In a scathing critique of inside-the-Beltway politics, Falcone in an interview accused the FCC of bowing to special interests that could have been hurt by the innovation, robbing consumers of a cheaper alternative to AT&T and Verizon Wireless.
Falcone and other business groups see the fall of Reston-based LightSquared as a cautionary tale of what can happen when a business bets on Washington.
“We were ready to put the shovel in the ground, but they pulled the rug out from under us,” Falcone said. Lobbyists, he added, “have a tremendous amount of power, and I was shocked by how regulators responded to that pressure.”
The FCC had been a champion of LightSquared’s groundbreaking technology and last year put the company’s plans on a fast track, analysts of the project have said. The unusual move drew criticism from lawmakers and some business groups.
Preliminary tests showed that LightSquared’s devices interfered with Global Positioning System signals used by the military and airplanes. Industry groups and federal agencies lobbied the FCC and Congress to nix LightSquared’s plans.
“We don’t pick sides,” FCC general counsel Austin Schlick said. “Our decision-making here, as on other issues, will continue to be based on the record and guided by law, engineering and settled policies that seek to remove regulatory barriers to broadband while avoiding harmful interference.”
But Falcone remains adamant that the engineering problems could have been fixed. Ultimately, it was politics, not the technical interference, that disrupted the project’s promise, he said.
“The message to investors and other businesses is that if this couldn’t work, what can?” said Jeffrey Silva, an analyst at the Medley Global Advisors research firm. “When this came out of the box, they had all the right licenses, and there was no good reason to believe it wasn’t on solid ground.”
The LightSquared saga has been a remarkable defeat for Falcone, who made billions of dollars as an investment “vulture” by buying distressed companies and assets at bargain-basement prices. Falcone has been a major donor to Republicans and increasingly to Democrats after Obama took the White House.
He first got into the telecom business in 2010 when he took advantage of a rare opportunity to buy a slice of airwaves. The spectrum was like owning a prime piece of real estate in downtown Manhattan, and it had all the government permits needed to build the next-generation wireless service. The network would beam signals from satellites in space to phones on the ground.