Did the FCC try to drive a LightSquared competitor into bankruptcy?

posted at 8:40 am on February 22, 2012 by Ed Morrissey

The Daily Caller follows up on its dot-connecting yesterday on the Obama administration’s efforts to make LightSquared pay off for its Democratic-donor backers with a look at the other side of crony capitalism.  Matthew Boyle tells the story of the original government effort to expand broadband to rural areas, Open Range, which partnered with GlobalStar, a competitor of LightSquared’s predecessor company Skyterra.  The difference between the two was that GlobalStar actually owned spectrum allocated for terrestrial cell-system use, which Open Range wanted to use to expand broadband.

Open Range had already received a hefty loan from the USDA’s Rural Utilities Service to roll out their service, but GlobalStar needed to have more satellites in the air to maintain its FCC approval to operate in both spectrum allocations simultaneously.  In 2008, the FCC granted GlobalStar a 16-month window to resolve the situation, but a 2009 earthquake in Italy disrupted the completion of the satellites, and they asked for another significant extension.  The FCC then slow-walked the waiver application while expediting the sale of Skyterra to newly-minted Obama backer Philip Falcone and Harbinger, now the hedge-fund parent of LightSquared:

Citing the earthquake and disruptions because of the global financial meltdown, GlobalStar filed a request with the Obama administration’s FCC on Dec. 14, 2009, asking for an additional temporary waiver from the agency’s requirements so it could continue building its network.

The FCC didn’t acknowledge receipt of the extension request until March 5, 2010, and didn’t open it up for public notice until four weeks later, on April 2.

During the months while GlobalStar’s request languished in the FCC’s slow-moving bureaucracy, the agency was helping to finalize the sale of SkyTerra to Harbinger. That company would ultimately become LightSquared.

Eventually, the FCC would extend the deadline only until September 15th.  While GlobalStar tried to get the FCC to extend the deadline further, the FCC spent the summer flirting with LightSquared, which intended to use satellite-communications spectrum rather than terrestrial spectrum to build their 4G network.  In mid-September, with GlobalStar’s extension expiring in just hours, the FCC seemed much more interested in how to make it look like Harbinger hadn’t stuck it to Open Range than in the merits of the Open Range/GlobalStar waiver request:

Documents show that on Sept. 13, three days after Adelstein sent his email, Obama’s technology adviser Phil Weiser hosted another White House meeting. Attendees included Adelstein, de Sa and several other high-ranking officials in the FCC and USDA.

Later that day, after the meeting, Adelstein emailed de Sa in what appears to be an indication of what transpired.

“Thanks for taking so much time for the helpful meeting today,” Adelstein wrote. “Would you mind letting the Harbinger folks know I will call them soon so we look like a coordinated effort so they don’t feel they have unlimited leverage to stick it to Open Range?”

“Happy to hook you up,” de Sa replied, “although one thought is that at the moment the ball is in openrange [sic] court (in that they have the term sheet), so I wonder if rather than spending your intervention bullet now when [there are] no issues with negotiation, whether it would be better to wait until if/when a problem arises after the fcc order comes out?”

de Sa added, regarding Adelstein’s concern that the parties involved “don’t want to give harbinger any ideas about sticking it to openrange,” that it was “totally your call tho, just let me know what u prefer.”

GlobalStar’s final request for an extension on its rule waiver was denied on Sept. 14, the very next day.

Boyle sees three possibilities for this e-mail conversation.  It looks like a communication to the White House letting them know that LightSquared’s competition would get the shaft from the FCC, and/or an acknowledgment that the FCC had already tipped Harbinger that they would deny GlobalStar’s waiver request.  It could also be a discussion about how to force Open Range to subcontract with LightSquared rather than GlobalStar in order to get even more money into Harbinger’s pocket from the LightSquared waiver, assuming the FCC granted it.  Whichever interpretation one chooses, it’s clear that the Obama administration was far more than a disinterested regulator in these events.

This is crony capitalism at its most bald: picking winners and losers through the use of regulatory intervention and favoritism.  The loser in this case was Open Range, which filed for bankruptcy in October 2011, a year after the Obama administration and the FCC stuck it to them and GlobalStar.  The White House instead favored a venture in which Obama himself was an early investor and whose backers were friends and donors to his campaign — and which had no chance of winning on the merits thanks to their insistence on using satellite-communications spectrum rather than spending the money buying terrestrial-communications spectrum.


