U.S. communications regulators dealt a severe blow on Tuesday to LightSquared's plans to establish a high-speed wireless network, proposing to withdraw authority for the land-based portion after government experts said it would interfere with the GPS system.
The Federal Communications Commission said it proposed to suspend indefinitely the authority LightSquared was granted to transition its satellite spectrum to ground-based use.
Just minutes earlier on Tuesday, the National Telecommunications and Information Administration, which manages military and government spectrum use, said it found that LightSquared's planned network would interfere with the global positioning system and there was no practical way to immediately solve the problem.
In a letter to the FCC, NTIA said its conclusion was based on testing and analyses, as well as discussions with LightSquared.
LightSquared had blasted the NTIA's assessment of its planned network saying the agency relied on flawed conclusions but was not immediately available to respond to the FCC's action.
Hedge fund manager Philip Falcone has made a huge bet on the startup wireless broadband company, sinking more than $3 billion from his Harbinger Capital Partners hedge fund into LightSquared.
LightSquared has said previously it has just several quarters worth of cash left and its network partner, Sprint Nextel, had given it a mid-March deadline for FCC approval.
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