LightSquared: FCC's planned block will violate our 'constitutional rights'

Wireless start-up LightSquared will tell the Federal Communications Commission (FCC) on Friday that the agency's proposal to block its planned 4G network would violate the law and the company's constitutional rights.

"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. Its contractual obligations will not permit this; its constitutional responsibilities will not allow it," the company wrote in its formal comment to the FCC, set to be filed before Friday's deadline.

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The company said blocking its network now, after it has already invested billions of dollars, would be "one of the most disastrous 'bait-and-switch' episodes in the history of telecommunications regulation."

Although the FCC granted LightSquared a conditional waiver to move forward last year, testing has shown its planned nationwide network could interfere with GPS devices. After a review by the National Telecommunications and Information Administration (NTIA) concluded there was no feasible way to fix the interference problem, the FCC said last month it would pull LightSquared's waiver and bar it from launching its network.

The company argued that the FCC has a legal responsibility to conduct its own independent review of the testing and not just rely on NTIA's conclusions, which it called "deeply flawed and fatally biased." LightSquared said the lack of analysis in the FCC's proposal "and the speed with which the Commission released it (the day after receiving the NTIA Letter), are powerful evidence of an arbitrary and capricious process."

The company insisted that technical fixes could allow GPS and LightSquared to exist side by side.

Testing showed that LightSquared's signal does not bleed into the GPS band. Instead, the problem is that GPS receivers are too sensitive to filter out LightSquared's powerful cell towers operating on nearby frequencies.

LightSquared argued that the GPS industry does not have any legal right to protection from interference outside of its assigned spectrum, but GPS companies claimed LightSquared is trying to build a cellphone network relying on frequencies that should only be used by satellites, which transmit much fainter signals.

"The GPS industry has basically sat on its hands and hasn't budged an inch on a problem it created," LightSquared's vice president of regulatory affairs, Jeff Carlisle, told reporters on a conference call on Friday. 

Carlisle argued that blocking the company's network would amount to an "uncompensated taking of property rights" and would violate the company's right to due process. He also claimed that by treating LightSquared differently than other companies, the FCC would violate the company's constitutional right to equal protection under the law.

If the FCC follows through with its decision to block LightSquared's network, Friday's filing could form the basis for a lawsuit in federal appeals court. LightSquared has already hired famed lawyers Ted Olson, a former solicitor general, and Eugene Scalia, the son of Supreme Court Justice Antonin Scalia.

Carlisle said LightSquared will continue to make its case to members of Congress, claiming that because there is an "obvious congressional prong to the strategy of the GPS industry, we would be fools not to have one ourselves."

The company suggested that if there is no technical solution to the interference problem, the FCC has an obligation to find new spectrum for LightSquared to use.

"Let me make one thing clear: we are not going away," Carlisle said.

In its filing with the FCC, the Coalition to Save Our GPS, which represents the GPS companies, noted that language inserted into a government funding bill specifically bars the FCC from approving LightSquared until it fixes the interference problem. The coalition argued that there is no way to fix the interference problem, so the legislation requires the FCC to reject LightSquared.

"While the Coalition recognizes that making more spectrum available for terrestrial mobile broadband is a laudable goal, it cannot come at the expense of an existing, critical service like GPS," the group wrote.

Friday is the deadline for comments on the FCC's proposal to block LightSquared, and March 30 is the deadline for responses.

Some Republicans have questioned whether the FCC and the White House have shown inappropriate favoritism to LightSquared. Sen. Chuck Grassley (R-Iowa) has vowed to block President Obama's two FCC nominees until the agency releases internal records on its review of the company.

The White House and the FCC have denied giving any special treatment to LightSquared, but expanding broadband access has been a top priority for both agencies. 

Last September, Rep. Michele Bachmann (R-Minn.) accused Obama of "crony capitalism" for allegedly giving favor to his political supporters, pointing to Harbinger Capital's Philip Falcone.

Falcone, who has donated thousands of dollars to both Democrats and Republicans in recent years, says he is a registered Republican and denied any attempts to influence the process through political connections.