LightSquared draws ire from GOP lawmakers while network remains in limbo

LightSquared found itself in political hot water Thursday as Republican lawmakers questioned whether the wholesale LTE provider had received special treatment from the White House or FCC for its network. LightSquared CEO Sanjiv Ahuja flatly rejected any insinuations of government favors and insisted that the company is being used as a political "piñata."

The drama unfolded at a congressional hearing on the impact LightSquared's proposed terrestrial network will have on GPS receivers. The fracas also came after a Daily Beast report suggested the White House influenced congressional testimony of a four-star Air Force general to put LightSquared's potential GPS interference in a more favorable light.

The report, which cited unnamed officials familiar with the matter, said that when the White House reviewed the testimony of Gen. William Shelton, who oversees Air Force Space Command, it requested that the testimony be altered to add two points: that the general supported the White House policy to increase broadband connectivity and that the Pentagon would try to clear up the GPS interference questions with testing in 90 days. The report said that Shelton, when pressed by member of Congress, said the White House tried to pressure him to change his testimony.

"We cannot afford to have federal telecommunications policy, especially where it affects national security, to be made in the same way that the White House parceled out a half billion dollars in loan guarantees to the failed Solyndra Corporation," Rep. Michael Turner (R-Ohio) said at a hearing of the House Armed Services' strategic forces subcommittee. Turner, the subcommittee's chairman, was referring to a solar firm that is stuck in controversy over a government loan it received.

The White House has denied influencing the testimony and said its Office of Management and Budget routinely reviews the testimony of officials before they appear before Congress. "I can assure you Gen. Shelton's testimony was his own, supported by and focused purely on documented tested results," Col. Kathleen Cook, a spokeswoman for Shelton, told the Washington Post.

Emails uncovered by Center for Public Integrity, a public watchdog group, through a Freedom of Information Act request also indicate that LightSquared officials lobbied for a meeting with the White House and mentioned political donations to President Obama and Democrats.

"Any suggestion that LightSquared has run roughshod over the regulatory process is contradicted by the reality of eight long years spent gaining approvals," Ahuja said in a statement. "Just this week, there has been another request from the government for an additional round of testing of LightSquared's network."

"It's also ludicrous to suggest LightSquared's success depends on political connections," he also said. "This is a private company that has never taken one dollar in taxpayer money."

Meanwhile, FCC said that more tests are needed to sort out GPS interference concerns about LightSquared's planned network. The FCC's notice came days after the National Telecommunications and Information Administration sent a letter to the Departments of Defense and Transportation, which said that the NTIA wants to have more tests, and that those tests be completed by Nov. 30. The FCC, however, gave no timetable in the public notice for when its requested tests will be completed.

The FCC said it has not received any requests from White House officials to approve LightSquared's request for a waiver that would allow its customers to sell terrestrial-only service. "Moreover, the LightSquared proceeding is now entering its second year and they remain unable to launch commercial services as another round of rigorous testing commences," FCC spokeswoman Tammy Sun told the Wall Street Journal. "No reasonable person can describe that process as speedy."

In July, Sprint Nextel (NYSE:S) inked a 15-year network-hosting deal with LightSquared valued at $9 billion. The deal includes spectrum hosting and network services, 4G wholesale and 3G roaming. However, the deal is contingent upon LightSquared getting FCC approval to deploy its terrestrial network, and if there is a material breach of the contract, or if LightSquared faces insolvency, Sprint holds a second lien on LightSquared's spectrum assets.

For more:
- see this WSJ article (sub. req.)
- see this Washington Post article
- see this Daily Beast article
- see this statement from Ahuja

Related Articles:
FCC demands more LightSquared GPS interference tests
LightSquared exec says GPS issue will be resolved within a month
LightSquared makes more changes to network plan to appease GPS community
LightSquared, federal agencies continue squabbling over GPS interference
LightSquared blames GPS industry for inadequate filters in interference debate
FCC won't guarantee timetable for LightSquared review

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