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Philip Falcone, the force behind wannabie network operator LightSquared, has stepped aside in exchange for delaying bankruptcy by a week while a longer extension is negotiated.

LightSqared, the box o' frogs idea to jimmy a cellular network into satellite frequencies, has always been Falcone's baby, financed largely by his hedge fund Harbinger Capital Management and headed by him personally. But investors want him off the board if they're going to agree to a longer extension, and continue negotiations with the FCC, claims the Wall Street Journal.

One might argue that a "hedge fund" with 60 per cent invested in one project is slipping away from its modus operandi; hedge funds are supposed to invest in competing businesses so they always come out marginally on top, but Falcone has already stated his desire to get away from the kind of operation.

Falcone joined the board of LightSquared when Orange veteran Sanjiv Ahuja stepped down as CEO in February, 10 days after the FCC withdrew the licence waiver upon which the entire LightSquared business model depended. Since then LightSquared has been looking for a replacement CEO, but few people are interested in heading up a network operator without any radio spectrum in which to operate a network.

The threat of bankruptcy still lurks for the company, whose only long-term hope seems to lie in using the threat of legal action to frighten the FCC into browbeating the US military into agreeing to a spectrum swap, thereby exchanging LightSquared's too-close-to-GPS bands for something more commercially viable.

But even if that were possible, and the rest of the US network operators could be persuaded not to notice, it's not going to happen immediately before a US presidential election, which makes a debt extension of at least 12 months essential if LightSquared is going to have any future at all. ®

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