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House Republicans Order Hearing on FCC’s Actions Regarding Bankrupt LightSquared

Phillip Dampier September 18, 2012 Competition, LightSquared, Public Policy & Gov't, Wireless Broadband No Comments

House Energy & Commerce Committee

The House Energy and Commerce Committee plans to hold a hearing Friday to review the Federal Communications Commission’s actions regarding the now-bankrupt wireless firm LightSquared, which proposed a nationwide 4G network later found to create major interference problems for GPS users.

At issue are the circumstances surrounding the conditional waiver the company received from the FCC to move forward with its network in 2011. Some Republicans are questioning whether the FCC rushed the approval process without independently assessing whether LightSquared would interfere with GPS services located on nearby frequencies.

The hearing, requested by the Republican majority, will explore whether the FCC skipped its own procedures and ignored policy to hurry approval.

Sen. Charles Grassley (R-Iowa) has raised questions about the FCC and LightSquared owner Philip Falcone, who has donated nearly $100,000 to the Democratic Party.

“Without transparency, and with media coverage of political connections in this case, there’s no way to know whether the agency is trying to help friends in need or really looking out for the public’s interest,” Grassley said last September after unsuccessfully trying to get the FCC to pass along documents regarding the venture.

The Center for Public Integrity found numerous political connections between LightSquared and the Democratic Party:

  • Several major Democratic campaign contributors and longtime Obama supporters have held investments in the company and its affiliates during its tangled decade of existence. They include Obama’s good friend and political donor Donald Gips, his former White House personnel chief, who now serves as U.S. ambassador to South Africa. Records show that Gips maintained an interest, worth as much as $500,000, as the FCC was weighing LightSquared’s request.
  • Obama himself was an early investor and came to the presidency a firm believer in expanding broadband. He remains close to other early investors, like Gips and investment manager George W. Haywood, inviting some to luxe social events at the White House and more intimate gatherings like a night of poker and beer.
  • Obama installed one of his biggest fundraisers, Julius Genachowski, a campaign “bundler” and broadband cheerleader, as chairman of the FCC, whose staff granted LightSquared a special waiver to operate.
  • LightSquared’s current majority owner, hedge fund manager Philip Falcone, made large donations to the Democratic Party while his broadband request was pending before the FCC. He and LightSquared executives met with White House officials. Neither Falcone nor the White House would comment on what was discussed.
  • LightSquared employs lobbying firms that wield formidable Democratic firepower: Ed Rendell, former governor of Pennsylvania and onetime chair of the Democratic National Committee, as well as the firm of former House Majority Leader Richard Gephardt.
  • Jeffrey J. Carlisle, the company’s vice president for regulatory affairs, served with Genachowski and Gips on Obama’s transition team.

With nearly $3 billion sunk into the venture by hedge fund owner Falcone and his backers at Harbinger Capital, fierce lobbying pressure was applied to win the conditional FCC waiver, granted by the FCC before it reviewed comprehensive reports affirming interference problems.

When independent tests showed LightSquared’s service would overwhelm sensitive GPS receivers and render the location-tracking service nearly useless, last February the agency withdrew its permission for LightSquared to operate, beginning a death spiral for the 4G venture, which filed for bankruptcy in May.

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