This story is right out of The Master Switch. For years, the incumbent monopolies opposed entries to the television market, citing interference concerns. These concerns were never proven, and delayed the introduction of TV to American by nearly two decades, until RCA was ready to introduce it (the BBC was years ahead of America). Anyway, old habits of protecting entrenched interests die hard at the FCC.

From the Times:

The telecommunications and information agency said tests showed that even a scaled-back version of the company’s wireless network would interfere with GPS signals and systems.

Interference of LightSquared’s signals with GPS systems is a tricky issue for the F.C.C., telecommunications experts say, because the interference appears not to be the fault of LightSquared. The most commonly used GPS receivers tend to pick up signals from outside of the segment of spectrum designated for GPS.

Because the satellite-telephone segment of airwaves, used by LightSquared, is next to the GPS band on the electromagnetic spectrum, GPS devices will frequently hear those extraneous transmissions.

The F.C.C. could have told GPS users and systems manufacturers that they were at fault for letting their devices stray into nearby airwaves, but that would mean overhauling an industry now in widespread use.

Jeff Carlisle, LightSquared’s executive vice president for regulatory affairs and public policy, wrote on the company’s blog this week that the GPS industry had apparently become “too big to fail,” seeking protection from the federal government for its own mistakes.

“GPS manufacturers have been selling devices that listen into frequencies outside of their assigned spectrum band — namely into LightSquared’s licensed band,” Mr. Carlisle wrote. “The GPS industry has leveraged years of insider relationships and massive lobbying dollars to make sure that they don’t have to fix the problem they created.”

I just sent a note to Tim Wu, author of The Master Switch.