Hedge-fund manager Phil Falcone is begging Uncle Sam not to kill off his make-or-break $3 billion bet on wireless venture LightSquared, saying he can fix 99.5 percent of complaints about interference with GPS systems but needs device makers to help fix the remaining 0.5 percent.
Reston, Va.-based LightSquared — which aims to build out a new super-fast, nationwide wireless network using 40,000 base stations — proposed in a letter to the Federal Communications Commission a “middle ground” solution to complaints that the upstart will interfere with commercial navigation devices used by tractors, high-tech air-traffic controls and the military.
The rest of the problem, however, will require some effort on the part of the GPS device makers, who have been complaining about the venture and want it to just go away, the company said.
“LightSquared believes cooperation is the least to expect from an industry that built a business by piggy-backing on the federal government’s GPS network without any investment in infrastructure or spectrum,” the company said in a combative press release announcing the FCC filing.
The FCC granted LightSquared preliminary approvals on Jan. 26 but early tests of the system, which uses spectrum reserved mainly for satellite services, found it interfered with global positioning systems. The regulator asked LightSquared to file a report on a possible solution by July 1.
The FCC’s reaction to LightSquared’s plea could go a long way to determine Falcone’s fate as a hedge fund honcho or has-been. The self-described hockey nut and minority owner of the NHL’s Minnesota Wild made his name betting against subprime mortgage loans in 2007.
That play helped him grow his hedge fund, Harbinger Capital Management, to a whopping $26 billion at its peak, and to bring Falcone and his wife, Lisa Marie, to New York society fame, including gracing the pages of Vanity Fair.
The LightSquared bet, however, has led to conflict with investors who say they never opted to be so heavily tied to the risky start-up venture. Roughly $3 billion has left the fund since the LightSquared deal was launched last year.
Today, Falcone’s $2.9 billion investment in LightSqared makes up roughly half of Harbinger’s $6 billion in assets.