FCC Political Favor for Lightsquared ? ~ Archive ~ See, that was the plan but it did not work out. NOT Productive Enough I Guess.

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Will FCC's Political Favor for LightSquared Result in GPS Interference?

Submitted by Ken Boehm on Tue, 03/01/2011 - 09:31

Under extremely unusual circumstances, the Federal Communications Commission (FCC) recently granted a company called LightSquared the right to use wireless spectrum to build out a national 4G wireless network. LightSquared will get the spectrum for a song, while its competitors have to spend billions.

Although the technical implications of the FCC action are complicated, how it came about is not. LightSquared is owned by the Harbinger Capital hedge fund, headed by billionaire investor Phil Falcone, in photo. Falcone visited the White House and made large donations to the Democratic Senatorial Campaign Committee.

When established regulations and procedures are circumvented for political reasons, the result is often unintended consequences. When the Obama FCC appointees did the favor for Falcone, they probably had no idea that they might be creating severe technical problems for other users of wireless spectrum.

Now the Global Positioning System (GPS) industry is up in arms. According to a statement issued by a new group called The Coalition to Save GPS:

LightSquared plans to transmit radio signals that would be one billion or more times more powerful than GPS signals as received on earth, potentially causing severe interference and rendering useless millions of GPS receivers - including those used by U.S. Federal and Local Government agencies, first responders, airlines, agriculture, and everyday consumers in their cars and on hand-held devices.

The statement references the unusual nature of the FCC action:

The usual FCC process is to conduct extensive testing followed by approvals. For LightSquared, the process was approve first, then test.

On February 2, NLPC asked the House Committee on Oversight and Government Reform, chaired by Reps. Darrell Issa (R-CA) and Edolphus Towns (D-NJ) to investigate the 'pay to play' appearance of the FCC action. The full text of our letter appears below.

Dear Chairman Issa and Congressman Towns:

As chairman and ranking member of the Committee on Oversight and Government Reform, your committee has a special responsibility to oversee ethics matters with federal policy implications. There are few issues more important today than reinforcing Americans' faith in government at all levels and particularly the high ethics standards the Obama Administration set forth two years ago.

Unfortunately, those ethics standards may have been called into question recently regarding federal wireless communications policy. This letter brings to your attention a series of odd procedural decisions at an independent regulatory agency - the Federal Communications Commission (FCC) - that appear to have been undertaken solely for the financial benefit of one individual. As outlined in further detail below, these process decisions, series of contacts, apparent appearances of impropriety, and potential conflicts of interest seem to reveal improper influence peddling before the Executive Branch, Office of Science and Technology Policy (OSTP), and the Federal Communications Commission.

Background

As you may know, the National Legal and Policy Center was among the first to disclose revelations that Andrew McLaughlin, the former White House Policy Advisor at OSTP, was secretly communicating through his private Gmail account with his former employees at Google about public policy issues affecting the company.

In the course of our research, we conducted a thorough review of visits to OSTP by industry leaders. As a consequence of our analysis of White House visitor records and meetings with OSTP officials, we have found another potentially troubling ethics issue concerning Phil Falcone, Harbinger Capital Partners, and Mr. Falcone's wireless venture, LightSquared.

Phil Falcone, the founder of a hedge fund known as Harbinger Capital Partners is currently under criminal and civil investigations by the Securities and Exchange Commission and U.S. Attorney's Office in Manhattan for allegedly failing to disclose $113 million in personal loans he took from his hedge fund to pay personal taxes. The Wall Street Journal has also reported that investigators are looking into allegations that Mr. Falcone allowed some clients to redeem funds from his hedge fund during the financial crisis of 2008, while preventing others from doing so.[1]

According to the Wall Street Journal, Mr. Falcone and Harbinger scored big gains for investors in 2007, but his fund has since shrunk from $26.5 billion to $9 billion from losses and client withdrawals. Harbinger's fund was off 15% for the year as of last November, and investors like Goldman Sachs and Blackstone Group had put in requests to withdraw funds.

As importantly, investors have expressed increased anxiety over Mr. Falcone's plans to launch a global wireless satellite network known as LightSquared. The majority of Harbinger's declining assets have been pledged to the venture, but many believe the initiative is risky and underfunded.

Experts believe that building a wireless network can require as much as $40 billion in investment. Interestingly, a May 31, 2010 story from The Register reported that "Harbinger reckons with a suitably flexible FCC... it can get the network operable for something in the region of $6 billion."[2]

Mr. Falcone's Wireless Plans

Mr. Falcone's wireless plans appear to focus on taking advantage of an FCC wireless loophole that would allow the circumvention of the billions of dollars in investment required to purchase wireless spectrum by taking over a distressed satellite company (SkyTerra, now LightSquared) and entering the wireless phone and Internet market at a fraction of the cost of competitors.

Mr. Falcone then plans to lease or sell a part of that spectrum for wireless phone or Internet service to a consumer wireless company (or companies) that could share in the costs of building and operating the network - all without the need to operate the satellite network, or sell satellite service.[3]

The plan centered around first securing FCC approval for Harbinger's acquisition of SkyTerra, then getting the FCC to "fast-track" approval for Harbinger to take advantage of a little-known spectrum loophole for satellite licenses.

