Why is the FCC stonewalling Grassley on LightSquared?

posted at 1:25 pm on December 13, 2011 by Ed Morrissey

Most people probably missed this statement from Senator Charles Grassley (R-IA) last week, announcing that he has put holds on two Barack Obama nominees to the Federal Communications Commission (FCC).  With most of the political focus on the Republican presidential race, and whatever focus is left concentrated on budget negotiations in Congress, another Senate hold can’t really compete for attention at the moment.  However, the hold carries significant importance, as Grassley refuses to release the nominees for confirmation until the FCC comes clean on its correspondence with LightSquared and the White House on a series of strange decisions by the FCC to allow politically-connected donors to attempt to create a 4G network on the cheap — and potentially at the expense of GPS users across the nation.

In my column for The Week, I delve into the background of this deal, and why it was so potentially lucrative for LightSquared backers:

The hedge fund Harbinger acquired LightSquared in 2009, when it was known as Skyterra, in order to exploit the Obama administration’s push to expand broadband internet access to areas not well served by wired providers. Until then, Skyterra provided mainly satellite communications, with approval for only an ancillary number of terrestrial towers to augment the satellite signals. The network carried very little data, and the company’s license covered small slices of radio spectrum. Harbinger cut a deal with another satellite company to combine licenses in order to launch a new 4G service that would provide high-speed internet service, complete with an extensive terrestrial network in that frequency band. Essentially, LightSquared would become a cell-service company rather than a satellite communications service.

Normally, the FCC auctions off these slices of radio spectrum for this purpose, and the auctions bring in billions of dollars to the federal government. A 2008 auction of what had been a portion of the UHF band for commercial TV (channels 52 through 69) fetched more than $19 billion, primarily from AT&T and Verizon. If Harbinger and LightSquared could use their already allocated frequencies to launch a new 4G communications service without having to purchase spectrum space, they would have a tremendous advantage over existing carriers.

However, LightSquared’s frequencies were not allocated for this purpose, which required the FCC to issue a waiver for its use. The frequencies are adjacent to the band allocated for GPS service, which use very weak signals from geostationary [see update] satellites that allow receivers to pinpoint their location. Because of the low power of these signals, GPS receivers have to use broad reception, which makes them exceptionally susceptible to interference. That’s why the military and the GPS industry raised warnings about LightSquared’s proposal.

The FCC has its own facility for testing, but chose not to investigate LightSquared’s application before granting the waiver in January of this year. The commission relied instead on assurances from LightSquared that they had resolved the interference issue. According to a source on Capitol Hill familiar with the issue, that assurance did not come with any testing data, yet the FCC allowed LightSquared to proceed nonetheless, with the provision that testing would have to eventually take place before approval for a full commercial rollout.

As readers probably already know, the testing showed that LightSquared’s system had a 75% failure rate in the NTIA tests, which should — should — effectively end its project … if the FCC enforces the terms of its waiver.  The NTIA’s test concluded that “No additional testing is required to confirm harmful interference exists,” which means that the company’s product cannot use their spectrum slice for 4G service.

The big question, though, is why the FCC didn’t just test the system itself right from the beginning.  According to my source on Capitol Hill, they had the capacity to do so, and the issuance of a waiver — especially one that would have bypassed the need to purchase expensive spectrum allocation — was unusual enough that it should have prompted that kind of due diligence.  The FCC claims that LightSquared assured them that they would develop safeguards that would prevent this kind of interference, but apparently didn’t require LightSquared to provide any technical data to support that conclusion.  (Similarly, LightSquared announced two days before the NTIA report was leaked that “independent” tests had shown that their service didn’t interfere with “precision GPS” receivers, but didn’t provide the data or methodolgy of the testing.)

Why did LightSquared get such preferential treatment?  In my column, I recap the relationships between investors in LightSquared, as well as new and ongoing SEC investigations into its parent company, Harbinger, headed by big Democratic donor Philip Falcone.  Grassley and others suspect that the waiver grant and oddly uncurious attitude of the FCC might have to do with the firm’s political connections, which is why Grassley wants to see the FCC’s correspondence between the FCC and the company itself, and between the FCC and the White House as well.  FCC chair Julius Genachowski has refused to cooperate to three separate requests over the last seven months, saying that agencies do not have to honor “compulsory” oversight except from committees with jurisdiction over their operations.  As my source on the Hill points out, making excuses like that usually means there’s something an agency doesn’t want other people to see.

