Ailing LightSquare To Cut 45% Of Work Force As Regulatory Battle Rages On

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Things are beginning to look even dimmer for LightSquared. Just one day after satellite network operator Inmarsat announced that LightSquared had defaulted on a $56 million payment, new reports indicate that the company plans to slash its workforce by 45% in an effort to cut costs and keep fighting.

“This and other cost savings measures will allow LightSquared to continue to navigate the regulatory process as it works with the appropriate government agencies to find solutions to the GPS interference issue,” reads a statement issued to Reuters.

Let’s not forget that LightSquared isn’t that a big a company to start off with — the company only employs around 330 people. With their workforce poised to be cut nearly in half and regulatory woes bogging them down, I can’t imagine the morale in their particular corner of Virginia to be too high. The move also casts their non-payment to Inmarsat in a different light — while LightSquared claimed that they have “raised several matters that require resolution” before they make the payment, it now just looks like they couldn’t scrape the money together.

LightSquared declined to offer any further detail on the situation, and could not be reached for comment at time of writing.

Though things are looking grim for LightSquared right now, it’s unfair to say that the book has closed completely on their ambitious plans. From the sound of their release, LightSquared seems ready to streamline their operations and keep their head down for the time being. Anyone who’s followed the LightSquared situation though knows that keeping their head down is highly uncharacteristic for them. For nearly every drawback LightSquared has faced (and there have been a lot of them so far), the company was quick to respond with a sharp-tongued press release.

This time though, there doesn’t seem to be much more that LightSquared can do. They can’t proceed any further without the FCC’s go-ahead, and they’ll never get that unless they can prove that the interference risk their network poses to GPS is negligible. LightSquared has publicly taken issue with the testing process — they’ve gone as far as to accuse two government committees of wrongdoing — but only further testing can clear their name.

Even then, the ball isn’t in their court. Despite having given LightSquared a conditional approval [PDF] to build out their network in early 2011, the regulatory body changed their minds in a jiffy when NTIA Administrator Lawrence Strickling sent them a letter [PDF] last week stating that an interference-free network rollout wasn’t doable.

LightSquared clearly intends to continue fighting, but their spate of layoffs seems to signal that the company is hunkering down into survival mode. Unless the political or regulatory climates change soon, how long LightSquared can continue to keep at it is anyone’s guess.