Phil Falcone's high-speed mobile internet start-up will interfere with a "majority" of agriculture and military GPS systems, a US government group said.
LightSquared, in which the New York billionaire invested $3 billion, is hoping to get the thumbs-up from Washington to start operating. But it must first assure several agencies that its 40,000-tower 4G network will not harm GPS systems.
The government group -- which represents nine federal agencies, including the Defense and Transportation departments -- said its testing showed that "LightSquared signals caused harmful interference" to "general purpose GPS receivers."
The report is the first step in a long series of examinations leading to the final review by the Federal Communications Commission (FCC), which has veto power.
The GPS community has fought the launch amid concerns the transmissions could interfere with weaker GPS signals from space. The test results were supposed to help answer that question before the FCC weighs in.
Executives at the Reston, Va., company blasted a portion of the report that was leaked earlier this week.
LightSquared executive vice president Martin Harriman slammed the conclusion as a "distortion of the truth," saying that the metric used -- one decibel change -- was too insignificant to be considered harmful.
"It's a little bit like saying an extra foot of water in an 80-foot dam will cause the dam to fail," he said.