"Falcone’s Wireless Plan Concerns Mount Over GPS Interference

Jan. 18 (Bloomberg) -- Billionaire Philip Falcone’s LightSquared Inc. wireless-communications venture is facing mounting resistance to a proposal that it be allowed to operate mobile phones on its network that don’t rely on satellites.

LightSquared has asked the U.S. Federal Communications Commission to let its customers use terrestrial-only phones, such as those used by rivals Verizon Wireless and Sprint Nextel Corp. The aircraft industry is among a growing group who say relaxing the rules may put additional pressure on global- positioning services.

“The LightSquared proposal will result in an unreliable GPS signal reception,” according to letters to FCC Chairman Julius Genachowski from Hawker Beechcraft Corp., Diamond Aircraft Industries GmbH and the National Business Aviation Association trade group, posted on FCC’s website today.

LightSquared says the waiver is essential to meeting government deadlines for building out its network. Falcone agreed last year to FCC conditions that he employ a combination satellite-terrestrial network for up to 100 million Americans by the end of 2012 and 260 million by 2016. He’s committing billions to compete against Verizon, AT&T Inc. and Clearwire Corp. in providing the service.

Last week, the U.S. Commerce Department also said Falcone’s waiver request raises “significant interference concerns” on GPS and some maritime and aviation emergency communications, according to a letter from Lawrence Strickling, assistant secretary of communications and information.

Tom Surface, a LightSquared spokesman, said in an e-mail he didn’t have an immediate comment. LightSquared, based in Reston, Virginia, is backed by Falcone’s Harbinger Capital Partners hedge fund.

--With assistance from Todd Shields in Washington. Editors: Ville Heiskanen, Peter Elstrom

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net "

http://www.businessweek.com/news/2011-01-18/falcone-s-wireless-plan-concerns-mount-over-gps-interference.html

Falcone's Wireless Plan Concerns Mount Over GPS Interference

By Greg Bensinger - Jan 18, 2011 10:11 AM MT

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Billionaire Philip Falcone’s LightSquared Inc. wireless-communications venture is facing mounting resistance to a proposal that it be allowed to operate mobile phones on its network that don’t rely on satellites.

LightSquared has asked the U.S. Federal Communications Commission to let its customers use terrestrial-only phones, such as those used by rivals Verizon Wireless and Sprint Nextel Corp. The aircraft industry is among a growing group who say relaxing the rules may put additional pressure on global- positioning services.

“The LightSquared proposal will result in an unreliable GPS signal reception,” according to letters to FCC Chairman Julius Genachowski from Hawker Beechcraft Corp., Diamond Aircraft Industries GmbH and the National Business Aviation Association trade group, posted on FCC’s website today.

LightSquared says the waiver is essential to meeting government deadlines for building out its network. Falcone agreed last year to FCC conditions that he employ a combination satellite-terrestrial network for up to 100 million Americans by the end of 2012 and 260 million by 2016. He’s committing billions to compete against Verizon, AT&T Inc. and Clearwire Corp. in providing the service.

Last week, the U.S. Commerce Department also said Falcone’s waiver request raises “significant interference concerns” on GPS and some maritime and aviation emergency communications, according to a letter from Lawrence Strickling, assistant secretary of communications and information.

Tom Surface, a LightSquared spokesman, said in an e-mail he didn’t have an immediate comment. LightSquared, based in Reston, Virginia, is backed by Falcone’s Harbinger Capital Partners hedge fund.

To contact the reporter on this story: Greg Bensinger in New York atgbensinger1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

Philip Falcone and Harbinger Capital’s Wireless Adventure

By Insider Monkey

Philip Falcone’s Harbinger Capital Partners dove into anilliquid and risky wireless adventure- one which proved to be a big concern for his investors. The adventure brought some legal troubles for both Harbinger and Philip Falcone.

Philip Falcone is famous for betting against subprime mortgages, which made Harbinger $11 Billion in 2007. Harbinger Capital Partners Fund returned 116% that year. Harbinger was doing fine until mid 2008, but Falcone’s flagship fund lost half its value during the rest of 2008. Phil Falcone’s Harbinger returned 42% in 2009, which was much better than most funds. However, 2010 was very bad for him. He lost about 12% in 2010.