The Loophole

FCC policy regarding satellite license holders allows the holders to "supplement" satellite spectrum with freeterrestrial (land based) spectrum. The policy was implemented because satellites have limited transmission power, and the opaque nature of rooftops and buildings limits effective coverage. Satellite operators are thus permitted to run base stations on the ground, at the same frequency and use free terrestrial spectrum to "fill in the gaps." The land based spectrum is known as Ancillary Terrestrial Component (ATC), and is free to use for companies possessing a satellite license.[4]

Thus, the loophole Harbinger was seeking allowed LightSquared to essentially build out its national 4G state-of-the-art wireless and broadband network using the free terrestrial spectrum it is permitted to use as part of its satellite license, avoiding the requirements to immediately invest upfront capital to launch expensive satellites. The terrestrial spectrum can then be leased to wireless providers.

It is important to note that other companies that want to compete in the U.S. wireless phone and Internet market have to pay billions of dollars at auction to use the public airwaves (spectrum), and those billions accrue to the benefit of taxpayers. By contrast, Falcone's bold plan would build out a national wireless network taking advantage of freespectrum - i.e., at taxpayer expense. Clearwire for instance, has already invested substantial sums to secure spectrum and build out its wireless network.

Falcone's Plans Required Unprecedented FCC Intervention on his behalf

None of Mr. Falcone's plans would be successful, however, unless he was successful in persuading the Administration and the FCC to intervene on his behalf. And over the course of the past year, a series of odd decisions, questionable meetings and procedural anomalies at the Federal Communications Commission and White House highlight Mr. Falcone's growing influence in the hallways of government.

Mr. Falcone's plans required the investment of the majority of Harbinger's assets into a little known satellite company (SkyTerra) despite substantial investor opposition. The merger between Harbinger and SkyTerra was conditioned on FCC approval, and accordingly, in October of 2009, the parties sought such approval for majority control of SkyTerra and a transfer of their satellite license in a proposed merger transaction.[5]

The transaction moved through the FCC at an accelerated pace and was approved within 5 months of filing its restructured takeover request in October 2009. For comparison sake, given the slow speed in which the agency acts, the FCC typically decides merger transactions in 180 days. Since many merger transactions go well beyond that period, the FCC has an informal 180 day "shot clock" as a method of keeping transactions moving inside of the agency. Falcone's approval arrived a month before the FCC's shot clock period.

On February 26, 2010 during the FCC's public comment period on the proposed transaction, Harbinger filed a confidential business plan document that included certain conditions the company agreed to in order to obtain FCC approval of the license transfer. These conditions included an unprecedented agreement, that, without prior approval from the FCC, Harbinger would not be allowed to provide spectrum to the two largest wireless carriers, and similarly would not be allowed to carry more than a limited amount of traffic for either.[6]

During FCC merger proceedings, parties typically file confidential materials that are protected from the public. Under FCC rules, however, the public must be notified within 24 hours that a filing of confidential material was submitted into the record. In this case, the FCC withheld Harbinger's letter and the merger conditions from public disclosure for more than a month. The letter was made public only on March 31, 2010, five days after the FCC approved the license transfer, and nine days after the Harbinger/SkyTerra merger was approved by SkyTerra shareholders.[7]

The FCC also violated its own precedent by failing to place in the record and publicly disclose the merger conditions (non-confidential data) before the deal was finalized so that interested parties would have an opportunity to comment on the proposed conditions.

The FCC's electronic filing system also reveals additional anomalies with respect to Falcone's transaction - a confidential document filed on February 12 also appeared on the electronic docket on March 12-the document has yet to be made final. In fact, no public notice of the filing appeared in the electronic docket for any of the confidential filings made in late 2009 and early 2010 until weeks or months later.

On April 21, 2010 Senators Hutchinson, DeMint, Vitter and Brownback sent FCC Chairman Genachowski a joint letter with numerous inquiries regarding the Falcone transaction.[8] On May 10, Genachowski replied with a non-responsive letter. These correspondences were not posted electronically for weeks after they were filed. In addition to violating FCC procedure and precedent, the FCC's actions in withholding these documents from public view directly contradicts Chairman Genachowski's promise to maintain an open and transparent process at the FCC.

On November 19, 2010, Mr. Falcone implemented the final stage of his plan, applying for a waiver of FCC's rules to allow SkyTerra (now re-named LightSquared) to begin selling wireless phone and Internet services utilizing freeterrestrial spectrum (ATC) to wholesale customers without having to operate its satellite system. In an unprecedented move for the agency, the FCC placed Mr. Falcone's waiver request on a "fast track" approval schedule with a truncated 10-day comment period over the Thanksgiving holiday. On the Friday after Thanksgiving, the FCC granted a three-day extension of the comment period, still well short of the standard 30 day period for public comment.[9]

How Phil Falcone ensured a "suitably flexible FCC"

Sensing an opportunity to exploit FCC satellite license "loopholes" while playing into the Administration's agenda to find another facilities-based wireless and broadband provider, it now appears that Mr. Falcone worked throughout 2009 to secure special consideration and tilt the playing field to get his wireless venture off the ground.

