Loss of Wireless Dream Caps Falcone's Fall From Grace

Excerpt from an article in The New York Times
Thursday, February 16, 2012

Loss of Wireless Dream Caps Philip Falcone's Fast Fall From Grace 

By AZAM AHMED

It was as ambitious a bet as any hedge fund manager could imagine: building a wireless network from scratch to compete with the likes of AT&T and Verizon.

But the dream has come crashing down to earth for Philip A. Falcone, the investor whose multibillion-dollar wager has been all but halted by the Federal Communications Commission. The agency, which initially blessed Mr. Falcone's plans for a 4G network, changed course late Tuesday after an adviser determined the signal would interfere with GPS systems.

The decision could spell disaster not just for LightSquared, the upstart venture, but also for Mr. Falcone's career as a money manager. He paid billions of dollars to launch a satellite into orbit and map out a forest of cellphone towers dense enough to service the nation.

Now, after more than a year in Washington's cross hairs, the crown jewel of Mr. Falcone's efforts - representing some 60 percent of his main hedge fund - is in peril.

"They're done because of how politicized the situation is," said Jonathan Chaplin, a telecommunications analyst with Credit Suisse. "If this were being worked out by engineers, the nature of the debate would be very different."

Mr. Falcone struck a confident note in responding to questions via e-mail on Wednesday. He says he has no plans to sell the spectrum assets of LightSquared and is not planning to file for bankruptcy.

"It's only one chapter," he wrote.

Yet analysts say that Mr. Falcone is left with few options, all unpromising.