The FCC said it was accepting public comments on its revocation plans until March 1.
LightSquared had hoped to compete nationally with super-fast, fourth-generation wireless services being rolled out by AT&T, Verizon Wireless and other traditional wireless companies. It hadn't planned to sell directly to consumers. Rather, it would have provided network access to companies including Leap Wireless, parent of the Cricket phone service, and Best Buy, which planned to rebrand the service under its own name.
LightSquared is owned by Harbinger Capital Partners, a private-equity firm that made billions betting against subprime mortgages ahead of the collapse of the housing market.
Part of the problem stems from the fact that today's GPS devices have been designed to screen out low-power signals in the adjacent wireless spectrum used by LIghtSquared, not the high-power ones planned.
Public Knowledge, a group that advocates more wireless competition, said the FCC needs to improve GPS-receiver standards so that the LightSquared spectrum can be used to meet growing demand for wireless services.
In a research note, telecom analyst Christopher C. King of Stifel Nicolaus said the move should benefit traditional wireless companies such as AT&T and Verizon as well as two other companies whose spectrum holdings may become more valuable: Dish Network Corp. and Clearwire Corp.
Dish's stock gained 81 cents, or 2.9 percent, to $29.17 in afternoon trading. Clearwire gained 3 cents to $2.32 per share. AT&T Inc. fell 22 cents to $29.85 while Verizon Communications Inc. lost 22 cents to $37.82 per share.