According to White House visitor access logs, on September 22, 2009, Mr. Falcone and LightSquared CEO Sanjiv Ahuja personally visited the White House and met with the Chief of Staff at the Office of Science and Technology Policy (OSTP).[10] One day later, the Harbinger/SkyTerra merger agreement was signed.[11]

On September 30, 2009, one week after his September 2009 White House visit, Mr. Falcone contributed $30,400 to the DSCC -- the maximum legal individual contribution limit to a party committee. His wife, Lisa Falcone, contributed an additional $30,400 to the DSCC on the same day. (LightSquared's new CEO Sanjiv Ahuja also contributed $30,400 to the DNC in September of 2010).[12]

Mr. Falcone's contributions to the DSCC were anomalous as, traditionally, Mr. Falcone was a much larger donor to the Republican Party. In fact, just prior to the $60,800 in contributions to the Democrats, the most Mr. Falcone and his spouse previously contributed during that political cycle was $2,400. As for Sanjiv Ahuja, his $30,400 contribution to the DNC was his first political contribution in 8 years, and prior to that he contributed only to Republicans between 1998-2002.

On January 21, 2010, Mr. Falcone visited the White House again, this time for an appointment with John Holdren, the Director of the Office of Science and Technology Policy.

Falcone Hired Husband of Senior FCC Staffer to Lobby the FCC on Mobile Satellite Services

In addition to well-timed political contributions to the DSCC at the height of merger review discussions, Mr. Falcone's Harbinger also secured the assistance of a lobbying firm, the Palmetto Group, via Harbinger's legal counsel Goldberg, Godles, Wiener and Wright to lobby Congress and the FCC on mobile satellite services.[13] Mr. Steve Glaze, a lobbyist with the Palmetto Group, was registered to lobby the FCC directly on mobile satellite services and is married to Terri Glaze, a senior staffer at the FCC.[14]

Governmental and Private GPS Authorities Object to ATC License Due to Interference

On January 12, 2011, the National Telecommunications and Information Authority (an authority housed within the Department of Commerce responsible for working with other Executive Branch agencies to develop and present the Administration's position on telecom issues) sent a letter to Chairman Genachowski objecting to the ATC waiver for SkyTerra and stating that the "[g]rant of the LightSquared waiver would create a new interference environment and it is incumbent on the FCC to deal with the resulting interference issues before any interference occurs." (emphasis in original)[15]

Attached to Assistant Secretary Strickling's letter was a letter from Danny Price, Director of Spectrum and Communication Policy at the Department of Defense to Strickling, stating that "DoD is concerned with the [order and authorization] being conducted without the proper analysis required to make a well informed decision. Given the potential negative impacts to GPS, Inmarsat, and AMT operations, request NTIA advocate to the FCC to defer action on the waiver request and place this application under a Notice of Proposed Rule-Making . . . ."[16]

The United States GPS Industry Council (USGPSIC) has also raised concerns in a letter to the NTIA: "the potential for interference to existing terrestrial and adjacent mobile space services from the introduction of a primary terrestrial voice and data broadband service . . . is orders of magnitude more significant than under the original MSS ATC mode of operation."

The USGPSIC letter continues, "none of these changes can be fully and fairly vetted without an open rulemaking proceeding, as the current application process initiated by the FCC is insufficient for the proposed changes. Indeed, the FCC governing statute and its rules and regulations require an Administrative Procedure Act (APA)-sanctioned rulemaking in order to implement this transformation . . . ."[17]

Notably, the letter raises serious concerns about interference with E911 and law enforcement GPS applications.

Summary

Last Tuesday, the FCC, on delegated authority, officially granted the request by LightSquared to drop the FCC's long-standing requirement that its new 4G service be a satellite service. In granting the waiver, the FCC chose to issue a license modification for LightSquared because of what they term "unique" circumstances, instead of modifying its rules to apply to all providers-- essentially guaranteeing that Mr. Falcone, and only Mr. Falcone, receives this special treatment.

One can speculate whether or not those "unique" circumstances are related to Mr. Falcone's September 30, 2009 meeting with the White House, and subsequent political contributions to the DSCC (in fact, the maximum contributions allowed by law), but the outcome of the FCC's decision means other similarly situated satellite companies will not be able to take advantage of the same loophole, as the license modification is only valid for LightSquared.

The ramifications of the FCC's favoritism are enormous. Consider for instance other competitive nationwide mobile providers like Clearwire, which have purchased terrestrial spectrum at auction for substantial sums and have invested millions more -- in Clearwire's case -- to build out its 4G network. For them, the message couldn't be more clear: Companies who play by the rules, create jobs, and invest in building out competing networks, are now at great risk of seeing their plans entirely upended by the FCC's arbitrary "unique" circumstances that give a Clearwire competitor the same terrestrial spectrum for free, and essentially exempt them from requirements to invest and build out a competing network by using a wholesale model where free satellite spectrum can be leased and "laundered" to other terrestrial mobile providers.

