LightSquared Gathers Lawyers, Goes to War

A couple of weeks ago, I was sure that Sprint Nextel (NYS: S) would give up on its LightSquared network plans. Fellow Fool Dan Radovsky even wrote an obituary for the deal.

But not so fast -- LightSquared isn't quite dead yet.

The network has lawyered up something fierce and looks ready to attack the FCC and/or Department of Justice to get its innovative but troubled 4G network off the ground. The legal team now includes Theodore Olson, who helped George W. Bush secure the presidential election win in 2000, and former Labor Department solicitor Eugene Scalia.

Olson won't say what his legal strategy might be, but he appears to come into the case in high spirits. "Lots of times we find out, when we dig into things, that we have a whole lot stronger case than people thought," he told reporters from Politico.

It will take a minor miracle to revive LightSquared at this point. The FCC and independent researchers have confirmed that the proposed satellite and cell-tower 4G network would cripple certain types of GPS receivers, notably ones used in aircraft navigation and emergency services. Most smartphones would be fine since they can flesh out drowned GPS signals with wireless signal triangulation and other satellite-free tricks, but LightSquared's effect on other devices would be too much to handle.

There are issues that should have been considered, tackled, and corrected long before giving LightSquared the go-ahead to spend billions on the contested bandwidth space. Sprint should have seen the troubles coming from a mile away, given that the company is stocked with capable network engineers. If nothing else, Clearwire (NAS: CLWR) could have sent in the attack dogs to avoid risking the loss of its own lucrative Sprint agreement.

But none of that happened, and the damage is done. Maybe Clearwire stayed put because it's sweeter to laugh at the misery of rivals than it is to stop it altogether. Even top-shelf lawyers can't change the laws of physics, and I don't think they have enough clout to turn the entire GPS industry on its head. But that doesn't mean they won't try.

So grab a bag of chips and pull up a chair. You might as well add Sprint and Clearwire to your Foolish watchlist in order to get a better view. These legal fireworks are going to be fantastic.

At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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