LightSquared: Poster Child for Crony Capitalism

Two high-level government officials have revealed they were pressured by the Obama administration to change their testimony to Congress in order to favor a wireless company linked to a high-level Democratic Party donor, and to sound supportive of Obama’s stated goal of bringing high-speed wireless to at least 98 percent of Americans within five years. General William Shelton, a four-star General and Commander of the Air Force Space Command Center at Peterson Air Force Base in Colorado Springs, disclosed that he was pressured to add two items to his testimony; that he supported the White House policy to add more broadband for commercial use, and that the Pentagon would resolve questions relating to broadband company LightSquared through testing within the next 90 days. Anthony Russo, director of the National Coordination Office for Space-Based Positioning, Navigation, and Timing, also rejected the coercion to change his testimony, believing that it would take closer to six months to resolve concerns with LightSquared.

Rep. Paul Broun (R-GA), chairman of the House Science Committee’s Subcommittee on Investigations and Oversight, observed that four out of the five government witnesses for the Obama administration who testified about the LightSquared broadband project had virtually identical language in their testimony reflecting the administration’s views on broadband.

Rep. Mike Turner (R-Ohio), House Armed Services subcommittee chair, believes that General Shelton’s proposed testimony was leaked in advance to LightSquared. This may have prompted the suggested changes in testimony. The Center for Public Integrity has obtained emails revealing that LightSquared officials lobbied for a meeting with the White House and brought up their political contributions to Obama and Democrats.

LightSquared’s major financial backer is Philip Falcone, a high-level Democratic party donor and hedge fund capitalist. His company, Harbinger Capital, has a $3 billion majority stake in LightSquared. Falcone is a Republican but he has given substantial amounts of money to Democrats. He and his wife gave the Democratic Senatorial Campaign Committee $60,800 in 2009. On the same day that LightSquared CEO Sanjiv Ahuja made a $30,400 contribution to the Democratic Party, he sought a meeting with Obama’s top technology adviser, Aneesh Chopra, telling him he would be in town for an Obama fundraiser. In 2005, then Senator Obama made a $90,000 investment in LightSquared, known as Skyterra at the time.

The LightSquared controversy arose due to serious concerns that part of its proposed use of broadband in the terrestrial frequency might interfere with GPS (Global Positioning System) devices, including GPS used by the US military, GPS for hurricane and tornado tracking, and GPS predicting floods, landslides and volcanic eruptions. LightSquared owns the frequency bands 1525 to 1559 MHz. GPS satellites use the adjacent 1559 to 1610 MHz bands. There is a risk that LightSquared signals could overpower weaker GPS signals. The GPS industry has been lobbying Congress and the FCC to stop LightSquared plans until further testing has been completed.

General Shelton testifed to Congress about the results of tests showing that LightSquared’s signals would interfere with military equipment and jam vital GPS receivers. He said GPS would “be completely unusable” for aircraft 500 feet above the ground in the Washington, D.C. greater area. He said it could take a decade or more for LightSquared to mitigate the effect of its proposed network on military GPS.

Two government agencies have concluded that LightSquared’s network will interfere with GPS satellite signals. The National Space-Based PNT Advisory Board, a government entity that advises and coordinates federal departments and agencies on GPS matters, conducted tests in May which found that some GPS receivers lost signal strength or were disabled by LightSquared’s signals. Testing commissioned by the Federal Aviation Administration showed that GPS for aircraft would be hampered below 2,000 feet in metro areas.

The FCC generously granted LightSquared a conditional waiver in January of this year to set up a land-based network to operate smartphones over its 4G network, but under pressure now says that it will not allow the company to operate its high-speed network until it resolves the GPS interference issue. LightSquared owns its own spectrum, but must get approval from the FCC in order to use it for another purpose.

Large cellular phone and broadband companies like Verizon and Sprint use either LTE (long- term evolution) or WiMAX technology. WiMAX operates in a frequency range which does not interfere with GPS, in the higher 2.1, 2.3, 2.5 and 3.5 GHz frequencies. Sprint currently employs WiMAX technology. But Sprint recently reached a $20 billion 15-year network sharing deal with LightSquared that would use its LTE technology and the controversial range that interferes with GPS.

It comes down to money. LTE and WiMAX are both good technologies. There is no reason why LightSquared using a frequency range in LTE that will likely interfere with GPS should receive preferential treatment over WiMAX - which would not interfere with GPS. LightSquared has bought favorable treatment through its connections and contributions to Obama and the Democrats.

LightSquared is trying to minimize the backlash by offering not to use the top 10 MHz of its spectrum, a loss of $100 million. This did not arouse any sympathy from Rep. Dana Rohrabacher (R-Cal.), who pointed out during last week’s Congressional hearing that LightSquared was given the spectrum from the government in 1989 for nothing. Falcone asserts that the problem was created by GPS satellites that have begun spilling out into other frequencies, and claims that LightSquared has a 10-cent filter that will fix the 40,000 military devices at risk. Ted Gartner, a spokesman for GPS manufacturing company Garmin, skeptically told Fox News that LightSquared has been talking about the 10-cent filter for awhile but it has never materialized.

Republican lawmakers are demanding an investigation into LightSquared’s contacts with the Obama administration and FCC officials. Rep. Darrell Issa (R-Calif.), chairman of the Oversight and Government Reform Committee, said this week his committee will launch an investigation into government loan programs to private corporations.

Rep. Austin Scott (R-Ga.) believes that the White House was lobbying on LightSquared’s behalf. “I’ve been in politics for 14 years. I have never seen an agency advocate so strongly for something like this, unless there was pressure from above or a relationship that was not being disclosed,” he said.

This is more of the same crony capitalism we have come to expect from the Obama administration. This comes just a week or two after the FBI and a House committee started investigating a half billion dollar federal loan guarantee to a failed solar firm tied to a large Obama fundraiser, Solyndra. As these incidents increase, it is becoming apparent that the level of cronyism in the Obama administration may even exceed the level during the Clinton administration. It is time to clean house and put an honest administration into office.