Based on this evidence and the record outlined above, it would appear that Mr. Falcone, a hedge fund trader currently under federal civil and criminal investigation, purchased a distressed satellite company to obtain a federal government bailout worth billions of dollars by shrewdly taking advantage of existing loopholes and preferential treatment by the FCC.

Mr. Falcone, who previously was almost exclusively a supporter of GOP causes and candidates gained access and influence to the Obama Administration and Democrats through well-timed White House visits and contributions to the DSCC - weeks before filing his merger application at the FCC. Since then, at virtually every step of the way, Mr. Falcone has received favorable treatment and expedited consideration of his plans to offer wireless satellite services utilizing free terrestrial spectrum that would cost billions in the marketplace.

The FCC for its part, has fast tracked the merger, granting approval with lightning speed in March of 2010. During the entire process, the FCC has cut procedural corners, failed to publicly disclose ex parte contacts between Mr. Falcone, his representatives and the FCC, failed to consider the legitimate concerns of governmental authorities and GPS stakeholders about the ATC license waiver, and as announced last week, ultimately granted the crucial final waiver necessary for LightSquared (and only LightSquared) to begin offering wireless services using free terrestrial spectrum.

Given the above, and given the special responsibility of federal agencies to not only avoid conflicts of interest, but to avoid even the appearance of conflicts, the above record is troubling. No fair-minded person could look at the record so far and not believe that further investigation is warranted. These actions call out for your committee to conduct a thorough investigation so that citizens will have the benefit of the full record.

Sincerely,

Ken Boehm

Chairman, National Legal and Policy Center "

Source of Post

http://www.nlpc.org/stories/2011/03/01/will-fccs-political-favor-harbinger-hedge-fund-result-gps-interference

 Links to More Research on Philip Falcone, Harbinger Capital, Spectrum Brands

http://curtislublog.blogspot.com/

http://harbingercapitalpartners.blogspot.com/

http://philipfalconeblog.blogspot.com/

http://mssspectrum.blogspot.com/

http://sanjivahujablog.blogspot.com/

Open Letter To GPS Council, Things to Consider.

..Coming Soon..

Philip Falcone - Authorities Probe a Top Hedge Fund

"By JENNY STRASBURG

One of America's most prominent hedge funds is being probed by federal authorities, who are investigating whether the firm gave illegally preferential treatment to its founder and to some clients.

The Securities and Exchange Commission and U.S. Attorney's office in Manhattan are looking into whether Harbinger Capital Partners misled investors by failing to disclose in a timely fashion a $113 million personal loan it extended to founder Philip Falcone from the firm's funds, according to people familiar with the matter.

The authorities also are examining whether Harbinger improperly allowed some clients to withdraw money following the financial crisis while barring others from doing so, these people said.

In an interview, Mr. Falcone said Harbinger "did not give preferential treatment to any investor."

View Full Image

Reuters
Hedge fund manager Philip Falcone.

He said the personal loan was made in accordance with the terms of the fund and disclosed in the firm's audited financial statements for 2009. He said it "was reviewed by our accountants and outside legal counsel." Mr. Falcone said he has paid back more than $70 million of the loan, with the balance due in 2014. Also, he said the loan has been profitable for investors, and was backed by his holdings in the fund.

Mr. Falcone declined to comment on whether he or the firm has been contacted by investigators. It is unclear whether the inquiries will lead to any legal action.

The parallel criminal and civil probes come as regulators are conducting a broad examination of hedge funds. Authorities are looking at trading by the private funds, which cater to sophisticated investors such as wealthy individuals, public pension funds and endowments. Also under scrutiny is the clout the funds have in markets and the methods they use to value their asset prices, which influence the fees they earn from clients.

The investigation is a potential black eye for Harbinger, known in the industry for both its size and its role in pushing for corporate changes at companies where it holds a significant ownership stake, including New York Times Co.

In 2007, Harbinger scored gains betting against bonds backed by subprime mortgages. Investors flocked to the firm, helping it rise to $26 billion in assets in 2008 before it shrank from losses and client withdrawals. The firm now manages about $9 billion.

Harbinger's main fund has declined about 15% this year, a person familiar with the matter says, as the average hedge fund has seen positive returns. Some clients, including Goldman Sachs Group Inc. and Blackstone Group, have recently put in withdrawal requests, according to people familiar with the matter.

Mr. Falcone, a former Barclays trader, grew up in Minnesota and played hockey at Harvard University.

In 2008, like many hedge funds, Harbinger stumbled as its investments in energy, finance and other companies lost value and some investors sought to withdraw money. In 2009, as Harbinger's biggest funds rebounded, Mr. Falcone opened new funds and delved more deeply into deals in the telecommunications industry.

One focus of the investigation is the loan Harbinger executives authorized in late 2009 to help Mr. Falcone pay personal taxes, people familiar with the matter say. Mr. Falcone borrowed the funds from a Harbinger fund that had $2.5 billion in assets, while clients were barred from withdrawing money from the fund at the same time, according to fund documents and people familiar with the matter.

