Sprint Cancels LightSquared Contract As Company Responds To FCC Rejection
March 17, 2012

Sprint Cancels LightSquared Contract As Company Responds To FCC Rejection

As officials from LightSquared Inc. challenged the FCC's ability to block their planned 4G wireless service on Friday, they officially learned that Sprint Nextel was cancelling a 15-year contract to help build the network.

The deal's termination was first reported Thursday by The Wall Street Journal's Greg Bensinger, who said that the company would return $65 million in prepayments to the Virginia-based company founded by billionaire Philip Falcone in 2010.

Sprint confirmed the cancellation to Steven Musil of CNET later that day, and said that the unresolved issues with the FCC, which stem from reports that their proposed network would interfere with GPS software and other devices, was the primary reason for the contract's cancellation.

"Due to these unresolved issues, and subject to the provisions of the agreement, Sprint has elected to exercise its right to terminate the agreement announced last summer," Sprint Nextel officials said in a statement, according to Musil. "We remain open to considering future spectrum hosting agreements with LightSquared, should they resolve these interference issues, as well as other interested spectrum holders."

As previously reported on RedOrbit, the FCC and the National Telecommunications and Information Administration (NTIA), a federal agency overseeing government and military spectrum use, ruled in February that LightSquared's network would be blocked due to those possible disruptions.

The communications commission had asked for comments regarding the decision by Friday, Bloomberg reporter Todd Shields wrote. He added that an email summary distributed Friday by LightSquared revealed that the company had invested more than $4 billion in the proposed high-speed wireless network, which they claim could serve as many as 260 million people and has been structured using FCC legal framework dating back to 2005.

In that filing, LightSquared reportedly accused the government of basing their decision on "flawed and biased tests," Shields said. They say that there is "no scientifically valid evidence" that "even 1 percent of GPS receivers would experience adverse performance consequences as a result of LightSquared´s operations.”

“We are not going away... We´re in the process of revising our business plan to extend our financial runway, to continue to move forward over a period of quarters and years," Executive Vice President Jeff Carlisle said in a conference call Friday, according to Bloomberg reports that also stated that the company had "hired litigators as it gears up for a possible legal battle with regulators."

Late last month, following the regulatory agency's blocking of LightSquare's proposed wireless network, company CEO Sanjiv Ahuja resigned. He was replaced on an interim basis by co-COOs Doug Smith and Marc Montagner, while remaining on as chairman, the company announced in a statement.