Last week, it looked like the Defense Appropriations Bill had squashed any hopes terrestrial 4G provider LightSquared might have had of getting off the ground. I wondered if the fight might be over. Turns out, it was just getting interesting.
This week, things got a little nasty, with Grover Norquist wading into the fight, and Sen. Chuck Grassley intimating he felt as though he was being offered something akin to a bribe to grease the skids for LightSquared.
Let’s start with Norquist. The anti-tax crusader joined with Kelly William Cobb, of an organization called Digital Liberty, which “advocates for a consumer-driven market free from heavy regulation or taxation of the Internet, technology, telecommunications, video games, and media,” to pen a piece for The Hill, which is well read in Washington circles. Its title? “FCC can prevent crisis by moving on Spectrum now.” I’m not entirely sure why spectrum is capitalized there, but let’s ignore that for the moment. The thrust of the piece is that wireless companies, and their consumers, need more spectrum on which to transmit phone calls, media, communications of all sorts, and that the government is standing in the way.
There are specious arguments throughout the piece (the early leader in the clubhouse was “they helped kill the AT&T/T-Mobile merger aimed at using spectrum more efficiently to expand coverage and capacity.” Really? I thought AT&T just wanted to make a whole bunch more cash and limit my carrier options – silly me), but they quickly come around to LightSquared, which, given the timing of the piece, was likely the whole point:
Yet, when the GPS industry and federal departments complained that LightSquared’s network could interfere with some GPS devices, the Commission quickly quieted, cowered, and slowed the company’s plans. The GPS industry used influence with bureaucrats in the federal government to curb progress, even leading to the Pentagon and other agencies leaking a preliminary report on spectrum interference in an effort to tarnish LightSquared’s public image. While progress has been made by setting up a working group between stakeholders, the Commission has largely bowed to this outside pressure. Instead, they should be working to facilitate a solution.
Well, I guess that’s one way to look at it. In the very next paragraph, the authors acknowledge that this is a technology issue, not really a political issue, but they, themselves, are making it a political issue. Who said the FCC isn’t trying to figure out a solution?
The Department of Defense put a hold on this because they need their GPS devices to work without having to invest a whole bunch of money they don’t have right now. Is the DoD really known as an easily “cowered” organization? Please.
The simple facts, which no one really denies, are that LightSquared’s transmissions interfere with many GPS devices currently in use. Especially affected are those sensitive devices used in commercial and governmental operations.
LightSquared is probably completely correct that the devices were poorly or inefficiently designed in the first place, and that the interference isn’t “their fault,” but that doesn’t make the interference go away. A bunch of devices are going to have to be replaced, at significant cost, and much of that cost is going to be footed by taxpayers. That doesn’t happen in a short period of time.
But what’s the rush? Is this 4G technology so in demand it’s going to save hundreds of lives tomorrow?
No, the rush is that LightSquared is funded by a big giant pile of someone else’s cash, and they’d like to see their money grow instead of sit idle. They’ve already lost a big pile of cash committed by Sprint. They want to get this thing moving. Thus, they’ve called in favors with likes of Norquist, and they’ve done things like try to curry favor with senators.
Such as Iowa Senator Chuck Grassley.
On Wednesday, Sen. Grassley sent a letter directly to Philip Falcone, head of Harbinger Capital Partners, which funds LightSquared. It was not a friendly missive:
On January 6, 2012, at approximately 12:45 p.m., a member of my staff who is investigating the Federal Communication Commission’s (FCC) decision to grant a waiver to LightSquared, a company owned by your hedge fund, Harbinger Capital Partners, received a phone call from Mr. Todd Ruelle of Fine Point Technologies. Mr. Ruelle indicated that he “only gets paid if this deal goes through” and that “there will be a call center in the Midwest, possibly in Iowa, if this deal goes through.” This statement is of particular concern in light of your e-mailto my staff on October 5, 2011, which read in part, “The last thing I want to do is to make this more political than it already is. It doesn’t belong in that arena. However, since we are already there, I believe I can make this into a win for the Senator, Lightsquared and the consumer.” Taken together, these two statements implied an invitation to pull punches in my investigation. I won’t be a part of that.
Yikes. An “invitation to pull punches.” A bribe, in other words. I’d encourage you to read the whole email if you really like Washington inside baseball. Or even if you want just a peek at how this kind of big-money politics works.
Unfortunately, considering the value of GPS to the 3D industry, it’s something that may very well affect your bottom line. Stay tuned.