Isn’t it time we get a little sunlight to shine on LightSquared?  CREW thinks so; they have a raft of FOIA requests and results from the White House Office of Science and Technology Policy (OSTP).  Given that the failure in the NTIA tests will mean the end of LightSquared and could rattle Harbinger as well,  it will eventually come out in discovery from the inevitable lawsuit that follows.  Grassley needs to hold firm until the Obama administration comes clean on LightSquared.

That transparency shouldn’t stop with the FCC or with LightSquared, either.  As the Daily Caller reports, this administration has spent almost $5 billion on broadband expansion since the February 2009 stimulus.  How many projects have been completed?  How about … none:

As of the third quarter of 2011, no projects from the federal government’s Broadband Technology Opportunities Program (BTOP) — a technology stimulus program funded by the American Recovery and Reinvestment Act of 2009 (ARRA) — have been completed. …

Recovery.gov states that 170 out of 234 BTOP projects — employing 2,806 people, or 81.5 percent of the BTOP workforce — are still less than halfway complete. …

BTOP funds totaled over $4 billion, and the average award was $6,217,509, according to Recovery.gov. A total absence of loans — and completed projects —  already has at least one critic reeling.

“You’d think if BTOP was even marginally successful, the government would want to trumpet that,” wrote Mike Wendy, director of MediaFreedom.org, wrote on his blog. Wendy told The Daily Caller that he was referred to Recovery.gov after he repeatedly asked NTIA for specific jobs numbers.

And how many jobs have been created from the $4.7 billion already laid out?  Only 3,442 — which comes to $1.365 million per job.

Update: John Ekdahl has more background on LightSquared and the FCC at Ace’s place.  It gets murkier and murkier, but at least the players are … consistent.

Update II: GPS satellites are not geostationary; they have an orbit that consists of roughly 12 hours.


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Good work on this Ed. Falcone is going ballistic over the breaking news and some in the MSM have risen to his defence.

Light needs to be shined on this

William Amos on December 13, 2011 at 1:30 PM

Why? Maybe because they’re all crooked? Just a wild guess.

Helen A Handbasquet on December 13, 2011 at 1:32 PM

Why is the FCC stonewalling Grassley on LightSquared?

You answered your own question, Ed.

In my column, I recap the relationships between investors in LightSquared, as well as new and ongoing SEC investigations into its parent company, Harbinger, headed by big Democratic donor Philip Falcone.

Flora Duh on December 13, 2011 at 1:33 PM

Luckily for Obama’s’ reelection prospects there are no scandals…….

sandee on December 13, 2011 at 1:35 PM

Oh great, Republicans manufacturing another controversy. Here we go again.

Lily on December 13, 2011 at 1:37 PM

Almost everything Issa and Grassley have asked bho and team to give them, they have stalled, stalled, and just give bits and pieces as a Friday dump! The whole blooming bho and team thinks they are above the law and by golly, they do as they please! Thank goodness HA, MM, Fox news, and other convervative sites are keeping this before us with up-dates.
L

letget on December 13, 2011 at 1:37 PM

Keep stalling and let this scandal drag out into 2012.

NapaConservative on December 13, 2011 at 1:40 PM

Oh great, Republicans manufacturing another controversy. Here we go again. Lily on December 13, 2011 at 1:37 PM

Can we call it C2gate?

Akzed on December 13, 2011 at 1:41 PM

Did the Lightsquared project turn to crap?

Then you know Obama was involved.

BobMbx on December 13, 2011 at 1:41 PM

great piece Ed

let the sun shine in

cmsinaz on December 13, 2011 at 1:41 PM

a series of strange decisions by the FCC to allow politically-connected donors to attempt to create a 4G network on the cheap — and potentially at the expense of GPS users across the nation.

Don’t want it to get lost the a number a private companies are already quickly developing 4G networks in urban and rural areas and they’re doing it for top dollar.