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Is anyone here surprised?
.
But that doesn’t mean we shouldn’t try to indict someone for this.
And it would probably have to wait until after the election.

listens2glenn on February 22, 2012 at 8:46 AM

did Obama motors try to crush Toyota under “unintended acceleration” claims a few years ago? Nah…never happens…

thedevilinside on February 22, 2012 at 8:46 AM

Nothing here to see. Move along.
Pay no attention to the man behind the curtain.

ObamatheMessiah on February 22, 2012 at 8:48 AM

Unprecedented transparency.

search4truth on February 22, 2012 at 8:49 AM

All this smoke of corruption keeps building and the congressional Repubs turn an apparent blind eye. Why they’re so frightened of Obama escapes me. He gets away with this nonsense because we let him. The blame for it continuing is ours alone.

volnation on February 22, 2012 at 8:49 AM

This is crony capitalism at its most bald: picking winners and losers through the use of regulatory intervention and favoritism.

Can’t wait for my medical services to be run like this.

forest on February 22, 2012 at 8:50 AM

And you think the “Chicago Way” is not into every fiber of this administration? The don’t care about the people…just their wallets!

KOOLAID2 on February 22, 2012 at 8:51 AM

Well, it should be obvious to sane people by now that in subsequent years, the ChicagØbama administration will be atop the Pantheon of Corruption.

Said “memorial” to be built right next door to the Federal Prison where Barry and Eric will be sharing a cell in protective custody.

~(Ä)~

Karl Magnus on February 22, 2012 at 8:54 AM

The most transparent administration evah!!!!!!!!

angrymike on February 22, 2012 at 8:54 AM

Is it prosecution material, I wonder? If any of the candidates is willing to air the idea aloud I’ll support him – even if it Santorum.

Archivarix on February 22, 2012 at 8:56 AM

But…
Obama can sing….
Dreamy…..

Electrongod on February 22, 2012 at 8:58 AM

Now I know why Obama said he was not going to put up with lobbyists – he had his winners already picked out.

OldEnglish on February 22, 2012 at 9:00 AM

RAS says no athesit FEEEEEVAH in Michigan.

Eph on February 22, 2012 at 9:00 AM

ATHEIST FEEEEVAH, that is!

Eph on February 22, 2012 at 9:00 AM

Obama’s America, may the special interest triumph!

rob verdi on February 22, 2012 at 9:01 AM

Obama doesnt pick winners and losers. He picks losers and losers.

http://www.slashgear.com/lightsquared-dims-as-45-of-workforce-is-slashed-22214742/

Things around the LightSquared offices have to be looking dim at this point. While the managers of the company continue to fight to get their proposed wireless 4G network approved, denials keep streaming in. LightSquared has announced that is having take rather drastic measures to save money and attempt to stay afloat. The company has announced that it is shedding 45% of its 330 person workforce

William Amos on February 22, 2012 at 9:11 AM

This is nothing…absolutely not at all important enough to even mention.

But, did you hear about Santorum saying that the Devil is targeting America??/

Now, we need more of that sorta stuff flooding the airwaves, right?

Once upon a time there would be timely indictments and trials for those who masterminded and pushed these sort of schemes.

But that was long ago when ethics meant something.

And long ago when the citizens actually gave a damn.

coldwarrior on February 22, 2012 at 9:11 AM

More of the crony capitalism — or perhaps we should just be calling it what it really is, crony thievery by way of government – we’ve come to expect from the uber-corrupt Obama administration.

Gee, if only there had been some clue to Obama’s propensity for this kind of corruption — say, like, Obama allowing one of his criminal Chicago backers/fixers (Tony Rezko) to arrange the purchase of a house for Obama with a loan at below-market rates and with the empty building lot next to the Obama house “donated” to the Obamas by way of a shady deal in which they purchased a small sliver of the lot from Rezko, which just coincidentally made the remaining portion of the lot too small to build anything on (per local building codes), thereby destroying the lot’s value. (But hey, don’t all politicians’ “friends” give them gifts worth hundreds of thousands of dollars while expecting absolutely nothing in return?)

AZCoyote on February 22, 2012 at 9:12 AM

William Amos on February 22, 2012 at 9:11 AM

These guys are fixing the game as their own referee, and they still manage to pick the losers. Megafail.

forest on February 22, 2012 at 9:15 AM

All of this will pass, and corporations all over the place will jump on the Obama bandwagon…as Obama floats the idea of dropping the corporate tax rate…just in time for an election…and just at the time when the tax rate has become a GOP issue.

