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March 14, 2012

LightSquared Hires High-Profile Litigators; Legal Battle with FCC to Follow?

Apparently not ready to walk away from its half-built mobile broadband network, Philip Falcone's wireless venture LightSquared has hired two of the nation's most prominent conservative litigators, suggesting that a legal brawl with the Federal Communication Commission (FCC) could be right around the corner.

The wireless startup has hired Theodore Olson and Eugene Scalia, two partners at Gibson, Dunn & Crutcher who have a long track record of representing high-profile figures and conservative legal causes, according to Politico.

The moves come on the heels of a series of devastating blows for LightSquared, each of which can be traced back to the FCC's repeated efforts to prevent the company from launching its long-awaited wholesale network, which the FCC's says interferes with GPS receivers and flight control systems.

The startup was given several deadlines to fix its network – and tried several remedies, including using a lower spectrum band from satellite firm Inmarsat – but has been unable to garner approval from the FCC.

LightSquared's hope of deploying the network was essentially buried last month when the National Telecommunications and Information Administration concluded that "there are no mitigation strategies that both solve the interference issues and provide LightSquared with an adequate commercial network deployment."

The fallout has been immense. Sprint, which signed an 11-year deal with LightSquared back in 2011, is expected walk away from its network-sharing agreement as soon as this week. Smaller carrier Leap Wireless is also moving on, noting on Wednesday that it has inked a deal with wholesale provider Clearwire to take its network to 4G.

LightSquared was forced to ask Nokia Siemens to stop work on its network and even defaulted on a $56.3 million payment to Inmarsat last month, although it claimed that the promised work had not been completed. And just last month, CEO Sanjiv Ahuja abruptly resigned and LightSquared cut nearly half its staff.

While many assumed that LightSquared may waive the white flag and sell off its assets, Falcone told investors of his Harbinger Capital Partners hedge fund last month that the company was still exploring options to gain regulatory approval and push forward with the network. With the hiring of Olson and Scalia, it's safe to assume that one option being considered is litigation.

Olson told Politico that the FCC's action against LightSquared "an egregious example…of pulling the rug out from under them capriciously and precipitously," especially considering it is the federal government that is pushing the expansion high-speed networks. The Obama administration has made this a top priority.

"On the face of things, it looks to me like the government has acted arbitrarily after inducing the expenditure of an enormous number of resources," he told Politico.

Stay tuned. It looks like the FCC may soon find itself with a major legal battle on its hands.




Edited by Tammy Wolf


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