene Scalia, son of US Supreme Court Justice Antonin Scalia.
LightSquared accused the FCC of breach of contract, saying the company has already spent $4 billion on the project after it was “encouraged — and, indeed, affirmatively required” to aid the agency in its mandate to expand the nation’s broadband services.
“The federal government may not now — on the basis of flawed evidence, a flawed process, and conspicuous political pressure — strip away the approval it granted and leave LightSquared and its investors holding the bag for billions of dollars of losses,” the company said in a filing with the FCC.
LightSquared aims to use a combination of terrestrial, or ground, transmitters and satellites to provide coast-to-coast 4G service to as many as 260 million Americans.
The FCC granted LightSquared a conditional waiver last year to move forward with those plans but required testing to be sure its network wouldn’t interfere with sensitive global-positioning devices used in planes and tractors.
The agency did an about- face last month after another federal agency, which had been testing LightSquared’s network, said there was no immediate solution to the GPS interference problems.
LightSquared had until yesterday to respond to the FCC’s plan to nix the network, and the company took the opportunity to put its new legal brainpower to work, a source close to the company said.
LightSquared already faces an uncertain future. Since the FCC’s decision last month, LightSquared has lost half its staff, including CEO Sanjiv Ahuja. Falcone, who angered some clients by investing $2.9 billion of his hedge fund’s money in the venture, also stands to lose big.
In the latest blow, Sprint Nextel cancelled its deal to be the wireless company’s main carrier. Sprint will return $65 million to LightSquared, which could help fund its potential legal battle.
