Stephen Foley: Block on LightSquared seems the right decision
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Saturday 18 February 2012
US Outlook: Philip Falcone and the other investors behind LightSquared, an ambitious plan to build a nationwide wireless broadband network in the US, are foaming at the mouth with fury at having their plan blocked by regulators.
They are throwing out accusations of political bias and manipulation by lobbyists, and they are lawyering up in anticipation of a court battle against the government. The truth doesn’t lie in their conspiracy theories, though. The Federal Communications Commission did the right thing.
I will confess to pangs of sympathy for Mr Falcone, a self-made billionaire who became a star of the hedge fund industry thanks to his successful bets against the mortgage market before the credit crisis. He was early in identifying the need for more wireless broadband capacity. The phone networks here are already creaking, as video calling, movie streaming and other data-intensive services take off. LightSquared, which has acquired rights to chunks of the radio spectrum, was proposing to build something that would be good for consumers and vital for innovation, as well as severely lucrative for its backers. It doesn’t seem especially fair that the plan has been scuppered because existing GPS services can’t stick to their own bit of the spectrum.
But practicality trumps fairness. The trouble is that GPS services use adjacent bits of the spectrum and would be disrupted by its service. Weak GPS satellite signals require a big scoop, so receivers are straying into LightSquared’s territory. Some of these GPS services are critical to aviation and the Pentagon; others are the basis of existing multi-billion dollar industries.
Only government regulation can make sense of the noise and prevent chaos, and the FCC had to weight the greater good. LightSquared argued the GPS industry should be forced to invest in technical fixes so as to stay within their spectrum. The FCC ruled that the proposed technical fixes were impractical, so it withdrew the provisional approval it gave to LightSquared.
My own view is that it is not only the science that is on the FCC’s side. Even if a fix were technically feasible, the FCC would still be within its rights to favour a well-established, highly-profitable, widely-used and security-critical industry over an unproven start-up. Spectrum is finite but not in short supply, and there are other options for improving wireless internet in the US. A day after the Commission’s decision, Congress approved a plan to re-auction areas of the spectrum currently being under-utilised by broadcasters.
For Mr Falcone this is all a terrible disaster. His fund, Harbinger Capital, has more than half its assets in LightSquared and last night we learned that outside investors are suing him for what they called a “reckless” all-in bet.
Foaming now about how the FCC has ignored “the rule of law” isn’t true and isn’t going to help.
International Women's Day 2014: The shocking statistics that show why it is still so important
Feminist quotes to inspire you on the International Women's Day
Oscar Pistorius trial first week: Never mind a media scrum – murder case becomes bizarre safari following the tracks of a wounded lion
International Women's Day 2014: Mothers and daughters around the world describe hopes and dreams in touching photographs
International Women’s Day: 'When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch' - feminist quotes from female icons to inspire you
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Orgasm machine to deliver climax at the push of a button
- 4 Too upsetting? Academy members voted for Oscar-winning 12 Years A Slave 'without watching it'
- 5 Liam Neeson turned down James Bond role because Natasha Richardson said she wouldn't marry him if he took it
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...