Harbinger’s assets under management reached $26 Billion at its peak, but recently went back down to around $7 Billion. Investors have been doubting Philip Falcone’s ambitious wireless investments. These investments both led to poor performance and redemptions. Falcone’s illiquid investments is also one of the reasons why he couldn’t meet redemption requests in a timely manner.

Some investors see Falcone’s LightSquared investment as a giant gamble. He’s building a wholesale wireless network that will compete with AT&T (T) and Verizon (VZ), and he’s been launching satellites to achieve his dream. LightSquared already raised $2 Billion but probably needs another $6 Billion to complete its network.

According to Reuters, Harbinger is reducing headcount to cut expenses. This week 39-year-old Lawrence Clark left Harbinger to start his own fund. Kenneth Turano, 29 year old trader, left Harbinger probably to join Clark in the new fund. Two other investment analysts Clark Baker, 49, and Eli Benson, 36, were laid off.

Philip Falcone’s Harbinger has other investments as well. Here are some of his holdings at the end of September:

1. iPath S&P 500 VIX Short-Term Futures ETN (VXX): Harbinger had more than $60 Million of VXX in its portfolio. VXX was one of the best stocks to short after the increase in volatility at the end of May. VXX declined more than 50% since September 30th, adding to Phil Falcone’s woes.

2. Cliffs Natural Resources Inc (CLF): Cliffs Natural Resources returned more than 39%.Insiders at Cliffs Natural were selling during the past quarter as the stock kept climbing.

3. Corn Products Intl. (CPO): The stock increased nearly 28% since September. Three insiders at Corn Products Intl were selling below $45, and there was another insider, James P. Zallie, who bought more than 3,000 shares at $46.87.

4. Crosstex Energy Inc (XTXI): Crosstex Energy returned 14.4% since September, beating the S&P 500 by 1 percentage point. Susan J Mcaden, VP Accounting, sold more than 10,000 shares in November.

5. Exco Resources (XCO): Harbinger had nearly $99 Million invested in XCO and the stock returned 31.5% since September.

6. New York Times (NYT): This is another failed investment of Harbinger. They still had $95 Million of New York Times stock at the end of September. The stock gained 32% since then.

7. SPDR Gold Shares (GLD): Harbinger is one of the hedge funds that invests in gold. Daniel Loeb’s Third Point and Brevan Howard are also investors in GLD. There are several other hedge funds that invest in gold through gold miners or hold physical gold. (See Paulson & Co Holdings, Curtis Schenker’s Scoggin Capital, David Einhorn’s Greenlight Capital, and Mohnish Pabrai’s holdings)

Tags: AT&T (T), Clark Baker, Cliffs Natural Resources (CLF), Cliffs Natural Resources Inc (CLF), Corn Products Intl. (CPO), Crosstex Energy Inc (XTXI), Eli Benson, Exco Resources (XCO), iPath S&P 500 VIX Short-Term Futures ETN (VXX), James P Zallie, Kenneth Turano,Lawrence Clark, LightSquared, New York Times (NYT), Philip Falcone Harbinger Capital,SPDR Gold Shares (GLD), Susan J Mcaden, Verizon (VZ)

Harbinger-Skyterra $7 billion deal with Nokia gives AT&T Competition with LIGHTSQUARED

• Today marks the launch of LightSquared™, a new nationwide 4G-LTE wireless broadband network integrated with satellite coverage that will revolutionize communications in the United States. As the nation’s first wholesale-only integrated wireless broadband and satellite network, LightSquared will provide wireless broadband capacity to a diverse group of customers, including retailers; wireline and wireless communication service providers; cable operators; device manufacturers; web players; content providers; and many others. The LightSquared network will allow these partners to offer satellite-only, terrestrial-only, or integrated satellite-terestrial services to their end users. This wholesale-only business model ensures LightSquared has no conflict of interest with its customers. LightSquared seeks to transform the wireless broadband industry to one that fosters innovation, creativity, and freedom of choice via the first truly open and net neutral wireless network.
• First-ever wholesale nationwide 4G-LTE wireless broadband network integrated with satellite coverage allows partners to offer terrestrial-only, satellite-only, or integrated satellite-terrestrial services to their end users.
• Telecommunications luminary Sanjiv Ahuja becomes Chairman and CEO, joined by a seasoned management team
• First truly open and net neutral wireless network spurring the development of new wireless devices, applications, and services
• Unique wholesale-only business model avoids conflict of interest with customers
• LightSquared is announcing up to $1.75 billion in additional debt and equity financing
• LightSquared network build-out anticipated to generate more than 100,000 direct and indirect private sector jobs within five years

