LightSquared Mulls Bankruptcy

LightSquared is "seriously considering" filing a voluntary bankruptcy,  Reuters reports. That would appear to be a new position, since Chairman Philip Falcone had been insisting he would try to revive the company, in part by litigating the Federal Communications Commission's refusal to approve its petition for re-purposing satellite spectrum to build a terrestrial Long Term Evolution fourth generation mobile network. 


The new stance could be the result of pressure from major stakeholders, especially creditors, who are themselves threatening to file bankruptcy claims. 


Voluntary bankruptcy has frequently been a business strategy in the telecommunications business over the last decade or so, allowing firms to stave off creditors, erase debt and start over. The principal asset LightSquared would continue to own is its spectrum, even though the FCC has concluded that use of much of that spectrum to support a terrestrial mobile network would pose unacceptable interference with GPS service, aeronautical communications and military communications. 


At least near term, the biggest beneficiaries would seem to be the largest U.S. mobile service providers, who will not have to face a new LTE network operating on a wholesale-only basis, enabling many new competitors into the 4G market. 


But Clearwire, itself a major wholesale provider of 4G service, should be positioned to pick up many of the wholesale deals LightSquared had gotten, and now has lost.