LightSquared files for bankruptcy protection

posted at 9:21 am on May 15, 2012 by Ed Morrissey

It’s been a while since we looked in on LightSquared, the firm that wanted to roll out a terrestrial cell network on a part of the spectrum reserved for low-powered satellite transmissions.  The FCC gave LightSquared, a firm with significant connections to Barack Obama, a temporary waiver to proceed while testing took place to see whether it would interfere with GPS systems, an outcome the Department of Defense and the FAA both insisted would happen.  Sure enough, after spending a fortune, testing showed that LightSquared transmissions would swamp out commercial, aviation, and defense GPS systems — an outcome the FCC could have determined right off the bat, had it chosen to do the testing itself.

Yesterday, LightSquared filed for bankruptcy protection, but that’s not necessarily the end of the story:

LightSquared, the wireless startup that has run into opposition from federal regulators, filed for Chapter 11 bankruptcy on Monday.

Philip Falcone and his investment firm Harbinger Capital invested billions of dollars in LightSquared’s plan to build a high-speed wireless network that would have served more than 260 million people, but federal regulators denied it permission to launch earlier this year.

In a statement, Marc Montagner, the company’s chief financial officer, said the filing “is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network.”

Yes, the firm still wants to roll out its network, even though the FCC found “no practical way” to solve the interference problem short of throwing consumers, commercial airlines, and the military under the bus.  LSQ only has a couple of options in this regard.  One way is through the courts, which LSQ has already hinted they will go, claiming that the temporary waiver from the FCC have the firm some level of commitment to their system and that they were being punished for the shortfalls of GPS manufacturers (see links below for more on that argument), even though the waiver clearly stated that LSQ had to show that their systems would not interfere with established GPS systems, a condition to which LSQ agreed.

The other way?

The wireless group had contracts with three lobby firms in the first quarter of 2010, compared to 14 by early 2012. It spent $695,000 on K Street in 2010, compared to nearly $2.8 million in 2011.

LightSquared’s lobbying line-up has been star-studded, thanks to contracts with firms that employ influential former lawmakers. Former congressman Dick Gephardt (D-Mo.) and former Pennsylvania Gov. Ed Rendell (D) are among those who have lobbied for LightSquared.

The K Street blitz has continued in 2012. The now-bankrupt company spent more than $1 million during the first three months of this year on 14 lobbying powerhouses, public disclosures show. Only two of those 14 firms disclosed terminating their contracts with LightSquared in the first quarter of this year despite the firm’s financial woes.

LSQ went on a lobbying blitz to pressure Congress into forcing the FCC to approve the network.  That lobbying blitz didn’t get limited to Congress, either, as I first reported in December, but also included state legislatures such as ours in Minnesota.  Those efforts didn’t work either, and it’s difficult to see how they could have worked with the crystal-clear test results demonstrating that the variance LSQ needed on transmission strength would have forced every person with a GPS device to replace it with something more expensive and less useful.

LSQ chose Chapter 11, a reorganizing effort, rather than Chapter 7, a shutdown, which indicates that they will still try to get their network on the ground.  They’d better come up with a plan to buy spectrum in the same way other 4G operators have had to do, because their efforts to use their satellite spectrum aren’t going any farther than they have up to now.


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…But Bain Capitol!

KOOLAID2 on May 15, 2012 at 9:26 AM

But they had such a cool name….

RBMN on May 15, 2012 at 9:26 AM

Smart power investing cronyism errr…

makattak on May 15, 2012 at 9:26 AM

…JugEars is shocked…shocked I tell you!

KOOLAID2 on May 15, 2012 at 9:27 AM

Just hang in there…
More flexibility right around the corner..

Electrongod on May 15, 2012 at 9:27 AM

If a business uses it’s own money to build the company up instead of throwing $1M at lobbyists, they may succeed. Oh, and a business plan that didn’t include absolute failure by trying to use a wireless network they knew in advance wouldn’t get approval.

Kissmygrits on May 15, 2012 at 9:30 AM

Flexibility is not a good thing when you want to hose someone.

