During the past year, satellite communications provider LightSquared has been embroiled in controversy over its proposal to deploy a terrestrial LTE network nationwide over its airwaves in the 1.5 GHz band. This spectrum originally was designated solely for satellite use, but the Federal Communications Commission in 2003 approved the L Band (1–2 GHz) for terrestrial use under certain conditions.

Chief among those conditions regarding LightSquared’s terrestrial system was that the company’s operations not introduce harmful interference to Global Positioning System (GPS) devices that operate on spectrum in the adjacent band. So far, it’s a condition that LightSquared has yet to fulfill despite offering several proposals, meaning that the start date for its massive cellular project is on hold. Based on the latest negative conclusion from nine federal agencies, many industry observers question whether LightSquared’s LTE vision ever will be realized.

“There appears to be no practical solutions or mitigations that would permit the LightSquared broadband service, as proposed, to operate in the next few months — or years — without significantly interfering with GPS,” the agencies stated in a letter to the National Telecommunications and Information Administration (NTIA).

However, LightSquared officials contest the findings cited in the letter, and claim that testing was conducted in a manner that unfairly guaranteed that LightSquared would fail.

As of press time, the final outcome from this contentious episode remained uncertain. But one aspect of the situation is undisputed: the stakes in this debate are enormous.

On one side, the GPS industry boasts more than 500 million devices across the globe, some of which are tasked with providing mission-critical information, such as the location of an airplane.

On the other side, LightSquared’s nationwide LTE deployment was expected to help address several key public-policy goals. Through its LTE network buildout, the startup carrier plans to create about 15,000 jobs and inject about $14 billion of private investment into a struggling economy. And LightSquared’s wholesale business model promises to increase competition in the wireless industry by providing regional operators with a mechanism to compete against industry behemoths AT&T and Verizon on a nationwide basis.

Instead of LightSquared being a boon to the economy, the company’s financial viability — including its push-to-talk satellite business — now is in serious doubt. LightSquared officials repeatedly state that the company has enough funding to survive for “several quarters,” but they have declined to be more specific. The fact that the company’s primary backer — billionaire hedge-fund manager Philip Falcone — faces inquiries from Congress and the Securities Exchange Commission regarding investment practices indirectly associated with LightSquared also is discouraging.

Add it all up and the LightSquared episode is fraught with the potential to set key precedents on many levels — spectrum policy, testing procedures and regulatory certainty. Indeed, this web of claims, tests, actions and accusations has become so complex that a House subcommittee was expected to conduct a hearing on the matter as of press time, in an attempt to determine whether the FCC’s regulatory process went awry.

“How did that process fail?” Rep. Greg Walden (R-Ore.), chairman of the House technology subcommittee, reportedly said. “Because you’ve got a lot of people spending a lot of money trying to sort this out now, and it would seem to me somebody would have sorted it out before they made the licenses available.

“I don’t understand the process where someone buys the spectrum, put forth by the FCC to be used for a purpose, only to discover later on you can’t use what you just bought because of interference issues. I’m trying to figure out how the cart got so far ahead of the horse.”