It is becoming increasingly difficult for wireless carriers in US to go through with U.S. regulatory procedures. Not only does it take long, the regulators may eventually refuse to give the permission to go ahead. That is precisely what happened with LightSquared, which has led the company right to the brink of bankruptcy.
LightSquared originally intended to furnish high-speed wireless service to millions of people. However, U.S. regulators eventually stated that they had found out the signals of the company’s network interfered with the Global Positioning System and thus, the company was refused the permission to start offering its service.
Consequently, the company wasn’t able to launch and while it worked intensely to settle things with U.S. regulators, it incurred so huge a debt that it was no longer possible for the team to continue. The bankruptcy, we are told, was primarily filed because of the creditors and ” to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network” as we are told by the Chief Financial Officer.
A number of investors had pitched in with huge sums for the company, only to be disappointed eventually. The result was that the creditors grew impatient and it became really difficult for the company to handle things on its own.
The chief backer of LightSquared, Philip Falcone, stated that the bankruptcy wasn’t “an option the company embraced quickly or easily, but it was necessary to protect LightSquared against creditors who were looking for a quick profit. We remain committed to our original mission, and I remain steadfast in my belief that a path forward exists that will satisfy and benefit all constituencies.”
After filing for bankruptcy, what remains to be seen is that can the company really leverage the regulators somehow on its side or will it continue to face a block at this point.
Source: Bloomberg
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