LightSquared’s political efforts doomed to failure? Update: Turner statement says LS approval “prohibited by our legislation”

Over the last couple of weeks, I have written several times about LightSquared’s efforts to leverage its political connections into building a cell-phone and wireless broadband Internet connection on the cheap, but this story may come to a sudden halt whether LightSquared or its friends in the White House wish it or not.  In my column for The Fiscal Times today, I introduce the controversy to TFT’s readers, but also break a little news.  The decision by Barack Obama to sign the National Defense Authorization Act will bar LightSquared and the FCC from pursuing their project for the next two years, at least:

The overwhelming failure of the NTIA tests puts Genachowski in a corner, especially given the public statements from the Departments of Transportation and Defense specifying the failures.

In case that doesn’t prevent the FCC from succumbing to political pressure, Rep. Michael Turner inserted language into the National Defense Authorization Act (section 913) that requires the Secretary of Defense to ensure that no commercial services are presenting “widespread harmful interference” – and certify that every 90 days for the next two years. It furthermore requires that the FCC “ensure that the signals of Global Positioning System satellites can be received without interruption or interference.” President Obama will sign the NDAA in the next few days (a bill that has other controversial provisions in it), which will give this language the force of law.

Once Obama signs the bill, the FCC has no choice but to deny LightSquared’s petition for a declaratory ruling in their favor and refuse to allow them to proceed for another two years.

Be sure to read it all, especially if you need to catch up to the story.

As I noted in the previous post, Obama plans to sign the NDAA with this language in the next couple of days, albeit with a signing statement on an unrelated issue.  That hasn’t kept LightSquared and its parent, the hedge-fund Harbinger that’s currently under SEC investigation for potential fraud and market manipulation, from trying to win politically what it couldn’t technologically.  They have begun a Facebook blitz that links to every sympathetic article, and puts up odd assertions like this: “Today there are twice as many mobile-broadband as fixed broadband subscriptions. We need to find a wireless solution!”  Well, if we do have twice as many mobile broadband subscriptions as fixed-point subscriptions, doesn’t that make the argument that we already have plenty of wireless solutions available? The mobile customers aren’t moving around with really long wires, after all.

Speaking of sympathetic pieces, this Forbes article lamenting the fact that “Washington” has killed LightSquared really needs a fact check:

Falcone bought debt and equity in both companies and by 2007 had engineered an agreement where Inmarsat leased its spectrum to SkyTerra to assemble a single 20-megahertz block. The problem was the existing tenants. Or, in Falcone’s case, squatters. The GPS system operates on a slice of spectrum between 1,559 megahertz and 1,610 megahertz. But the transmitters on GPS satellites are weak: the equivalent of a 50-watt lightbulb hanging 12,550 miles in the air.

To pick up such faint signals, the GPS industry designed receivers that take in a broad swath of radio waves on either side, like an owl’s huge eyes that can see a single photon in the darkness of night. Instead of zeroing in on the GPS ­frequencies alone, they take in the entire GPS band plus ­Falcone’s neighboring ­­block. That allowed for cheap, handheld GPS devices. But it was based on the assumption no one would ever build on the lot next door.

That “assumption” was the FCC’s own spectrum allocation plan, which restricted the frequencies “next door” to low-power satellite communications for this very reason.  Instead of buying frequencies in a part of the spectrum planned for ground-based telecommunication, LightSquared tried to get the FCC to waive the power restrictions, a decision that would have saved them billions of dollars, as Forbes notes:

Since then the government has raised $52 billion by selling spectrum to owners who can do pretty much whatever they want as long as they don’t transmit on frequencies that belong to somebody else. The spiraling price for radio spectrum has created the equivalent of land developers who buy underused frequencies, pay the existing “tenants” to move out and then apply to the zoning authorities—in this case, the FCC—to build skyscrapers on the land.

No, broadcasters cannot do “pretty much whatever they want” with their licenses.  They are restricted by power output and transmission type, as anyone who has held an FCC radio license either commercially or otherwise knows.  If that were true, then Falcone wouldn’t have had to get the waiver at all.  The FCC imposes those restrictions for the very reason at stake here, which is to make sure one broadcaster doesn’t interfere with another’s services.

Nor does Forbes do a very good job of dot connecting:

He thought he’d cleared the last hurdle standing between him and the trade of his life in January 2011, when the FCC granted LightSquared permission to operate a combined cellular/satellite communications network in the so-called L-band, adjacent to the frequencies GPS uses. That theoretically made Falcone’s 56 megahertz of radio spectrum, purchased for about $2 billion in a series of transactions a few years ago, worth as much as $17 billion. …

Then in November LightSquared asked the FCC to allow its wholesale customers to sell “terrestrial only” cellular plans. The rest of the industry saw this as a threat, since it had assumed LightSquared would have to charge higher prices to meet the requirement that it build an integrated satellite/terrestrial system. But the objection may be hollow: LightSquared says it spent $50 million developing new Qualcomm chipsets that make it possible to offer dual-mode service at prices below cellular.

In other words, having gotten a $15 billion advantage over their potential competitors, Forbes wants to argue that a $50 million investment somehow balances the equation.  I’m pretty sure they’re better at math than this at Forbes.  And the point still remains that the GPS industry, including military and commercial aviation systems, has millions and millions of units in the field, the vast majority of which will fail if LightSquared manages to get FCC approval for its system, which has failed the NTIA testing on which it was conditioned.  That was a risk that Falcone knew before sinking this money into the LightSquared venture, and the remedy that Forbes seems to champion in this piece is the obsolescence of millions of general-purpose, military, and aviation GPS systems in order to allow LightSquared to build a cell-phone network on the cheap, by shifting the cost of the obsolescence onto consumers and the government.

Thankfully, Congress seems to have headed this off with the NDAA, but that doesn’t lessen the need to discover what the FCC was thinking — or what it was told — when they issued the conditional waiver in the first place.

Update: Rep. Michael Turner will shortly release this statement, which states categorically that the NDAA would bar the FCC from approving LightSquared’s application:

“The President will shortly sign the National Defense Authorization Act for FY12, which contains a provision I sponsored with Rep. Loretta Sanchez that will prohibit FCC approval of the LightSquared network until concerns about its widespread harmful interference with DOD’s Global Positioning System are resolved. I understand the company has recently petitioned the FCC to approve its network immediately.

“Such approval, in view of the recent test results of the LightSquared network’s effect on GPS receivers, would be prohibited by our legislation. The FCC should take no actions inconsistent with the bipartisan and bicameral position of the Congress that our first goal must be to protect DOD GPS systems.”

That’s the way I read Section 913 as well.  Interesting that Sanchez partnered with Turner on this prohibition, too.

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