LightSquared to Emerge From Bankruptcy in Better Place, Says Falcone
ASPEN, Colo. -- A LightSquared spectrum swap with the Department of Defense remains a possibility but would likely “take some time,” said founder Philip Falcone of the bankrupt owner of mobile satellite frequency licenses, which he said Monday still hopes to use for terrestrial wireless service. In the short term, LightSquared is more focused on spectrum sharing scenarios, said Falcone, CEO of Harbinger Capital Partners, the hedge fund that’s the biggest investor in LightSquared. It will emerge from Chapter 11 bankruptcy “in a better place” with respect to the U.S. regulatory environment, Falcone told a dinner at the Technology Policy Institute’s Aspen conference. The FCC has proposed rescinding a waiver to LightSquared, no longer letting it build out the terrestrial service.
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"A spectrum swap is always a bit more challenging, and while we think that opportunity is there it is probably going to take some time,” Falcone told reporters. He declined to say what specific spectrum bands LightSquared was interested in sharing or swapping. The U.S. wireless infrastructure “is at a breaking point,” Falcone said. For America to retain its global competitiveness, policymakers must focus on maintaining a regulatory framework that “encourages private investment and not just through an auction process,” he said. “Make no mistake, the policy choices of today will not only affect the growth of our digital economy tomorrow, but for decades.”
"People are ready to press the reset button,” Falcone said of regulators and LightSquared. “There is going to be a lot of wood to chop, there is no question about that, but I believe we are in a better place today than we were in the past six months.” After filing for bankruptcy in May, LightSquared continues to operate its businesses and manage its properties as debtors in possession, the company said in a recent FCC filing (CD July 27 p16). Falcone said the company is “engaged with stakeholders to identify opportunities that would allow us to deploy this network in the near future and to also protect the concerns raised by the GPS community.” GPS device makers objected to LightSquared’s spectrum plans because they could cause interference to the devices.
In the long run “rational heads will prevail,” said Falcone, and regulators “want to see this thing get done.” The difference now is that LightSquared has become more flexible to finding a solution and is not “battling continuously” with GPS providers, he said. Falcone said pushing the GPS providers off the spectrum is not a winning solution. “And it is not the solution that Washington wants to see,” he said. “We are trying to find solutions.”
Falcone hailed the President’s Council of Advisors on Science and Technology’s recent spectrum sharing report, which he said “raises the possibility of spectrum sharing as a means of bringing more spectrum into the market in the short term.” Falcone was encouraged by the government’s willingness to look at alternative spectrum to address concerns in other bands, he said. “We believe this framework can be applied to LightSquared as an effective way to free up more spectrum for American consumers in a short period of time."
Public Knowledge Senior Vice President Harold Feld said the speech felt “heavily lawyered” and short on specifics. “Reading between the lines, it may be that Falcone still hopes to negotiate some kind of deal with the federal government, either for a spectrum swap or for some kind of use of the spectrum on a non-interfering basis,” Feld, who attended the speech, told us. “This would explain why Falcone avoided strong criticism of the process despite a crowd that would be very sympathetic to an anti-government message."
Falcone told reporters he didn’t have time to point fingers or regret how his investment played out. “Sure it’s been frustrating, but I can’t sit here and complain about what this guy is doing or what that guy is doing or what he said,” he said. “If I do that, I spend most of my time thinking about that instead of moving forward.”