I knew Obama’s “investments in rural broadband” was a scam to begin with, but it’s turning out to be more evil than I had imagined.

forest on December 13, 2011 at 1:41 PM

that evil grassley
-lsm

cmsinaz on December 13, 2011 at 1:43 PM

Good for Grassley!

For more details on this corruption, a must-read by the Boss Emeritus: LightSquared: Obama’s Dangerous Broadband Boondoggle
by Michelle Malkin

If you thought the half-billion-dollar, stimulus-funded Solyndra solar company bust was a taxpayer nightmare, just wait. If you thought the botched Fast and Furious border gun-smuggling surveillance operation was a national security nightmare, hold on. Right on the heels of those two blood-boilers comes yet another alleged pay-for-play racket from the most ethical administration ever.

petefrt on December 13, 2011 at 1:43 PM

Our government is in the hands of pre-schoolers.

oldbearak on December 13, 2011 at 1:45 PM

Let’s not get distracted from the real issues – anti-bullying, OWS and gay rights.

Love,

the MFM

NoDonkey on December 13, 2011 at 1:46 PM

Ed and “John E” at “Ace of Spades” do a good job on this stuff, but it sure would be nice if we had a functioning news media and bigger resources to investigate stuff like this.

Didn’t media folks used to actually compete to get stories like this?

forest on December 13, 2011 at 1:49 PM

Most transparently corrupt administration ever. Warren G. Harding is envious.

rbj on December 13, 2011 at 1:49 PM

Didn’t media folks used to actually compete to get stories like this?

forest on December 13, 2011 at 1:49 PM

Only if the party up to the dirty tricks was (R).

Flora Duh on December 13, 2011 at 1:54 PM

Let’s not forget the part of the story where Obama’s people tried to get General Shelton (U.S. Space Command) and Anthony Russo (director of the National Coordination Office for Space-Based Positioning, Navigation, and Timing) to lie to Congress about Lightsquared’s failures.

Happy Nomad on December 13, 2011 at 1:57 PM

due diligence

Hahahahahaha!!!!!! This will go down as one of the most corrupt administrations, evah!

GarandFan on December 13, 2011 at 2:00 PM

Do you know how many ski resorts I could stimulate with that kinda dough? Me neither, but I’d love to find out.

Kissmygrits on December 13, 2011 at 2:01 PM

The FCC like the DOJ, and every other agency under Obama seem to think the laws don’t apply to them!

Zcat on December 13, 2011 at 2:03 PM

I’ll take a quess that LightSquared had no hardware to test in the beginning, and their funding and approval were based strictly on a “paper” design. That would be a good reason FCC is stonewalling.

elintex on December 13, 2011 at 2:04 PM

But Mitt just bet 10k … and Newt’s been married 3x..and..and….Boooshhhhh.

LetsBfrank on December 13, 2011 at 2:07 PM

But Mitt just bet 10k … and Newt’s been married 3x..and..and….Boooshhhhh.

LetsBfrank on December 13, 2011 at 2:07 PM

OT but sort of related

Fast And Furious Watch: No Coverage From NBC Nightly News In All of 2011

Flora Duh on December 13, 2011 at 2:10 PM

Isn’t it time we get a little sunlight to shine on LightSquared?

It sure is. This reeks to high heaven

ted c on December 13, 2011 at 2:21 PM

Anybody heard from Jonathan Alter since this piece came out?

http://www.bloomberg.com/news/2011-10-27/obama-miracle-is-white-house-free-of-scandal-commentary-by-jonathan-alter.html

Projection…its whats for dinner.

DanMan on December 13, 2011 at 2:22 PM

Not surprised flora

cmsinaz on December 13, 2011 at 2:34 PM

Why the focus on broadband? It’s not like most of the country does without as it is. Perks for Obama’s donors? Surely Bambi would earn as much with much less hassle. Or is this about eventual total control of the internet? Monopoly?

We wouldn’t want twitter and facebook interfering with our totalitarian movement now, would we?

MikeinPRCA on December 13, 2011 at 2:51 PM

Hey… they paid good money to be ‘protected’, that’s why.

CPT. Charles on December 13, 2011 at 3:08 PM

I find myself going aginst the “conservative” grain on this one guys.

