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Death of satellite LTE project essentially sealed the firm's fate

Philip Falcone, Harvard University economics grad and billionaire venture capitalist, has seen his hopes to deliver 4G satellite LTE crash and burn.  Despite his fortune, Mr. Falcone had to dig deep to scrounge up $5B USD in extra venture capital to pay for the world's largest communications satellite in history -- the 5.4 ton SkyTerra 1.

Launched in 2010, all was going glorious for Mr. Falcone and his new venture LightSquared.  Soon they had worked out a $9B USD deal with Sprint Nextel Corp. (S) to deploy a terrestrial LTE network to complement the satellite offerings.  Together the terrestrial + satellite solution was expected to dominate the LTE market when it launched sometime around 2013.

But optimism surrounding the U.S. Federal Communications Commission's conditional approval of LightSquared's satellite LTE turned to dismay when the U.S. Air Force revealed that it would interfere with an estimated 75 percent of commercial and government GPS units.

SkyTerra 1
LightSquared's doomed LTE bid involved a record-setting 5.4 ton satellite. [Image Source: Boeing Comp.]

And just in case rendering navigation useless across the continental U.S. wasn't enough of a death sentence, the SkyTerra 1 bid became an intensely politicized issue when it was revealed that LightSquared's legal team had pressured the White House chief of staff, reminding him of the millions Mr. Falcone had raised for President Barack Obama's election bid.  Many believe those donations led to a hasty conditional approval by the FCC, overlooking interference concerns.

But in the end those contributions were for naught because even the friendly Obama administration was forced to kill LightSquared's proposal.  Sprint, upset at losing a key part of the service, also terminated its contract with LightSquared.

With no terrestrial deployer, billions in debt, and a defunct multi-ton hunk of metal floating in orbit, the latest entry in this story is perhaps a predictable one -- LightSquared has filed for Chapter 11 protection in New York's Southern District Court in New York.

The bankruptcy spells dire news for hedge fund Harbinger Capital Management, as well as Mr. Falcone.  The perhaps ironically named hedge fund was a deep investor in LightSquared and joined Mr. Falcone in trying to propose stop-gap deals to placate creditors who grew increasingly unsettled in the wake of the satellite deal collapse.

Philip Falcone
The LightSquared failure is the first major defeat for venture capital whiz Phillip Falcone.
[Image Source: Jacob Kepler/Bloomberg/Getty Images]

Most of LightSquared's staff has already jumped ship, so at this point creditors may be left picking at a carcass.

LightSquared's marketing chief Frank Boulben has gone from one bankruptcy candidate to another, becoming the new chief marketing officer (CMO) for money-losing Canadian phonemaker Research in Motion, Ltd. (TSE:RIM).  CEO Sanjiv Ahuja, stepped down in February.

With the bankruptcy filing LightSquared and its ambition to become a fifth major American wireless service provider are -- for all intents and purposes -- dead.  The company's meteoric rise and bizarre fall stand as a cautionary tale to those who might wish to cut corners to establish themselves as a competitive service provider.

Source: LightSquared

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Jason Mick = Fail
By McTardy on 5/14/2012 11:14:39 PM , Rating: -1
Jason Mick strikes again with another RIM bashing comment in a non-RIM article. I'm not even going to try and be civil this time.

Hey Jason! F*ck you!

RE: Jason Mick = Fail
By Dorkyman on 5/15/2012 11:49:39 AM , Rating: 2
Gee whiz, McTardy, three separate posts to flame the author?

Plus expletives to show how much you really mean it?

Color me impressed.

RE: Jason Mick = Fail
By McTardy on 5/15/2012 1:38:34 PM , Rating: 1
Was only supposed be 1 post. Guess the DailyTech posting engine was having a fail moment of its own while I was commenting. Would have gone back and deleted the duplicates, but I can't.

Expletives? Yeah I gave up resorting to reason when it comes to Jason Mick and his unholy crusade to mention RIM in every single article he writes.

RE: Jason Mick = Fail
By bigboxes on 5/15/2012 9:54:36 PM , Rating: 1
I thought the same when all the talk about Palm was the rage. And yet it still happened. Why does it even bother you? Are you a RIM stockholder? I never understand why people need to defend the feelings of a corporation.

It's all lies, I tell ya!

RE: Jason Mick = Fail
By McTardy on 5/16/2012 2:39:20 AM , Rating: 2
As I've said a few times before, I'm not defending RIM or their stupid decisions over the past few years. Its expected and healthy for writers to call out a company that isn't performing up to snuff. My issue with Jason Mick is that he takes it to a level that bypasses absurd. This article isn't even about RIM, yet he finds a way to sneak it in. My point to Jason is this: bash RIM if you so choose, but stop letting it poison your other articles. And STOP citing yourself as a source!

There. I didn't use expletives that time. Let the flames begin.

RE: Jason Mick = Fail
By bigboxes on 5/16/2012 9:33:13 AM , Rating: 2
Maybe he's just adding tags to increase hits. I understand the annoyance, I don't understand the hatred. I'd just stop reading his blogs if it bothered me that much.

RE: Jason Mick = Fail
By McTardy on 5/16/2012 4:36:13 PM , Rating: 2
I have DailyTech in my RSS. Believe me if there was a "show all DailyTech posts except those from Jason Mick" I'd be the first person to sign up for it. It pops up in my RSS and gets my attention. I'll give him credit for writing about interesting topics. Unfortunately I don't realize until its too late that the article has been written by a monkey who has had his ass shaved and taught to walk backwards. By that point the damage is done and Captain Fantastic Journalist has added to his page hit count :(

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