Welcome to LightSquared. It's a toxic mix of venture socialism (to borrow GOP Sen. Jim DeMint's apt phrase), campaign finance influence-peddling and perilous corner-cutting all rolled into one.
The company is building "a state-of-the-art open wireless broadband network." Competition in the industry is a good thing, of course. But military, government and civilian aviation experts have long objected to LightSquared's potential to interfere with the Global Positioning System (GPS) satellite network. As the government's own Positioning, Navigation and Timing agency explained:
"The GPS community is concerned because testing has shown that LightSquared's ground-based transmissions overpower the relatively weak GPS signal from space. Although LightSquared will operate in its own radio band, that band is so close to the GPS signals that most GPS devices pick up the stronger LightSquared signal and become overloaded or jammed."
Two high-ranking witnesses -- Air Force Space Command four-star Gen. William Shelton and National Coordination Office for Space-Based Positioning, Navigation and Timing Director Anthony Russo -- have now blown the whistle on how the White House pressured them to alter their congressional testimony and play down concerns about LightSquared's threat to military communications. According to Eli Lake of The Daily Beast, both officials were urged to express confidence in the company and endorse its promise to address any technical concerns "within 90 days."
Gen. Shelton had noted earlier this year: "Within three to five miles on the ground and within 12 miles in the air, GPS is jammed by (LightSquared's) towers. ... If we allow that system to be fielded and it does indeed jam GPS, think about the impact. We're hopeful we can find a solution, but physics being physics, we don't see a solution right now."
Despite industry-wide protests, the firm somehow received fast-track approval for a special FCC waiver that grants LightSquared the right to use wireless spectrum to build out a national 4G wireless network on the cheap. Ken Boehm, of the conservative watchdog National Legal and Policy Center (NLPC) in Washington, D.C., summed up the deal earlier this year: "LightSquared will get the spectrum for a song, while its competitors (e.g., AT&T and Verizon) have to spend billions."
The current "fix" LightSquared proposes to address the interference problems is a costly, conceptual pipe dream that could require massive retrofitting of millions of handheld GPS devices. GPS expert Eric Gakstatter scoffs: "I've been pretty open-minded about LightSquared proposing a solution, but this really insults our intelligence. (A)s we've seen previously with LightSquared, it's not about finding a practical solution for the GPS user community; it's all about selling an idea to the FCC. The problem is that the FCC doesn't have to live with LightSquared's half-baked 'solution'; we do."
So, what's greasing LightSquared's skids? Hint: It used to be known as "Skyterra." In 2005, Obama put $50,000 into the speculative firm -- raising eyebrows even among his water-carriers at The New York Times. The paper noted that Skyterra's principal backers at the time of the investment included four Obama "friends and donors who had raised more than $150,000 for his political committees."
One of those pals who urged him to buy stock in Skyterra was George Haywood, a major Skyterra investor and campaign donor who chipped in nearly $50,000 to Obama's campaigns and to his political action committee along with his wife.
Coincidentally, Obama bought his Skyterra stock the very same day the FCC "ruled in favor of the company's effort to create a nationwide wireless network by combining satellites and land-based communications systems." The Times reported that immediately after that morning ruling, "Tejas Securities, a regional brokerage in Texas that handled investment banking for Skyterra, issued a research report speculating that Skyterra stock could triple in value."
Coincidentally, Tejas and its chairman, John J. Gorman, were also major backers of Obama -- flying him in a private plane for political rallies and pitching in more than $150,000 for his campaign coffers since 2004. Obama sold his stock at a loss in November 2005, but his political relationship with the company was cemented. In 2009, shady billionaire hedge-fund manager Philip Falcone -- whose firm Harbinger Capital Partners is reportedly under investigation by the Securities and Exchange Commission for market manipulation abuses -- acquired Skyterra.
Coincidentally, Falcone, his wife and LightSquared CEO Sanjiv Ahuja have contributed nearly $100,000 between them to the Democratic Party during critical White House meeting periods and negotiations over LightSquared's regulatory fate.
Oh, and coincidentally, there's $6 billion earmarked for a "public safety broadband corporation" buried in the Obama jobs proposal just as LightSquared pushes into that market, too.
It's all just one strange quirk of timing, Team Obama shrugs. Except, as we all should know by now: There are no coincidences in Chicago on the Potomac. Just an endless avalanche of quids, quos and taxpayer woes.
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