Sure am glad we didn’t get one of those perfidious professional politicians elected to the White House last time around…sure am glad that we got real “change” in the way things are run and we are governed lorded over.

coldwarrior on February 22, 2012 at 9:18 AM

I really hate being a law abiding citizen, it takes all the free stuff away.

angrymike on February 22, 2012 at 9:19 AM

AT&T lost it’s effort to buy Tmobile, too. Had to pay a hefty amount for not completing the purchase after being turned down by the FCC. The amount must have been less than the asking price of a donation to the regime.

Kissmygrits on February 22, 2012 at 9:20 AM

Check Democratic donor stock records versus the times of these emails. This is ripe for insider trading to reward big Dem donors.

Nethicus on February 22, 2012 at 9:20 AM

If the Republicans hadn’t taken the House in 2010, they’d probably be going ahead with this.

forest on February 22, 2012 at 9:25 AM

so what? do you need more proof that satan is loose in america?

nathor on February 22, 2012 at 9:43 AM

so what? do you need more proof that satan is loose in america?

nathor on February 22, 2012 at 9:43 AM

No

forest on February 22, 2012 at 9:53 AM

This is crony capitalism at its most bald…

But, Ed, I thought bald was good!

KS Rex on February 22, 2012 at 10:03 AM

Hey, let’s take the miracle that is the Chitcago model, national!

Yes we can!

MNHawk on February 22, 2012 at 10:17 AM

If this isn’t an Impeachable offence, it should be!!!

landlines on February 22, 2012 at 10:22 AM

It’s the “Chicago way”.

GarandFan on February 22, 2012 at 10:26 AM

This should be a Troll-Free Thread, at least until they all get out of bed and get their Authorized Talking Points!

Del Dolemonte on February 22, 2012 at 10:36 AM

Meanwhile the Republicans in Congress…..wait!…do we even have any Republicans in Congress???
Do the Republicans in Congress do anything?
Other than run for re-election?
Do they ever investigate anything? Do anything?

albill on February 22, 2012 at 10:45 AM

Corruption by government officials with favors to sell is not new; pundits and professional pol-watchers finding out about it isn’t new either, sad to say; sharing the information with the public while the crooks are still in office is a radical game-changer.

I come back to Milton Friedman’s immortal words, …

I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or, if they try, they will shortly be out of office.

The problem is that there are a substantial number of people working very hard to establish a political vacuum of opinion which makes it politically profitable for the wrong people to do the wrong thing.

The solution is to continue publicizing that fact.

AesopFan on February 22, 2012 at 11:36 AM

Isn’t this the same story that had an Air Force (I think) General reportedly being asked by the administration to lie to Congress in testimony regarding the technology and it’s effects on military operations?

BKeyser on February 22, 2012 at 11:55 AM

sooooooooooo, we imported Chicago Pols and we got this, couldn’t have seen that coming, could we?

FineasFinn on February 22, 2012 at 12:06 PM

I’m beginning to think that the reason the Repubs in Congress don’t start legal proceedings is because they are all as dirty as are the Dems.

dahni on February 22, 2012 at 12:34 PM

I wish you’d stop using that picture.

Julius looks like he is taking a particularly satisfying dump.

CorporatePiggy on February 22, 2012 at 12:40 PM

I guess Obama’s next move to take over the airwaves will involve a Mexican who knows how to do it.. Carlos Slim seems to be the likely choice. I wondered why we would have visited with “Big Sis” several weeks ago. Just makes you go “hmmmmmmmmm”

tgdouglas on February 22, 2012 at 12:50 PM

He’s not behind the curtain, he’s in front of the teleprompter.

either orr on February 22, 2012 at 12:57 PM

All this smoke of corruption keeps building and the congressional Repubs turn an apparent blind eye. Why they’re so frightened of Obama escapes me. He gets away with this nonsense because we let him. The blame for it continuing is ours alone.

volnation on February 22, 2012 at 8:49 AM

Because 90% of them are in on corporatism as well. It fills their bank accounts.

Go Vols!

ReformedDeceptiCon on February 22, 2012 at 1:42 PM

Plata o plomo is now the law of the land.

jnelchef on February 22, 2012 at 3:38 PM

You know, everyone is joking around here, but this gives me a sick feeling in my stomach.

cptacek on February 23, 2012 at 4:06 PM