The SEC received investor complaints after Harbinger disclosed the loan in fund documents in March, according to people familiar with the matter. The agency's enforcement unit began an inquiry into the loan this summer, said one person. A concern is that investors weren't informed at the time Mr. Falcone borrowed the funds, the people say. Another issue is that the loan might have increased the risk of losses without clients' knowledge. The loan was reported in September by Bloomberg News.

Also at issue is whether clients were equally well-informed, including about risks to the funds, during the restructuring of Harbinger funds, according to people familiar with the matter.

One issue is whether some clients got different withdrawal terms than others, they say. It is unclear which clients are the focus of concern.

Last year, Harbinger executives were working to convince clients to keep their money in the firm's biggest funds. The discussions came after Harbinger suspended redemptions in the funds in December 2008 and set aside hard-to-sell holdings, according to investors.

In 2009, the firm also tightened rules about investor withdrawals, adopting a 25% limit per quarterly period for each investor as opposed to a limit that applied to all clients combined, according to investors and fund documents reviewed by The Wall Street Journal. The move, which was put to a client vote, meant any investor wanting to redeem fully could opt to do so over a year, with the set-aside illiquid assets potentially taking longer to sell.

Hedge-fund managers have wide leeway to change terms and withhold client money, which in some cases can protect assets during crises. The issue of equal treatment of investors is a focus of the SEC's enforcement unit, which has investigated funds to determine whether some clients are favored with better information or financial terms to the detriment of others.


PHILIP FALCONE

Mr. Falcone has been pushing an ambitious plan to launch a global wireless-satellite network, and has dedicated the majority of his assets in his biggest hedge fund to the venture, called LightSquared.

In the process, Harbinger has come to look less like the hedge-fund firm it was when many investors came to it, and more like a private-equity firm making a concentrated, long-term bet. Investors say the strategy shift has contributed to anxiety over having assets locked up in the firm.

Mr. Falcone has some $2 billion of his own money invested in Harbinger, investors say, citing that as a strong reason to support his strategy.

In 2009, while some investors were asking for withdrawals, others were lining up to put money into Harbinger. They included Soros Fund Management, which during the past year became a significant new investor, say people familiar with the matter. A Soros spokesman declined to comment.

—Michael Rothfeld contributed to this article.
Write to Jenny Strasburg at jenny.strasburg@wsj.com "

Source of Post Philip Falcone, Harbinger Capital Partners Post

http://online.wsj.com/article/SB10001424052748704658204575610943408735792.html?KEYWORDS=falcone

What Really Happened Behind the Scenes of this FCC Probe? Was there anything Legit about it Really ? Got a Tip? Crystal L. Cox ~ Investigative Blogger. Crystal@CrystalCox.com

GPS Jamming Issues

GPS Jamming Issues ~ More Coming Soon ..

GPS Spectrum Issues - What is Really Going On?

.. More Coming Soon on the GPS Council, FCC and Political Favoritism and whom is on whose "SIDE" and what Andrew Hamerling has to say about Spectrum and GPS interference.

Ken Boehm on Philip Falcone, LightSquared and Special FCC and Political Favors.

"February 2, 2011

The Honorable Darrell Issa

The Honorable Edolphus Towns

House Committee on Oversight and Government Reform

U. S. House of Representatives


Dear Chairman Issa and Congressman Towns:

As chairman and ranking member of the Committee on Oversight and Government Reform, your committee has a special responsibility to oversee ethics matters with federal policy implications.

There are few issues more important today than reinforcing Americans' faith in government at all levels and particularly the high ethics standards the Obama Administration set forth two years ago.

Unfortunately, those ethics standards may have been called into question recently regarding federal wireless communications policy. This letter brings to your attention a series of odd procedural decisions at an independent regulatory agency the Federal Communications Commission (FCC) - that appear to have been undertaken solely for the financial benefit of one individual.

As outlined in further detail below, these process decisions, series of contacts,apparent appearances of impropriety, and potential conflicts of interest seem to reveal improper influence peddling before the Executive Branch, Office of Science and Technology Policy (OSTP), and the Federal Communications Commission.

Background
As you may know, the National Legal and Policy Center was among the first to disclose revelations that Andrew Mclaughlin, the former White House Policy Advisor at OSTP, was secretly communicating by email with his former employees at Google about public policy issues affecting the company.

In the course of our research, we conducted a thorough review of visits to OSTP by industry leaders.

As a consequence of our analysis of White House visitor records and meetings with OSTP officials, we have found another potentially troubling ethics issue concerning Phil Falcone,Harbinger Capital Partners, and Mr. Falcone's wireless venture, LightSquared.

Phil Falcore, the founder of a hedge fund known as Harbinger Capital Partners is currently under criminal and civil investigations by the Securities and Exchange Commission and U.S.

According to the Wall Street Journal, Mr. Falcone and Harbinger scored big gains for investors
in 2007,buthis fund has since shrunk from $26.5 billion to about $9 billion from losses and
client withdrawals. Harbinger's fund was off 15% for the year as of last November, and
investors like Goldman Sachs and Blackstone Group had put in requests to withdraw funds.

