FCC Correspondence Shows Some Wanted to Speed LightSquared Waiver Process

FCC staff members debated whether to “ram ... through” a review of LightSquared’s waiver for an integrated satellite-terrestrial communications network. The waiver that staff gave to the company then drew concerns from lawmakers and the GPS industry that the agency didn’t fully evaluate potential interference issues with the network. Our review of internal emails from FCC officials, released Tuesday by the House Commerce Committee (http://xrl.us/bnui2y), showed they discussed the potential for LightSquared to reap billions of dollars in a so-called windfall profit from the waiver (CD Oct 17 p2). The waiver, which the commission this year proposed to yank, would have let the now-bankrupt company that was led by hedge-fund investor Phillip Falcone use spectrum licensed to be used only with satellites for terrestrial use to start a wireless broadband service.

The 80-page selection of the nearly 20,000 documents the FCC gave the committee, which then released them, shows how some agency officials at times acted as advocates and intermediaries for LightSquared and sought to suppress what they called the GPS community’s mischaracterizations. Some lawmakers who have criticized the FCC’s process said the documents now confirm their suspicions. Former FCC staffers who reviewed the emails at our request said some of the correspondence was unusual but not necessarily unethical. The committee hasn’t said when or if it will release all correspondence. What it did release was chosen because it addressed topics covered during a September (CD Sept 24 p4) House Oversight and Investigations Subcommittee hearing on the FCC’s process of approving the waiver, the subcommittee said. The emails show there wasn’t “thorough and fair consideration by the FCC of LightSquared’s plan,” subcommittee Chairman Cliff Stearns, R-Fla., told us. The commission and company declined to comment.

Citizens for Responsibility and Ethics in Washington’s Anne Weismann questioned why House Commerce didn’t make all the documents public. “The whole process -- yes, there is something about it that seems off,” the chief counsel of CREW told us. The group files Freedom of Information Act requests with federal agencies and has released documents on LightSquared it got under the act (http://xrl.us/bnuwkd). The documents do appear unusual, Weismann said. FCC officials are “very familiar with the players ... and it’s hard not to have a sense that it’s not always an arms-length proceeding. But I feel like in this case I don’t have the full picture” from what was released by House Commerce, she said. “It’s hard to know if these are anomalies. Are these little blips, or are these representative of what was really going on?”

Emails between International Bureau Chief Mindel De La Torre, Wireless Bureau Chief Ruth Milkman, then-FCC General Counsel Austin Schlick and other staff show that the agency wanted to act by Dec. 20, 2010, and mulled over whether to extend the comment deadline following a request from CTIA. “I guess the worry is that we are opening ourselves up unnecessarily for more negative comments, appeals, etc. from the mobile community when we don’t really need to,” De La Torre said in a November 2010 email. “We're just worried that there is already a perception that we're ramming this through (again) on behalf of LS [LightSquared] and we were trying to save us from more criticism ... :)”

The emails show how some FCC officials tried to accelerate the process before doing the proper research to determine if it was feasible or not, an aide to Sen. Chuck Grassley, R-Iowa, told us Wednesday. Grassley held up the nominations of the FCC’s newest two members because Chairman Julius Genachowski wouldn’t release the communications about LightSquared to him. A compromise was worked out in which House Commerce Committee Chairman Fred Upton, R-Mich., who unlike Grassley has direct oversight of the commission, requested the emails and got them.

The emails show FCC staff members “clearly favored” LightSquared and Harbinger Capital, Falcone’s hedge fund, over the GPS community, said Grassley’s aide. The documents show commission staff was turning a blind eye to the potential interference issues, so the agency’s handling of the LightSquared waiver caused a “train wreck,” he said. “When you are talking about folks in government who are regulators, you would hope that they act in a neutral way,” he said. “And one thing that disturbs me a little bit when you read these emails ... they were sort of cheerleaders for Harbinger and LightSquared, rather than being skeptical and neutral arbiters, and that is a concern.”

One email showed how Office of Strategic Planning then-Chief Paul de Sa played a significant role in moving forward the LightSquared waiver, and acted as a LightSquared proponent and intermediary between the FCC and Harbinger. Rural Utilities Service then-Administrator Jonathan Adelstein wrote de Sa Sept. 13, 2010, asking if he would “mind letting the Harbinger folks know I will call them soon so we look like a coordinated effort so they don’t feel they have unlimited leverage to stick it to Open Range?” That email was previously released as part of the bankruptcy proceeding of Open Range, a wireless company that had utilized satellite designated spectrum (CD Jan 26 p1). De Sa replied: “Happy to hook you up, although one thought is that at the moment the ball is in openrange court (in that they have the term sheet), so I wonder if rather than spending your intervention bullet now when no issues with negotiation, whether it would be better to wait until if/when a problem arises after the fcc order comes out? (don’t want to give harbinger any ideas about sticking it to openrange:). totally your call tho, just let me know what u prefer.”

"The good news is that at the end of the day we were able to slow down the process enough so that testing was able to be done and ... the FCC eventually, and with much prodding, did the right thing based on the testing results,” Grassley’s aide told us. “But you hope that there will be a lesson learned at the FCC that next time they see an appealing, a fancy, nice idea that they don’t just jump up and down and try to make it happen without taking the time to get it right.”

