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.

FCC Bars Use of Airwaves for a Broadband Plan

Excerpt from an article in The New York Times
Wednesday, February 15, 2012

F.C.C. Bars the Use of Airwaves for a Broadband Plan 

By EDWARD WYATT

WASHINGTON — A proposed wireless broadband network that would provide voice and Internet service using airwaves once reserved for satellite-telephone transmissions should be shelved because it interferes with GPS technology, the Federal Communications Commission said Tuesday.

The F.C.C. statement revokes the conditional approval for the network given last year. It comes after an opinion by the National Telecommunications and Information Administration, which said that “there is no practical way to mitigate the potential interference at this time” with GPS devices. The telecommunications and information agency oversees telecommunications policy at the Commerce Department.

The news appears to squash the near-term hopes for the network pushed by LightSquared, a Virginia company that is majority-owned by Philip Falcone, a New York hedge fund manager.

LightSquared said on Tuesday that the testing of the network was “severely flawed.” It “remains committed to finding a resolution with the federal government and the GPS industry to resolve all remaining concerns,” the company said in a statement.

The company said it “profoundly disagrees” with the results of the testing, which was done by a national engineering group, and the telecommunication agency’s opinions, “which disregard more than a decade of regulatory orders, and in doing so, jeopardize private enterprise, jobs and investment in America’s future.”

The F.C.C., which had granted a conditional approval to LightSquared to go ahead with its network pending the results of more testing, will now propose barring near-term deployment of the LightSquared system, the F.C.C. said. The commission will issue a request for public comment on the proposed action on Wednesday.