As importantly, investors have expressed increased anxiety over Mr. Falcone's plans to launch a
global wireless satellite network known as LightSquared.

The majority of Harbinger's declining assets have been pledged to the venture, but many believe the initiative is risky and underfunded.

Experts believe that building a wireless network can require as much as $40 billion in
investment. Interestingly, d May 31,2010 story from The Register reported that "Harbinger
region of $6 billion."

Mr. Falcone's Wireless Plans

Mr. Falcone's wireless plans appear to focus on taking advantage of an FCC wireless loophole that would allow the circumvention of the billions of dollars in investment required to purchase wireless spectrum by takitrg over a distressed satellite company (SkyTerra, nowLightSquared ) and entering the wireless phone and Internet market at a fraction of the cost of competitors.

Mr. Falcone then plans to lease or sell a part of that spectrum for wireless phone or Internet service to a consumer wireless company (or companies) that could share in the costs of building and operating the network all without the need to operate the satellite network or sell satellite service.

The plan centered around first securing FCC approval for Harbinger's acquisition of SkyTerra, then getting the FCC to "fast-track" approval for Harbinger to take advantage of a little-known spectrum loophole for satellite licenses.

The Loophole

FCC policy regarding satellite license holders allows the holders to "supplement" satellite spectrum withfree terrestrial (land-based) spectrum. The policy was implemented because satellites have limited transmission power, and the opaque nature of rooftops and buildings limits effective coverage.

Satellite operators are thus permitted to run base stations on the ground, at the same frequency and use free terrestrial spectrum to "fill in the gaps." The land-base spectrum is known as Ancillary Terrestrial Component (ATC), and is free to use for companies possessing a satellite license.

Thus, the loophole Harbinger was seeking allowed LightSquared to essentially build out its

national 4G state-of-the-art wireless and broadband network using the

-frun

terrestrial spectrum rt

is permitted to use as part of its satellite license, avoiding the requirements to immediately invest upfront capital to launch expensive satellites. The terrestrial spectrum can then be leased to wireless providers.

It is important to note that other companies that want to compete in the IJ.S" wireless phone and Internet market have to pay billions of dollars at auction to use the public airwaves (spectrum), and those billions accrue to the benefit of taxpayers. By contrast, Falcone's bold plan would build out ancillary wireless network taking advantage of free spectrum paid for by taxpayer expense.

Clearwire, for instance, already has invested substantial sums to secure spectrum and

build out its wireless network.

Falcone's Pluns Required Unprecedented FCC Intervention on his behalf

None of Mr. Falcone's plans would be successful, however, unless he was successful in

persuading the Administration and the F CC to intervene on his behalf. And over the course of

the past year, a series of odd decisions, questionable meetings and procedural anomalies at the

Federal Communications Commission and White House highlight Mr. Falcone's growing

influence in the hallways of government.

Mr. Falcone's plans required the investment of the majority of Harbinger's assets into a littleknown satellite company (SkyTerra) despite substantial investor opposition. The merger

between Harbinger and SkyT erra was conditioned on FCC approval, and accordingly, in October of 2009, the parties sought such approval for majority control of SkyTeffa and atransfer of their satellite license in a proposed merger transaction.'

The transaction moved through the FCC at an accelerated pace and was approved within five

months of filing its restructured takeover request in October 2009. For comparison sake, given the slow speed in which the agency acts, the FCC typically decides merger transactions in 180 days. Since many merger transactions go well beyond that period, the FCC has an informal 180-, day "shot clock" as a method of keeping transactions moving inside of the agency. Falcone's approval arrived a month before the FCC's shot clock period.

On February 26,2010 during the FCC's public comment period on the proposed transaction,

Harbinger filed a confidential business plan document that included certain conditions the

comp any agreed to in order to obtain FCC approval of the license transfer" These conditions

included an unprecedented agreement that without prior approval from the FCC, Harbinger

During FCC merger proceedings, parties typically file confidential materials that are protected

from the public. under FCC rules, however, the public must be notified within 24 hours that a

filing of confidential material was submitted into the record. In this case. the FCC withheld

The letter was made public only on March 31, 2010, five days after the FCC approved the license transfer, and nine days after the Harbinger/SkyTerra merger was approved by SkyTerra shareholders.

The FCC also violated its own precedent by failing to place in the record and publicly disclose

the merger conditions (non-confidential data) before the deal was frnahzed so that interested

parties would have an opportunity to comment on the proposed conditions.

The FCC's electronic filing system also reveals additional anomalies with respect to Falcone's

transaction

-

a confidential document filed on February 12 also appeared on the electronic

docket on March l2-the document has yet to be made final. In fact. no public notice of the

earllr 2010 until weeks or months later.