A separate memo regarding the potential for broadband service use of the S-band and the L-band shows that “the architect of what’s happening with LightSquared seems to be John Leibovitz,” said a satellite industry lawyer, referring to the Wireless Bureau deputy chief. The attorney, whose clients hadn’t taken sides on whether LightSquared should get an FCC waiver, said he thought previously that de Sa was the architect. De Sa was viewed by many as having been instrumental in supporting LightSquared’s efforts at the FCC and Grassley urged Genachowski to direct de Sa to answer questions on the matter (CD Jan 26 p1). The bands “should be viewed as a strategic component of the Commission’s spectrum strategy and an important component of the National Broadband Plan,” Leibovitz said in the Sept. 2, 2009 memo. It “lays out the strategy they ultimately adopted,” the attorney said.

Leibovitz pointed to “key decisions” that he wanted the FCC to consider, including whether it should reallocate mobile satellite service spectrum to terrestrial use and whether the FCC should increase the viability of terrestrial use within the context of the existing MSS allocations. Leibovitz also said the latter consideration is likely the most viable approach. He highlighted the commission’s authorization to conduct rule changes in MSS use, transaction approvals of Harbinger Capital’s bids for SkyTerra and Inmarsat and the recommendations in the National Broadband Plan, as “policy levers at its disposal to steer the MSS bands toward more productive use.” He mentioned the commission will have “to weigh the productivity/efficiency gains of increased spectrum utilization against potential equity considerations of providing a ‘windfall’ to companies who did not acquire the licenses at auction."

An ex-FCC staffer said he didn’t see anything surprising in the documents. “There was a lot riding on this idea which initially looked like a breakthrough,” said Christopher Sterling, an aide in the early 1980s to Commissioner Anne Jones and now at George Washington University. “But the FCC is traditionally conservative (not necessarily politically), especially in things technical. The mistake was that initial and tentative FCC OK for LightSquared, which set them up for a harder fall in the end."

The decision to approve the waiver first and test later is “definitely odd,” said John Dunbar, senior fellow at the Center for Public Integrity and project director of American University’s Investigative Reporting Workshop. “But it’s clear there was no real danger to aviation, that’s just nonsense.” Waiver opponents had said LightSquared could interfere with Federal Aviation Administration navigation. That “was a lobbying and PR tactic by the GPS industry,” Dunbar said. “Then the White House connections came to light and it became a political witch hunt,” he said. “The bottom line is there is no chance that a new wireless broadband competitor to AT&T and Verizon will step up any time soon and invest that kind of money and that’s just a damn shame. For everyone."

"It’s not unusual that people would favor one side or the other in these policy fights,” said a former FCC staffer under Chairman Michael Powell. “But where you cross the line is when you start coordinating and assisting outside parties, when you end up strategizing with private advocates on how to sway the commission,” he said. “Certainly it is a fine line because in any proceeding, staff members end up taking positions and they end up agreeing with one party or a set of parties over another,” he said. “And internally that’s how the process works, there are these kinds of internal battles.”

Some executives following the proceeding noted that statements in De La Torre’s email of a draft blog post show misguidance on the FCC’s intent of providing ATC authorizations. In the blog, which was never released, she skewered the GPS industry for what she said were inaccurate predictions of what would happen after the waiver was approved. The documents confirm that prior to the International Bureau’s waiver decision in January 2011, LightSquared’s terrestrial authorization “was limited to ‘filling in the gaps’ of a satellite service,” said Jim Kirkland, vice president of Trimble Navigation, a GPS device maker that opposed the satellite company’s waiver. The decision, “in no way, authorized nationwide standalone terrestrial services in the spectrum adjacent to GPS, and the FCC staff understood this,” Kirkland told us. The information in De La Torre’s email “was a fundamentally different idea from what the FCC has said before,” he added later.

A September 2009 memo from Leibovitz, James Bird of the Office of General Counsel and John Giusti, then-Commissioner Michael Copps’s chief of staff, acknowledged the FCC’s intent in issuing rules in 2003 for operating ATCs, said a satellite lawyer who reviewed the communications and opposes LightSquared’s waiver. To allow MSS users to enjoy ubiquitous coverage in the U.S., the commission issued the rules “to augment service in areas where the satellite signal is attenuated or unavailable,” the memo said. The rules require that operators meet certain gating criteria, “which are designed to prevent ATC from becoming a stand-alone terrestrial service,” it said.

De La Torre “mostly had it right in that blog post,” said a former Wireless Bureau staffer. “The frustration of the folks at the FCC is palpable. ... It seems to me you have this issue where you have spectrum that is not being robustly used.” Any spectrum manager, whether it’s the FCC or NTIA, “is going to want to see spectrum used efficiently,” the official said. Any spectrum that lies fallow is a waste of a nation’s assets, the official said. It’s a spectrum management issue, the official added. “Mindel’s article is exactly right. The problem is caused by cheap GPS receivers."

It’s clear that the FCC “saw a real opportunity in LightSquared to further a National Broadband Plan objective and spectrum goal specifically,” said analyst Jeff Silva of Medley Global Advisors. “There’s nothing intrinsically evil in that.” In terms of internal communications, “there’s a certain amount of political war gaming that goes on on any high-priority policy matter,” he said. “Usually you don’t hear about it."

"Their feathers were ruffled, I guess, by the public outcry and the negative press and they clearly were trying to contain and respond to that,” said a satellite lawyer. “It’s a cautionary note to anybody who communicates with the FCC by email that anything that you say to them in email can become public.” Apparently, the staff had set the Dec. 20, 2010, date “for favorable action on the LightSquared filing, and was trying to orchestrate -- including via contacts with LightSquared -- how to achieve that objective,” said a satellite industry attorney who’s opposed to giving the company a waiver.