National Journal calls it “a colossal fall from grace,” but it comes only as a political surprise that the FCC acted yesterday to kill off the LightSquared proposal.  After an extraordinary one-year grace period to resolve the interference issues of its network with existing GPS systems, the FCC reluctantly admitted that “no practical way” to fix the basic problem of high-powered terrestrial broadcasts on a spectrum slice intended for low-power satellite communications (via Instapundit):

The Federal Communications Commission (FCC) moved to reject LightSquared’s planned wireless network on Tuesday after the president’s top adviser on telecom issues said there is “no practical way” to prevent the network from disrupting GPS devices.

Philip Falcone and his investment firm Harbinger Capital invested billions of dollars in LightSquared’s plan to build a nationwide high-speed cellphone network, which now appears dead. …

On Tuesday, Lawrence Strickling, the assistant secretary for communications and information at the Commerce Department, said government testing showed LightSquared’s network would cause widespread problems with GPS devices, including ones used by pilots to prevent their airplanes from crashing.

“We conclude at this time that there are no mitigation strategies that both solve the interference issues and provide LightSquared with an adequate commercial network deployment,” Strickling wrote in a letter to FCC Chairman Julius Genachowski.

The action by the FCC would not only end the waiver process, it would force LSQ off of the terrestrial towers it now uses on those frequencies, ending all of their operations:

As a result of Strickling’s recommendation, the FCC will propose revoking LightSquared’s conditional waiver and and indefinitely suspending its authority to operate cell towers.

LSQ was caught unawares, according to National Journal:

The quick reaction seemed to catch LightSquared off guard. Just an hour before the FCC announced its decision, a LightSquared spokesman blasted the NTIA conclusion and said the company “fully expects the [FCC] to recognize LightSquared’s legal rights to build its $14 billion, privately financed network.”

The decision marks a colossal fall from grace for the wireless startup, which has waged a bitter fight over the network for more than a year. LightSquared wants to build a nationwide wholesale wireless network based on satellites and ground transmitters.

The Washington Post notes that the LSQ venture started out as a poster child for the Obama administration’s desire for broadband expansion, and turned into a potential exhibit for their crony capitalism instead:

It was a model project — a privately funded business that would carry out Genachowski’s plans to create more competition to giants AT&T and Verizon Wireless.

But the satellite venture struggled with financing as regulatory scrutiny of the network grew. Sen. Charles Grassley (R-Iowa) asked if the FCC was paying special favors to the company and asked for all correspondence between officials and the firm. Genachowski’s office refused, saying Grassley’s Judiciary Subcommittee doesn’t oversee the FCC.

Meanwhile, government aviation and military officials sounded alarms that LightSquared’s network would interfere with everything from landing gear to weather prediction systems. The FAA predicted multiple deaths could occur if the network was launched.

The only model this demonstrates is how Democratic donors got favorable treatment from the Obama administration.  The Post doesn’t mention that Obama was an early investor in a LightSquared predecessor, or how investors had access to the White House, nor how the White House tried to pressure witnesses to Congress to modify testimony favorably toward LightSquared.  None of the reports mention that the FCC could have easily bench-tested this a year ago and found out exactly what we know now, which would have saved LightSquared and taxpayers a lot of time and money.  Grassley’s investigation wants to get to the bottom of all these questions, and so far Genachowski has been stonewalling to prevent it.

Meanwhile, good riddance to LightSquared and its attempt to use political pressure to get a 4G cell network on the cheap at the expense of GPS consumers, commercial aviation, and national security.  It should never have taken this long to come to this conclusion.

• Bombshell: General accused WH of pressuring him to change testimony for Democratic donor
• Did Obama’s former investment play role in pressuring 4-star general to change testimony?
• White House offered “guidance” to second witness in LightSquared inquiry
• LightSquared disrupts 75% of GPS receivers in gov’t testing
• SEC warns LightSquared figure of potential fraud probe
• Why is the FCC stonewalling Grassley on LightSquared?
• LightSquared lobbyists pushing MN legislators to demand action from Klobuchar, Franken
• LightSquared flunks again
• Grassley: I’m not backing down on FCC holds until I get the LightSquared documents
• LightSquared “running out of cash”
• LightSquared to FCC: Quit screwing around and give us the approval
• LightSquared’s political efforts doomed to failure?
• Sprint to LightSquared: You’ve got 30 days to get FCC approval or we walk
• Advisory board: LightSquared can’t be fixed
• Grassley: LightSquared offered me a political “win” in exchange for backing down on FCC probe