Harbinger Capital, a New York investment firm with extensive telecommunications holdings, plans to announce Tuesday a eight-year, $7 billion deal with Nokia Siemens Networks to build and operate a satellite and mobile broadband network for wireless providers and other businesses.

The new venture will feature the mobile high-speed Internet service developed by Nokia Siemens and rely on satellites and terrestrial spectrum that Harbinger acquired through its purchase of Reston-based SkyTerra earlier this year, according to an announcement scheduled for Tuesday morning. The partners plan to name the venture LightSquared and have selected Sanjiv Ahuja, a former chief executive of France Telecom’s Orange subsidiary, to run it.

With the deal, Harbinger hopes to meet important financing and coverage requirements set by the Federal Communications Commission as contigencies of the firm’s purchase of SkyTerra. Satisfying those requirements would allow Harbinger to join the race to provide broadband service to the growing horde of wireless customers who are hungry for faster and more powerful devices.

“With a strong management team and a world-class partner to build and manage the network, the business is well positioned to capitalize on key trends; demand for wireless broadband is growing at a rapid pace and there is an increasing need for additional network capacity and reach," said Philip Falcone, chief executive of Harbinger Capital.

In an interview, Ahuja said that LightSquared plans to launch in its first markets by the middle of next year and hopes to have 92 percent coverage of the United States by 2015. He said the venture sees its customer base as a wide-ranging group including wireless carriers, device makers, and retailers such as Best Buy and WalMart that want to provide high-speed mobile services.

"We see a great diversity of customers to put to use one or all three propositions we offer," Ahuja said. "That would be satellite only, satellite and terrestrial or only terrestrial. This is one of its kind."

Source : SkyTerra.com & The Washington Post.

Philip Falcone’s Harbinger Capital Partners dove into anilliquid and risky wireless adventure- one which proved to be a big concern for his investors. The adventure brought some legal troubles for both Harbinger and Philip Falcone.

Philip Falcone is famous for betting against subprime mortgages, which made Harbinger $11 Billion in 2007. Harbinger Capital Partners Fund returned 116% that year. Harbinger was doing fine until mid 2008, but Falcone’s flagship fund lost half its value during the rest of 2008. Phil Falcone’s Harbinger returned 42% in 2009, which was much better than most funds. However, 2010 was very bad for him. He lost about 12% in 2010.

Harbinger’s assets under management reached $26 Billion at its peak, but recently went back down to around $7 Billion. Investors have been doubting Philip Falcone’s ambitious wireless investments. These investments both led to poor performance and redemptions. Falcone’s illiquid investments is also one of the reasons why he couldn’t meet redemption requests in a timely manner.

Some investors see Falcone’s LightSquared investment as a giant gamble. He’s building a wholesale wireless network that will compete with AT&T (T) and Verizon (VZ), and he’s been launching satellites to achieve his dream. LightSquared already raised $2 Billion but probably needs another $6 Billion to complete its network.

According to Reuters, Harbinger is reducing headcount to cut expenses. This week 39-year-old Lawrence Clark left Harbinger to start his own fund. Kenneth Turano, 29 year old trader, left Harbinger probably to join Clark in the new fund. Two other investment analysts Clark Baker, 49, and Eli Benson, 36, were laid off.

Philip Falcone’s Harbinger has other investments as well. Here are some of his holdings at the end of September:

1. iPath S&P 500 VIX Short-Term Futures ETN (VXX): Harbinger had more than $60 Million of VXX in its portfolio. VXX was one of the best stocks to short after the increase in volatility at the end of May. VXX declined more than 50% since September 30th, adding to Phil Falcone’s woes.

2. Cliffs Natural Resources Inc (CLF): Cliffs Natural Resources returned more than 39%.Insiders at Cliffs Natural were selling during the past quarter as the stock kept climbing.