On April 27,2010 Senators Hutchinson, DeMint, Vitter and Brownback sent FCC Chairman

Genachowsk i a joint letter with numerous inquiries regarding the Falcone transaction"

On May 10, Genachowski replied with a non-responsive letter. These correspondences were not posted electronically), for weeks after they were filed. In addition to violating FCC procedure and precedent, the FCC's actions in withholdimg these documents from public view directly contradicts Chairman Genachowski's promise to maintain an open and transparent process at the FCC".

On November 19,2010, Mr. Falcone implemented the final stage of his plan, applying for a

waiver of FCC's rules to allow SkyTeffa (nowre-named Lightsquared) to begin selling wireless

phone and Internet services utrhztngfree tercestrial spectrum (ATC) to wholesale customers

without having to operate its satellite system. In an unprecedented move for the agency, the FCC placed Mr. Falcone's waiver request on a "fast track" approval schedule with a truncated 10-day, comment period over the Thanksgiving holiday. On the Friday after Thanksgiving, the FCC granted a three-day extension of the comment period, still well short of the standard 3 0-day period for public comment.

How Phil Falcone ensured a "suitably flexible FCC"

Sensing an opportunity to exploit FCC satellite license "loopholes" while playitrg into the

Administration's agenda to find another facilities-based wireless and broadband provider, it now appears that Mr. Falcone worked throughout 2009 to secure special consideration and tilt the playing field to get his wireless venture off the ground.

According to White House visitor access logs, on September 22,2009, Mr. Falcone and

LightSquared CEO Sanjiv Ahuja personally visited the White House and met with the Chief of

Staff at the Office of Science and Technology Policy (OSTP). One day later,the

Harbinger/SkyTerra merger agreement was signed.

Mr. Falcone's contributions to the DSCC were anomalous he long has been a much larger donor

to the Republican Party.

In fact, just prior to the $60,800 in contributions to the Democrats, the most Mr. Falcone and his spouse previously contributed during that political cycle was $2,400.

As for Sanjiv Ahuja, his $30 ,400 contribution to the DNC was his first political contribution in

eight years, and prior to that he contributed only to Republicans between 1998-2002.

On January 21, 2010, Mr. Falcone visited the White House again, this time for an appointment

with John Holdrer, the Director of the Office of Science and Technology Policy.

Falcone Hired Husband of Senior FCC Staffer, Steve Glaze, to Lobby the FCC on Mobile Satellite Services In addition to well-timed political contributions to the DSCC at the height of merger review discussions, Mr. Falcone's Harbinger also secured the assistance of a lobbyittg firm, the Palmetto Group, via Harbinger's legal counsel Goldberg,

On January 12,2011, the National Telecommunications and Information Authority(an authority housed within the Department of Commerce responsible for working with other Executive Branch agencies to develop and present the Administration's position on telecom issues) sent a letter to Chaffman Genachowski objecting to the ATC waiver for SkyTerra and stating that the "grant of the LightSquared waiver would create a new interference environment and it is incumbent on the FCC to deal with the resultitrg interference issues before any interference occurs." (emphasis in original)

Attached to Assistant Secretary Strickling's letter was a letter from Danny Price, Director of Spectrum and Communication Policy at the Department of Defense to Strickling, stating that DoD is concerned with the order and authorization being conducted without the proper analysis requred to make a well informed decision. Given the potential negative impacts to GPS.

Inmarsat and AMT operations request NTIA advocate to the FCC to defer action on the waiver request and place this application under a Notice of Proposed Rule-Making....

The United States GPS Industry Council (USGPSIC) has also raised concerns in a letter to the NTIA: "the potential for interference to existing terrestrial and adjacent mobile space services from the introduction of a primary terrestrial voice and data broadband service...is order of magnitude more significant than under the original MSS ATC mode of operation."

The USGPSIC letter continues, "none of these changes can be fully and fairly vetted without an open rule making proceeding, as the current application process initiated by the FCC is insufficient for the proposed changes.

Indeed, the FCC governing statute and its rules and regulations require an Administrative Procedure Act (APA)-sanctioned rulemaking in order to implement this transformation.

Notably, the letter raises serious concerns about interference with E911 and law enforcement GPS Applications.

Summary

Last Tuesddy,the FCC, or delegated authority, officialft granted the request by LightSquared to drop the FCC's long-standing requirement that its new 4G service be a satellite service. In

One can speculate whether or not those "unique" circumstances are related to Mr. Falcone's

September 30, 2009 meeting with the White House, and subsequent political contributions to the.

DSCC (in fact, the maximum contributions allowedby law), butthe outcome of the FCC's

decision means other similarly situated satellite companies will not be able to take advantage of the same loophole, as the license modification is only valid for LightSquared.

The ramifications of the FCC's favoritism are enormous. Consider for instance other competitive nationwide mobile providers like Clearwire, which have purchased terrestrial spectrum at auction for substantial sums and have invested millions more -- in Clearwire's case -- to build out its 4G network.

For them, the message couldn't be more clear: Companies who play by the rules,

create jobs, and invest in building out competing networks, are now at great risk of seeing their

plans entirely upended by the FCC's arbitrary "unique" circumstances that give a Clearwire

competitor the same terrestrial spectrum for free and essentially exempt them from requirements to invest and build out a competing network by using a wholesale model where free satellite spectrum can be leased and "laundered" to other terrestrial mobile providers.

