Recent developments at LightSquared – the company that has invested billions of dollars to launch a mobile broadband network that incorporates terrestrial and satellite coverage – are grim.
Just last week, the Federal Communications Commission proposed blocking LightSquared from launching its network.
Now, a global satellite network company based in London claims LightSquared missed a deadline to make a $56.25 million payment. Inmarsat said it has issued a notice of default and that LightSquared has 60 days to pay up or the satellite company can enforce its rights under an agreement.
"Inmarsat and LightSquared have entered into discussions regarding the future of the Cooperation Agreement, but Inmarsat cannot provide any assurance that these discussions will result in any further payments being received from LightSquared," Inmarsat said.
LightSquared contends a final payment isn't due until Inmarsat replies to several issues that the company has raised, Reuters reported.
Last week, LightSquared received a devastating blow when President Obama's telecommunications advisor, the National Telecommunications and Information Administration (NTIA), informed the FCC that LightSquared's network would interfere with GPS systems and that there's no way to mitigate such harm at this time. The FCC is proposing to follow the recommendation of NTIA, an agency within the U.S. Department of Commerce, and has asked for comments in a public notice.
LightSquared said it has been working with federal regulators for years to launch the network and has spent nearly $4 billion. Philip Falcone's Harbinger Capital Partners investment firm is backing LightSquared.
"In this case, the government decided to choose winners and losers," LightSquared said last week in a statement that blasted the FCC's decision. "Politicians, rather than engineers and scientists, dictated the solution to the problem from Washington."
LightSquared hasn't thrown in the towel yet. The company said it remains "committed to finding a solution and believe that if all the parties have that same level of commitment, a solution can be found."
But if LightSquared can't reach an agreement with the government, it may resort to the courts. Falcone, The Wall Street Journal reported last week, has hired lawyers to map out a strategy to overcome the FCC's decision. Sources told the Journal that Falcone has employed Kirkland & Ellis LLP for litigation advice and Latham & Watkins LLP for counsel on regulatory issues.
