The Federal Communications Commission has nixed a company’s plan to offer 4G broadband through a new network of cellphone towers and satellites. It ruled that LightSquared’s plans would cause too much interference for GPS devices.

The idea was to create a network using the LTE system for mobile data transmission, then wholesale it to wireless companies who could provide mobile broadband to consumer. The problem was that the spectrum it intended to use was close enough to the one used for GPSs to potentially cause problems.

Following initial complaints, LightSquared said it had found a technical solution that would avoid interfering with 99.5 percent of GPS devices. That created two separate arguments with the GPS industry. The first was a matter of perspective, with LightSquared describing the remaining devices as a mere 0.5% of those in use, while the GPS industry emphasized this as an absolute number, namely 200,000 affected gadgets.

The second argument was technical, with a statement on behalf of the GPS industry saying the proposed solution would “defy the law of physics, and therefore simply will not work.”

The FCC had originally gave a preliminary thumbs up to LightSquared’s plans while putting a halt on commercial operations unless and until the issue of potential interference had been resolved. It’s now formally withdrawn approval and made the operations ban indefinite. There’ll be a formal public consultation, but in bureaucratic terms the LightSquared plan is dead.

Any legal action LightSquared takes now would have to relate to the decision-making process rather than the decision itself.. Even that seems a longshot as the legal debate really boils down to LightSquared having to prove the system was safe rather than opponents having to prove it would cause interference.

While the decision has been made on technical grounds, it’s something of an unfortunate outcome for the FCC as well, given its recent blocking of a proposed AT&T-T-Mobile merger on the grounds that it would reduce competition in a market already dominated by a few firms. It’s announcement today make a point of stressing that in principle it still wants mobile broadband opened up to new companies and new technologies wherever possible.

It’s also particularly bad news for the Harbinger Capital Partners hedge fund, which put up $3 million of the $4 million that LightSquared has already spent on the project.