Game Over: LightSquared Goes Bankrupt
May 14, 2012 7:44 PM
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Death of satellite LTE project essentially sealed the firm's fate
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. (
) 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
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.
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. (
). 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.
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RE: Jason Mick = Fail
5/16/2012 2:39:20 AM
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
5/16/2012 9:33:13 AM
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
5/16/2012 4:36:13 PM
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 :(
"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser
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