Federal officials on Tuesday struck a major blow to satellite venture LightSquared, saying the government plans to revoke initial permission it granted for the company to operate as a mainstream high-speed wireless network.

In a major reversal, the Federal Communications Commission said it plans to “suspend indefinitely” LightSquared’s conditional waiver to operate as a ground-based broadband network after a new government report said there didn’t immediately appear to be a way for the network to avoid interference with global positioning systems.

The FCC’s decision is expected to all but end LightSquared’s aspirations to provide mobile broadband services via satellite airwaves -- a plan that was touted from its inception by FCC Chairman Julius Genachowski. Under his tenure, the FCC granted the company a key conditional waiver in January 2011 that was meant to help fast-track the network. The decision has drawn massive protest from the military, John Deere, and weather forecasters who rely on GPS systems. Congressional Republicans have also launched investigations into the FCC’s controversial decision.

On Tuesday, the FCC said its decision was based on a report that day by the National Telecommunications and Information Administration (NTIA). The NTIA said its analysis of tests on the network showed “there is no practical way to mitigate the potential interference at this time” with global positioning devices.

LightSquared on Tuesday said it disagreed with the NTIA’s findings and said the government body used flawed testing data in its analysis.

“LightSquared recognizes, however, that this is just one step in the process, and it remains committed to working toward a resolution,” the company said in a statement.

The company didn’t immediately respond to requests for comments on the FCC decision.

But experts doubt any resolution will be achieved before LightSquared runs out of money and partners, such as Sprint Nextel, decide to turn away from the proposed satellite network that hasn’t yet been built.

LightSquared was created by hedge fund billionaire Philip Falcone’s investment fund, Harbinger Capital, with a commitment of $14 billion. The fund has lost much of its value, according to reports. The firm, which blames GPS devices for interference problems, said it has enough cash for the foreseeable future.

It was a model project — a privately funded business that would carry out Genachowski’s plans to create more competition to giants AT&T and Verizon Wireless.

But the satellite venture struggled with financing as regulatory scrutiny of the network grew. Sen. Charles Grassley (R-Iowa) asked if the FCC was paying special favors to the company and asked for all correspondence between officials and the firm. Genachowski’s office refused, saying Grassley’s Judiciary Subcommittee doesn’t oversee the FCC.

Meanwhile, government aviation and military officials sounded alarms that LightSquared’s network would interfere with everything from landing gear to weather prediction systems. The FAA predicted multiple deaths could occur if the network was launched.

The FCC said it would abandon its January 2011 waiver, effectively setting LightSquared back nearly two years to when it was founded. The FCC said that on Wednesday it would begin to take comments on the agency’s plans and the NTIA’s findings on LightSquared’s interference.

Still, the FCC on Tuesday defended its decision.

“LightSquared’s proposal to provide ground-based mobile service offered the potential to unleash new spectrum for mobile broadband and enhance competition,” FCC spokeswoman Tammy Sun said in a statement.


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