Archivarix on May 15, 2012 at 9:31 AM

claiming that the temporary waiver from the FCC have the firm some level of commitment to their system

Am I the only one having problems parsing that sentence?

Mohonri on May 15, 2012 at 9:31 AM

LSQ chose Chapter 11, a reorganizing effort, rather than Chapter 7, a shutdown, which indicates that they will still try to get their network on the ground

…in a second term JugEars …”will have more flexibility”…he can replace the “regulators”…

KOOLAID2 on May 15, 2012 at 9:31 AM

Let’s not forget that this administration tried to pressure the DoD in signing off on this project even with the “interference problem.”

Happy Nomad on May 15, 2012 at 9:31 AM

They should go down the same road that they forced Open Range, their competitor, to go down.

Given that Lightsquared used their f[r]iends in the Obama Administration to push Open Range into bankruptcy, it’s only fair that they themselves should suffer the same fate.

We aren’t in Chicago any more, Bobo!

unclesmrgol on May 15, 2012 at 9:36 AM

+1 koolaid on your first post

cmsinaz on May 15, 2012 at 9:37 AM

There’s some angle in the Chapter 11 that probably involves hosing taxpayers/creditors for even more money.

Who knows what those lobbyists are lobbying for — it might be something completely unrelated.

mr.blacksheep on May 15, 2012 at 9:38 AM

Too bad the Labor Relations Board can’t get involved. They make decisions easily. Easy peasy.

a capella on May 15, 2012 at 9:38 AM

They’d better come up with a plan….

I’m sure the ‘plan’ involves a checkbook and a rather LARGE donation to the re-election efforts of one Barack H Obama.

GarandFan on May 15, 2012 at 9:44 AM

They will emerge out of bankruptcy with a new name: Light in the Loafers.

hillsoftx on May 15, 2012 at 9:53 AM

What a shame when fascism runs straight into reality.

rbj on May 15, 2012 at 9:54 AM

Unexpectedly!

WhatNot on May 15, 2012 at 9:57 AM

On a tangential note, every time I see that guy from Light Squared’s face I think of James Spader.

Perhaps a bit apropo too, considering Spader’s character at The Office which nearly ran Dunder Mifflin into the ground.

I wonder if Montagner or some of the other Light Squared biggies spent most of their time pursuing Bacchanalian delights instead of sound business practices?

Logus on May 15, 2012 at 9:58 AM

O/T, but not bad news…

That astroturf “third party” group “Americans Elect” has apparently thrown in the sponge.

bofh on May 15, 2012 at 10:05 AM

claiming that the temporary waiver from the FCC have the firm some level of commitment to their system

Am I the only one having problems parsing that sentence?

Mohonri on May 15, 2012 at 9:31 AM

I suspect it should read “…gave the firm some level…”

Patrick S on May 15, 2012 at 10:10 AM

Corporate stupidity. These guys thought they could knock out everyone’s GPS to make a buck, and force the world’s GPS companies to change all their devices and force all consumers to throw away their old ones – -just so they could make a little money for themselves.

cane_loader on May 15, 2012 at 10:19 AM

Yes, the firm still wants to roll out its network, even though the FCC found “no practical way” to solve the interference problem short of throwing consumers, commercial airlines, and the military under the bus.

Why do we suddenly believe that a government agency, the FCC, is the final expert on this? When did the FCC become omniscient about technological innovation?

ss396 on May 15, 2012 at 10:36 AM

1. Incorporate a “gree” start-up
2. Raise lots of govt. money and loan guarantees.
3. …
4. Profit!

Who cares if the company craters, that’s not the point.

Kenosha Kid on May 15, 2012 at 10:42 AM

the filing “is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network.”

Not to worry, after the election, the FCC will have more “flexibility”.

petefrt on May 15, 2012 at 10:42 AM

“green”

Kenosha Kid on May 15, 2012 at 10:42 AM

Obviously, LightSquared isn’t going to be allowed to launch their network, but you’ve misled your readers about the actual cause and where the blame lies.

blink on May 15, 2012 at 11:12 AM

How so?