It is unfortunate that the LightSquared technology was handled by Democrat donors, Democrat businesses, Democrat cronies, and Democrat administration officials, all in an entirely incompetent manner, because the technology itself is something that should be fielded to the fullest to our national advantage.

I dont think that many of the older people posting here understand the technology, the conflict, and the possible resolution to the conflict. Most people consider this a political scandal and I do not argue that, but when we nail the coffin shut on LightSquared we will be blacking out affordable 4G for the mass market. 4g means cable internet speeds in he palm of your hands. Do you really, really understand what this means? I think to a lot of older people, they simply cannot fathom what 4g means. Advanced software and hardware can now run wirelessly, in the palm of your hands. Engineering, archetecture, mathematics, business, IT, weapon systems… Massive and data hungry, formerly bottlenecked mobile platforms are opened up to their full potential. The possibilities for data transfer are virtually limitless. And LightSquared was to be a whole seller of this 4g on a new spectrum, a mass market affordable spectrum.

This wasnt a ploy or power play or entitlement for country folk with no internets. The LightSquared technology was a game changer and was obvious to everyone involved and even those looking in from the outside. Of course the corrupt current administration had its fingers in the jar, any Republican administration would have been in there just as thick.

The problem arises with interference with current GPS systems including miliary systems which are often assembled with off the shelf consumer components. Please note that the GPS recievers encountering interference are the same receivers that were mandated to comply with filtering technology and regulations specified by the DoD. What this failure rate means is 75% of GPS receivers failed to implement this advanced signal filtering technology, and we are left to suffer.

This is equivalent to Alexander Bell inventing the telephone and Morse Code manufacturers wanting congress to “do something about it”… of course everyone in power wants to usher in the telephone but the entrenched morse code economy fights back hard.

I am not saying that the GPS receiver industry should just bend over and accept failure/glitching of devices to accomodate new technology, but it is the GPS industry that was suppsoed to intall advanced filtering technology and failed to do so. So we must suffer? We choose to hold ourselves and our economy back technologically for another decade or two?

I see it this way, remember when all the old TV channels wouldnt come up on gramas box anymore cuz of digital TV? And all the manufacturers were told to comply or be left behind? Why cant we do the same for this? Incrementally unfold the coverage map over the next 10 or 15 years when the usual service life of GPS units is only 2-5 years to begin with.

The LightSquared technology doesnt have to be an Obama disaster. Only the way it was handled from the top down was a disaster. We shouldnt wish the end for LightSquared or its technology that was implemented lawfully and with due dilligence on the part of the business.

dip it in cider on December 13, 2011 at 4:12 PM

If we can take over two losing car companies (share/bond holders be damned), nationalize 15-20% of the economy (barrycare) and build hi-speed rail to nowhere, what’s the big deal w/this?
We lost out on billions to a FOB (Friend of Barry) on the bandwidth auction.
We’re gonna gut the Military anyway..so who cares. “Let ‘em use maps…and eat cake!”.
I’m glad I paid the upcharge of $1700 for GPS in my last ride. Of course to get GPS, I had to get XM radio, Bose sound etc…

121fxdl on December 13, 2011 at 4:17 PM

dip it in cider on December 13, 2011
I’m actually in total agreement w/you. On your complete post. I’m just looking @ it from barrys’ and the end users side.
OK, where’s the payoff to the unions, CWA/IBEW that installs this Equipment?
How do I upgrade my in dash GPS?
Where is the incentive for rural telcos to go fiber, as promised and mandated? Many bumpkins like myself are w/o cell service because the ROI isn’t there for a tower. I’m lucky to have decent copper (Meh, marginal) to my house
Could be boon or bust if some clown is playing w/a windshield mount GPS, instead of texting which will be outlawed soon, and runs our butts over?
Your local 911 service can simply take your # via Caller ID, w/o you saying a word, get it to 1st responders and Police GPS units to save your life. Will that be safe as well. I don’t want them reading maps, or driving past my house during a heart attack or gunfight. Well, if it’s a gunfight, just keep goin’, it’ll be over before they leave the Donut shop ( I keed, I keed)

121fxdl on December 13, 2011 at 4:33 PM

dip it in cider on December 13, 2011 at 4:12 PM

From your comment, I don’t think you know much about GPS and how it functions. GPS signals are low-power, spread-spectrum signals. “Filtering” doesn’t really enter into the problem.

