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LightSquared GPS Interference Controversy: Senate Investigation Won’t End with FCC Decision

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January 28, 2012

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A Senate investigation into how the Federal Communications Commission (FCC) handled a request to rezone spectrum adjacent to GPS frequencies for LightSquared’s powerful wireless network will continue whether the FCC nixes the plan or not.

Sen. Chuck Grassley, R-Iowa, has been looking into whether the FCC fast-tracked its review of the Virginia firm’s proposal to build a 4G broadband network with signals that would be, tests now show, powerful enough to interfere dramatically with GPS receivers.

“We would continue even if the FCC said ‘No’ to LightSquared,” a Grassley staffer told Inside GNSS. “The investigation is about the FCC and the process they used. The question is — did the FCC expedite the process?”

Grassley has been trying unsuccessfully for months to get LightSquared-related communications from the FCC and the White House. He has been having more luck, however, with LightSquared itself and with its financial backer — the Harbinger Capital Partners hedge fund, which is owned by Phil Falcone.

The companies recently delivered the first of at least two tranches of documents. The first set comprises their own communications, the staffer said, while the second comes from the lobbyists and contractors who have been working for the two firms.

Three other companies, which rely on GPS and have been opposed to LightSquared’s plan, have also agreed to turn over documents. Grassley’s requests to Trimble, Garmin, and John Deere were made, in part, because LightSquared had refused to cooperate given that the GPS community was not also being pressed for materials.

All the submitted materials will be kept confidential, said the staffer, unless they become part of an official Senate action.

One of the names for which Grassley’s investigators will undoubtedly be scouring the documents is Todd Ruelle. In a letter released January 23, Grassley said that Ruelle had contacted his staff and said that, should the LightSquared proposal go through, there could be a call center located in Grassley’s state. The senator wrote that this suggestion, combined with communications with Falcone, implied that he was being asked to “pull punches.”

Ruelle, the chairman and chief executive officer of Fine Point Technologies, a provider of modem management software for network operators, has worked for a number of top communications firms including Sprint, MCI, PANAMSAT, and Loral Orion Network Systems, according to his LinkedIn profile and the Fine Point website.

A call to Fine Point’s office seeking comment went unanswered, and LightSquared and Harbinger did not respond to a request for information about Ruelle. In a statement to the New York Times, however, Harbinger said “Mr. Ruelle does not, nor has he ever worked for Mr. Falcone, Harbinger or LightSquared as an employee or a consultant.”

Neither Harbinger nor LightSquared had “had any discussions or negotiations with Mr. Ruelle with respect to approaching or contacting Senator Grassley’s office regarding an alleged quid pro quo,” the statement said, adding that, “If such conversations occurred, Mr. Ruelle was acting entirely on his own and without the knowledge, authority, or endorsement of Mr. Falcone, Harbinger or LightSquared.”

Grassley is not the only member of Congress looking into the LightSquared issue this year. Rep. Greg Walden, R-Oregon, chairman of Energy and Commerce's Communications and Technology Subcommittee, will hold a hearing on why it took so long for the FCC to determine whether LightSquared’s terrestrial transmitters would cause interference to GPS receivers.

Walden has been critical of the FCC and will reportedly push forward on proposed agency reforms. The GPS community could see changes too — GPS receiver standards are reportedly on the agenda, according to Bloomberg Business Week.

While Walden has yet to schedule his hearing, the aviation subcommittee of the House Comittee on Transportation and Infrastructure is already planning its second hearing on February 8. Experts will speak about protecting GPS for aviation users, a source told Inside GNSS, though LightSquared may come up in testimony. On the witness list are Garmin and the Aircraft Owners and Pilots Association, which have both opposed LightSquared’s plan, as well as representatives from the International Civil Aviation Organization, the Airline Pilots Association, the Air Transport Association of America and GPS expert Scott Pace, formerly of RAND and now the director of the Space Policy Institute at George Washington University in Washington, D.C.

In a January 13 letter to the National Telecommunications and Information Administration (NTIA), the cochairs the National Space-Based Positioning Navigation and Timing (PNT) Executive Committee (ExComm) said a second round of tests of LightSquared's planned transmissions indicated that “no practical solutions or mitigation” would enable it to co-exist in the near term with GPS-based devices. The NTIA coordinates federal use of frequencies and advises the White House on radio frequency issues. Earlier extensive tests last summer showed that transmissions from these stations would cause debilitating interference to the vast majority of GPS receivers.

Although the fight over spectrum is critical for LightSquared, it may be less urgent than some of its looming contractual and financial requirements. Among these is a deadline in the deal it made with Sprint to help build out LightSquared’s network. The agreement was predicated on LightSquared getting the go-ahead from the FCC by the end of 2011. When that did not happen Sprint extended the deadline 30 days. No additional extension has been reported.

The firm also has some big bills on the horizon. LightSquared is paying INMARSAT hundreds of millions of dollars for the use of its spectrum and TMF Associates, which follows the satellite communication industry, reports that INMARSAT is due $56.25 million on February 18. LightSquared could work out a deal with INMARSAT to delay that payment but there will be no getting back the money it has already paid.

Inmarsat Chief Executive Andrew Sukawaty told Space News in November that it would not be returning a dime. “There is no cash claw-back at all,” Sukawaty said about LightSquared. “Whatever cash we’ve received, we keep.”

Meanwhile the sharks are circling. Corporate raider Carl Icahn and two other experienced, distressed-debt investors — David Tepper, founder of Appaloosa Management and Andrew Beal of Beal Bank — have bought up hundreds of millions of dollars of LightSquared’s debt, according to reports by Reuters and the Wall Street Journal.

An expert following the industry explained that, though LightSquared is stalled at the moment, it does have value. If the firm fails the debtors will have first claim on its assets, which, the source said, include some cash, spectrum leases, and two satellites — one already on orbit. Should LightSquared succeed in getting FCC approval, or some sort of swap for its spectrum, the debt holders would have gotten a piece of a potentially very valuable company at a discount of 50 to 60 percent.

Copyright © 2012 Gibbons Media & Research LLC, all rights reserved.

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