L2 inherited a satellite network and convinced some moron at the FCC to give conditional permission for terrestrial usage. The conditions included NOT interfering with GPS. They failed and now they’re filing for bankruptcy.

Wendya on May 15, 2012 at 11:51 AM

And when the courts grant a sympathetic license to LSQ to produce their network, how long before we find out that there is Chinese or North Korean money behind them, and that an enemy government will have the ability to effectively jam our military GPS systems at will?

Freelancer on May 15, 2012 at 11:53 AM

LightSquared files for bankruptcy protection

When your “business plan” relies on government funding, regulatory favoritism, and endless government subsidies, bankruptcy should not be a surprise.

And when the courts grant a sympathetic license to LSQ to produce their network, how long before we find out that there is Chinese or North Korean money behind them, and that an enemy government will have the ability to effectively jam our military GPS systems at will?

Freelancer on May 15, 2012 at 11:53 AM

I predict this will be “breaking news” AFTER the election. After all, what better way to gain intelligence on US military GPS than to design a system which probably will disrupt it and then con the regulators into telling you WHY …so that you can design MORE EFFECTIVE disruptive systems?

And don’t be surprised if Iran, Russia, and assorted mideastern countries are are also participants in this attack on our military technology.

This failure can be directly attributed to Liberals’ inability to distinguish friend from foe, and complete lack of interest in national security.

landlines on May 15, 2012 at 12:09 PM

This whole thing is really quite curious. Falcone and the investors must have known that they could never make this work without disrupting GPS. It’s elementary physics. The proposed electronic signals would have been about a billion times larger that the signals from GPS. The variations in terrain and buildings will cause echos that have slightly altered frequency (into the GPS spectrum). Although these echos are very small, they are still larger than the GPS signal, thus we have the interference. There is no technology that can defy the laws of physics (Scotty not withstanding).

LakeLevel on May 15, 2012 at 12:17 PM

O/T, but not bad news…

That astroturf “third party” group “Americans Elect” has apparently thrown in the sponge.

bofh on May 15, 2012 at 10:05 AM

…’sponge’…I like that!

KOOLAID2 on May 15, 2012 at 12:21 PM

Everything that iL Duce President Barack Hussein Obama touches — withers and eventually dies. Every-single-thing.

FlatFoot on May 15, 2012 at 1:14 PM

You simply don’t understand the issue.

blink on May 15, 2012 at 12:35 PM

Really? What exactly don’t I understand? You make up some bull about “the GPS industry” stealing spectrum. Poor little blink, did you get taken by Falcone?

LakeLevel on May 15, 2012 at 1:30 PM

So blink, the spectrum near GPS is for lower power signals because of the interference problem I explained above. Sure there are other larger power signals but they are not near the GPS spectrum and so don’t interfere. Do you get it now?

LakeLevel on May 15, 2012 at 1:34 PM

Going Chapter 11 when they HAVE NOTHING on which to continue as a going concern without FCC approval of their GPS destroying network implies that they already have assurances of Barry Hussein Soetoro’s “flexibility” post-election.

IE: there is no other reason to even ATTEMPT to reorganize (chapter 11) rather than liquidate (chapter 7).

Their creditors should know this too and go into bankruptcy court to FORCE them into chapter 7. How much you want to bet that much arm twisting from The Regime will prevent that from happening?

wildcat72 on May 15, 2012 at 3:20 PM

an outcome the FCC could have determined right off the bat, had it chosen to do the testing itself.

So, a government agency actually knew what they were talking about?

No wonder there are so few posts on this thread…heads might start exploding around here…LOL.

The FCC gave LightSquared, a firm with significant connections to Barack Obama

Reminds me of a sci-fi movie I saw as a kid…some kind of weird alien (maybe a ghost?) female walked around and everything she touched died.

Obambi is similar, but with him it seems businesses he touches tend to die.

Dr. ZhivBlago on May 15, 2012 at 4:51 PM

Can’t wait for the auction. Bet they had some cool swag.

Ward Cleaver on May 15, 2012 at 5:53 PM