And Ed: You were incorrect about the GPS satellites: They are not geostationary, they’re in a medium Earth orbit (MEO), with an approximate 12-hour orbit.

RoadRunner on December 13, 2011 at 4:35 PM

I hope all of Barry’s scandals drag out till after he is out of office and the “Pardon Train” has left the station. Corrupt pols and lobbyists need to do some hard time without the possibility of a pardon or early release.

Robert Jensen on December 13, 2011 at 4:37 PM

I think to a lot of older people, they simply cannot fathom what 4g means.

dip it in cider on December 13, 2011 at 4:12 PM

Listen you young pup, just because Old Fogies do not cotton to backdoor dealing amongst Democratic donors and the incompetent bureaucratic boobs the government employs, does not mean we are too senile and old to know about the benefits to these newfangled technolocial marvels.

the GPS industry that was suppsoed to intall advanced filtering technology and failed to do so. So we must suffer? We choose to hold ourselves and our economy back technologically for another decade or two?

Let me type this real slow so your typo-prone young mind can comprehend it. There is a lot of GPS technology out there that would have to be grandfathered in because much of it is vital to national security. Much of it is military in nature and the military warned long in advance that interference would occur. Their warnings were ignored and scoffed at. Had those young whippersnappers at Lightsquared and the bumblers who were overseeing this project not done that, they would not be in this sad state of affairs. They could have made the changes they needed to in order to make this work. Now, who knows if they can because it will be very costly indeed.

I see it this way, remember when all the old TV channels wouldnt come up on gramas box anymore cuz of digital TV?

Oh, heck yeah, I remember that. I am even old enough to remember when the FCC was holding up cell phone development because they didn’t want to interfere with land line companies such at Bell Telephone. Cell phones would have been around in the 1940′s if it werent for that. The fact of the matter is, the L band that Lightsquared is planning on using for it’s 4G is too close to a band that has been in use by GPS for decades. Now, somehow, it’s GPS users fault that Lightsquared did not do any due dilligence to make sure that their product wouldn’t interfere. Other companies such as Verizon and At&T managed to come up with a way to use 4G without interference.

Somehow Lightsquared seemed to think that it’s political connections would make everything all hunky dory for them. And it did in the permitting process. But in the real world, not so much.

Lily on December 13, 2011 at 4:51 PM

As I said in another post, the reality is that the consequences will affect more than just the Garmins or Magellans in your car. I have invested almost a hundred thousand dollars in Survey grade GPS receivers over the last 15 years. I rely on them to daily to do my job and allow me to meet the requirements that almost all counties and states demand to get their contracts. I will be happy to go back to the old way but it will take three times longer and cost my clients three times as much.

SnakeHips on December 13, 2011 at 6:45 PM

Lily on December 13, 2011 at 4:51 PM

From all the geezers and old ladies here: YEAH!!

Anything pushed this hard by this administration HAS to be corrupt

hoosierma on December 13, 2011 at 7:06 PM

Dare I suggest the reason LightSquared (and Harbinger) wanted that untested waiver was to entice (dupe) investors.
LightSquared/Harbinger will likely be the next Obama crony capitalist schemes to declare bankruptcy. Those late investors will have effectively been defrauded by the FCC.

xstatic on December 13, 2011 at 7:36 PM

No offense Ed, but if LightSquared is able to increase competition, I want to do whatever it takes to make that happen. I am tired of having worse cellphone rates than Europe.

ArkyDore on December 13, 2011 at 9:52 PM

worse than Europe*

ArkyDore on December 13, 2011 at 9:53 PM

Pretty much all elected Democrats and nearly all of those they appoint to office are corrupt to their very core. We could fill a dozen prisons with the criminals in this Administration alone (not even counting the traitors at State).

Adjoran on December 14, 2011 at 12:06 AM

Update II: GPS satellites are not geostationary; they have an orbit that consists of roughly 12 hours.

Huh.

Did not know this.

Tim_CA on December 14, 2011 at 12:46 AM