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LightSquared: Another Solyndra?

A pattern of providing White House support to favored companies — at taxpayer risk — is emerging.

by
Richard Pollock

Bio

September 15, 2011 - 12:00 am
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In two separate rulings, the FCC favorably approved LightSquared requests: on March 26, 2010, and on January 26, 2011. The rulings allowed the company to switch from a satellite company to a wireless system based on 400,000 towers. The tower system could interfere with many GPS signals.

GPS proponents have been dismayed by the quick FCC rulings. “The whole process has been highly unusual,” said Dale Leibach, a spokesman for the industry group Coalition to Save Our GPS . “The FCC typically doesn’t act quickly on matters before them, and they acted with great haste and lightning speed” on LightSquared.

Like solar energy, Obama has pressed for a bold agenda for universal broadband availability. In his 2010 State of the Union address, the president became a big cheerleader for the idea. The president demanded that broadband be given to 98% of the American people. In February 2010, Obama released a bill called the American Jobs Act which called for universal coverage. He told a group of college students: “This isn’t just about faster Internet or being able to find a friend on Facebook. It’s about connecting every corner of America to the digital age.”

The president wasn’t only intellectually involved. Investment manager George W. Haywood steered Obama toward putting some of his personal money into the wireless company. Obama bought into it with a $50,000 investment, according to his 2005 Senate financial disclosure form.

Haywood has remained close personal friends with the president. Haywood and his wife attended the first White House state diner and a Super Bowl party at the White House in 2009.

In February 20, 2010, Haywood and Genachowski together met at the White House. A White House spokesman said the two men watched the NBA All-Star Game with Obama in the White House residence quarters. “That was a poker game,” said Haywood. “It was poker, pizza, beer and the … game.”

Obama explained during the 2007 campaign how he invested in the wireless company. “After I got my ($1.9 million) book contract, I had money to invest,” he said, referring to his second book, The Audacity of Hope. He said he wanted “a more aggressive strategy than the normal mutual funds.”

“I thought about going to Warren Buffett and I decided it would be embarrassing with only $100,000 to invest to ask his advice,” Obama told reporters. Instead, Haywood recommended a UBS stockbroker, who bought more than $50,000 in stock in SkyTerra Communications, which would become LightSquared.

For quite some time Senator Charles Grassley (R-IA) has been trying to get the FCC to disclose information about LightSquared’s investors and their relationship to the White House.  His office says they have had no success. Grassley asked:

Are there ties between the investors and the administration that might lead to the perception that the administration is biased toward approval? … In the absence of transparency, the perception might be that the FCC is rushing the public’s business to help a friend in need, regardless of the consequences for the public and the economy.

Thirty-four senators, including eight Democrats, wrote Genachowski in May of this year asking the commission to rescind LightSquared’s waiver. “GPS is integral to the functioning of our economy, and is essential for public safety.” Until the company can prove that its wireless system does not affect GPS use, “we request the Commission rescind LightSquared’s waiver.”

On May 31, Genachowski said he would not permit LightSquared to go into commercial service, but he did not rescind the waiver.

On June 23, the House Appropriations Committee passed a resolution to halt FCC expenditures on the LightSquared project until there are assurances it won’t disrupt GPS signals.

The LightSquared case has been quietly simmering in the background for years within the telecom community.  But now with possible tampering of a four-star general’s testimony, the episode should get a greater public airing.

If so, in addition to a sinking economy the other narrative that might emerge is that the Obama administration — which promised openness and integrity in governance — is an administration full of insider dealings, political favors, and deceit.

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Richard Pollock is the Washington, D.C., editor for PJ Media and the Washington bureau chief of PJTV.
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