3. Corn Products Intl. (CPO): The stock increased nearly 28% since September. Threeinsiders at Corn Products Intl were selling below $45, and there was another insider, James P. Zallie, who bought more than 3,000 shares at $46.87.

4. Crosstex Energy Inc (XTXI): Crosstex Energy returned 14.4% since September, beating the S&P 500 by 1 percentage point. Susan J Mcaden, VP Accounting, sold more than 10,000 shares in November.

5. Exco Resources (XCO): Harbinger had nearly $99 Million invested in XCO and the stock returned 31.5% since September.

6. New York Times (NYT): This is another failed investment of Harbinger. They still had $95 Million of New York Times stock at the end of September. The stock gained 32% since then.

7. SPDR Gold Shares (GLD): Harbinger is one of the hedge funds that invests in gold. Daniel Loeb’s Third Point and Brevan Howard are also investors in GLD. There are several other hedge funds that invest in gold through gold miners or hold physical gold. (See Paulson & Co Holdings, Curtis Schenker’s Scoggin Capital, David Einhorn’s Greenlight Capital, and Mohnish Pabrai’s holdings)

Posted at January 17th, 2011 in Philip Falcone | Tags: AT&T (T), Clark Baker, Cliffs Natural Resources (CLF), Cliffs Natural Resources Inc (CLF), Corn Products Intl. (CPO), Crosstex Energy Inc (XTXI), Eli Benson, Exco Resources (XCO), iPath S&P 500 VIX Short-Term Futures ETN (VXX), James P Zallie, Kenneth Turano, Lawrence Clark, LightSquared, New York Times (NYT), Philip Falcone Harbinger Capital, SPDR Gold Shares (GLD), Susan J Mcaden, Verizon (VZ)

LightSquared, an upstart telecom company that is owned by Falcone's Harbinger Capital Partners, has asked federal regulators for permission to offer terrestrial wireless broadband services, which could involve a waiver to conditions around its current wireless spectrum licenses.

Last year the Federal Communications Commission approved an application from LightSquared to build a high-speed wireless network that would offer both satellite and land-based service for wholesale clients. The Virginia-based company is seeking to alter the original plan by allowing its wholesale customers the option to offer terrestrial-only phones.

But in a January 12 letter, the National Telecommunications and Information Administration told the FCC that if it allows such services they may interfere with global satellite systems for navigation, aeronautical emergency communications systems and receivers used by Federal agencies.

A fully terrestrial service would require more land-based stations than a combined satellite and terrestrial system and increase the likelihood of communications interference, according to the letter signed by NTIA Administrator Lawrence Strickling.

The NTIA is an agency within the U.S. Commerce Department that advises the administration on telecommunications policy and manages government use of the airwaves.

In response to the concerns raised by the NTIA letter, the FCC told Reuters in an email that it would "ensure that any approvals would not result in harmful interference." It said it is reviewing LightSquared's waiver request.

The NTIA said in its letter that it was willing to work with the FCC and LightSquared for a possible solution.

LightSquared, which analysts say needs to raise billions of dollars to build-out its network, declined to comment.

The company had said in a January 6 letter to Strickling that it would commit up to $20 million to fund an industry group to study interference problems with the Global Positioning System (GPS). It said the problem was "not unique" to LightSquared.

Even if the NTIA's worries fail to derail the plan, Jeffrey Silva, an analyst at Medley Global Advisors, said the government concerns would likely cause some delays.

"What it does is probably trigger a time-out where there's a lot of consultation on technical issues to investigate ... At a minimum it would probably cause delays," said Silva.

LightSquared aims to build a wholesale wireless network on which it would rent capacity to service providers looking to sell high-speed wireless services to consumers.

Companies such as T-Mobile USA, a Deutsche Telekom (DTEGn.DE) unit, and MetroPCS Communications (PCS.N) have said they may be interested in partnering with LightSquared if it gets its network up and running.

LightSquared would compete with another rival, Clearwire Corp (CLWR.O), which has already partially built a wireless broadband network, but Clearwire also need more funding in order to complete its network.

Clearwire, which is majority owned by Sprint Nextel (S.N), is estimated to need another roughly $3 billion in funding. Some analysts say LightSquared may need another $6 billion funding on top of the $2 billion it has already raised.