LightSquared's Phil Falcone talks to CNBC, airs his feud with Verizon and AT&T (video)
Time to call in the wireless waahmbulance. LightSquared's billionaire backer Phil Falcone made his television debut on CNBC's Power Lunch to cry foul at the behind-the-scenes lobbying drama that could put the brakes on his 4G dreams.
Context & Ripple Effects
LightSquared enters August 2011 with real momentum: Phil Falcone's venture struck a wholesale network deal with Sprint in June and closed a $265 million raise in July to fund the high-speed build-out — yet both rest on regulators clearing its spectrum plans. Taking the grievance to CNBC's Power Lunch is the move of a backer whose capital-intensive bet lives or dies in Washington, not in the lab.
The feud lands at an awkward moment for the accused: AT&T's proposed $39 billion acquisition of T-Mobile USA is still pending before regulators, so the two carriers Falcone blames for the lobbying are simultaneously fighting their own consolidation battle inside the same agencies. It is also a familiar posture for Verizon, whose chief was needling rivals publicly as far back as the 2009 LTE iPhone rollout.
First-order effects
- Falcone converts a behind-the-scenes lobbying dispute into a public-relations campaign, wagering that television exposure can counteract Verizon and AT&T's influence with the regulators weighing LightSquared's spectrum plans.
- The Sprint wholesale partnership and the $265 million war chest are only worth what the network's regulatory clearance is worth — an adverse ruling strands both.
Second-order effects
- Verizon and AT&T are forced to fight on two Washington fronts at once — containing LightSquared's entry while shepherding AT&T's $39 billion T-Mobile acquisition through review — splitting lobbying attention and political capital between competing asks.
- Sprint emerges as the quiet beneficiary: a functioning fourth wholesale network would hand it capacity and negotiating leverage against the very carriers working to keep LightSquared sidelined.
Third-order effects
- If incumbent lobbying proves decisive, the episode hardens into a template in which spectrum access — not capital or technology — is the true gate determining whether well-funded challengers can enter US wireless.
- A hedge-fund billionaire campaigning on national television marks a shift toward open-market structure fights being settled publicly in Washington rather than privately among carriers.
The trend: US wireless market structure is increasingly determined by regulatory lobbying, with incumbent carriers wielding spectrum policy to gatekeep new entrants.