Updated: LightSquared's Falcone faces charges while Orange pursues L-band tests

Talk about adding insult to injury. The day after Philip Falcone was charged with numerous fraudulent acts by the U.S. Securities and Exchange Commission, Orange France announced plans to begin testing mobile broadband services in the L-band, though using frequencies that are different from those that Falcone is not being allowed to use for his bankrupt LightSquared project.

The SEC's charges against Falcone and his advisory firm, Harbinger Capital Partners, allege illicit conduct that included misappropriation of client assets, market manipulation and betraying clients.

Among other things, the commission alleged in a civil lawsuit filed at U.S. District Court in New York that Falcone paid his 2009 federal and state taxes with $113.2 million he fraudulently borrowed in investors' money without their consent from a hedge fund he advised through Harbinger Capital. He subsequently repaid the loan, with interest, in 2011. The regulators want to bar Falcone from serving as an officer or director of any public company and force him to pay unspecified penalties and restitution.

The SEC also charged Peter Jenson, Harbinger's former COO, for aiding and abetting the misappropriation scheme. In addition, the commission said it has already reached a settlement with Harbinger for unlawful trading.

Falcone spent years and billions of dollars trying to launch LightSquared's terrrestrial wholesale LTE network using L-band satellite frequencies, making LightSquared Harbinger Capital's largest investment. Those dreams were crushed in February, when the FCC revoked LightSquared's conditional waiver to build a terrestrial LTE network due to concerns that the operator's intended use of its 1.6 GHz L-band spectrum would cause interference with GPS equipment.

LightSquared, which claims to have invested more than $4 billion in its planned network, filed for voluntary Chapter 11 bankruptcy protection in May. The company has pledged to fight the FCC's February ruling and suggested swapping its spectrum for other frequencies that would not cause GPS interference.

L-band broadly refers to the frequency range from 1 to 2 GHz, a portion of which is allocated for mobile satellite service (MSS) operations, according to the FCC, which notes 1525-1559 MHz is domestically and internationally allocated for transmission from satellites to mobile earth stations and 1610-1660.5 MHz for transmission from mobile earth stations to satellites. LightSquared is licensed for MSS operation in portions of the 1525-1544 MHz and 1545-1559 MHz downlink bands and the 1626.5-1645.5 MHz and 1646.5-1660.5 MHz uplink bands.

Pundits have suggested that some of LightSquared's spectrum could yet be used to supplement terrestrial mobile broadband systems by alleviating data traffic delivered over their primary spectrum. Now Orange France is lending some credence to that vision, announcing plans to conduct trials early next year in Toulouse, France, in which the company would use L-band 1452-1492 MHz frequencies to provide mobile broadband systems with supplemental downlink capacity. However, Orange's trial results won't do much help LightSquared's arguments.

"The European L-band spectrum (formerly used by Worldspace) is vastly further away from GPS than the L-band MSS spectrum that (LightSquared) controls," said Tim Farrar of TMF Associates. While Orange has said it will test the 1452-1492 MHz spectrum as an auxiliary downlink, LightSquared is talking about using its spectrum for uplinks because those would produce less GPS interference, he added. "That's basically the opposite of the European situation,
and of course uplink spectrum is probably not in short supply," said Farrar.

Orange said of its planned tests, "The objective will be to assess the potential of using additional frequencies to boost capacity of 3G/UMTS and 4G/LTE networks regardless of the country or operator. Supplemental downlink, in this case using the L-band, is a promising technology that allows a boost in network capacity by exploiting inter-band multi-carrier technology standardized in 3GPP for 3G/UMTS and 4G/LTE."

The trial will use Ericsson (NASDAQ:ERIC) base stations and devices employing Qualcomm (NASDAQ:QCOM) chipsets. Both the base stations and the devices will use supplementary carrier frequencies in the L-band for downlink operations, combined with a traditional paired carrier at 2.1 GHz, said Orange.

The operator noted CEPT (European Conference of Postal and Telecommunications Administrations), which issues decisions regarding the harmonized use of the L-band in Europe, has indicated that refarming L-band spectrum for mobile broadband use is a relevant option given the continuing growth of mobile broadband use.

For more:
- see this SEC release
- see this Orange press release
- see this The Washington Times article
- see this PC World article

Related articles:
LightSquared in negotiations with creditors to avert liquidation
Lawmakers think LightSquared could use military spectrum
LightSquared: It's not over till it's over
LightSquared files for Chapter 11 bankruptcy protection
LightSquared to pay Inmarsat $56.3M, delays further payments until 2014

This article was updated on July 4, 2012, to include more information about Orange's L-band frequencies and provide analyst comments.