Based on this evidence and the record outlined above, it would app ear that Mr. Falcore, a hedge fund trader currently under federal civil and criminal investigation, purchased a distressed satellite company to obtain a federal government bailout worth billions of dollars by shrewdlytaking advantage of existing loopholes and preferential treatment by the FCC.

Mr. Falcone, who previously was almost exclusively a supporter of GOP causes and candidates

gained access and influence to the Obama Administration and Democrats through well-timed

White House visits and contributions to the DSCC - weeks before filing his merger application

at the FCC" Since then, at virtually every step of the way, Mr. Falcone has received favorable treatment and expedited consideration of his plans to offer wireless satellite services utilizing free terrestrial spectrum that would cost billions in the marketplace.

The FCC for its part, has fast tracked the merger, granting approval with lightnitrg speed in

March of 201 0. During the entire process, the FCC has cut procedural corners, failed to publicly disclose ex parte contacts between Mr. Falcore, his representatives and the FCC, failed to consider the legitim ate concerns of governmental authorities and GPS stakeholders about the ATC license waiver, and as announced last week, ultimately granted the crucial final waiver

necessary for LightSquared (and only LightSquared) to begin offering wireless services using

terrestrial spectrum.

Given the above, and given the special responsibility of federal agencies to not only avoid

conflicts of interest, but to avoid even the appearance of conflicts, the above record is troubling.

No fair-minded person could look at the record so far and not believe that further investigation is

warranted. These actions call out for your committee to conduct a thorough investigation so that citizens will have the benefit of the full record.

Ken Boehm

Chairman National Legal and Policy Center "

Source of Post

http://www.nlpc.org/sites/default/files/HarbingerLetter.pdf

Philip Falcone Asks Where Did you Get that Letter Anyway ? More on That Coming Soon.

Ken Boehm on Philip Falcone, LightSquared and Special FCC and Political Favors.

"February 2, 2011

The Honorable Darrell Issa

The Honorable Edolphus Towns

House Committee on Oversight and Government Reform

U. S. House of Representatives


Dear Chairman Issa and Congressman Towns:

As chairman and ranking member of the Committee on Oversight and Government Reform, your committee has a special responsibility to oversee ethics matters with federal policy implications.

There are few issues more important today than reinforcing Americans' faith in government at all levels and particularly the high ethics standards the Obama Administration set forth two years ago.

Unfortunately, those ethics standards may have been called into question recently regarding federal wireless communications policy. This letter brings to your attention a series of odd procedural decisions at an independent regulatory agency the Federal Communications Commission (FCC) - that appear to have been undertaken solely for the financial benefit of one individual.

As outlined in further detail below, these process decisions, series of contacts,apparent appearances of impropriety, and potential conflicts of interest seem to reveal improper influence peddling before the Executive Branch, Office of Science and Technology Policy (OSTP), and the Federal Communications Commission.

Background
As you may know, the National Legal and Policy Center was among the first to disclose revelations that Andrew Mclaughlin, the former White House Policy Advisor at OSTP, was secretly communicating by email with his former employees at Google about public policy issues affecting the company.

In the course of our research, we conducted a thorough review of visits to OSTP by industry leaders.

As a consequence of our analysis of White House visitor records and meetings with OSTP officials, we have found another potentially troubling ethics issue concerning Phil Falcone,Harbinger Capital Partners, and Mr. Falcone's wireless venture, LightSquared.

Phil Falcore, the founder of a hedge fund known as Harbinger Capital Partners is currently under criminal and civil investigations by the Securities and Exchange Commission and U.S.

According to the Wall Street Journal, Mr. Falcone and Harbinger scored big gains for investors
in 2007,buthis fund has since shrunk from $26.5 billion to about $9 billion from losses and
client withdrawals. Harbinger's fund was off 15% for the year as of last November, and
investors like Goldman Sachs and Blackstone Group had put in requests to withdraw funds.

As importantly, investors have expressed increased anxiety over Mr. Falcone's plans to launch a
global wireless satellite network known as LightSquared.

The majority of Harbinger's declining assets have been pledged to the venture, but many believe the initiative is risky and underfunded.

Experts believe that building a wireless network can require as much as $40 billion in
investment. Interestingly, d May 31,2010 story from The Register reported that "Harbinger
region of $6 billion."

Mr. Falcone's Wireless Plans

Mr. Falcone's wireless plans appear to focus on taking advantage of an FCC wireless loophole that would allow the circumvention of the billions of dollars in investment required to purchase wireless spectrum by takitrg over a distressed satellite company (SkyTerra, nowLightSquared ) and entering the wireless phone and Internet market at a fraction of the cost of competitors.

Mr. Falcone then plans to lease or sell a part of that spectrum for wireless phone or Internet service to a consumer wireless company (or companies) that could share in the costs of building and operating the network all without the need to operate the satellite network or sell satellite service.

The plan centered around first securing FCC approval for Harbinger's acquisition of SkyTerra, then getting the FCC to "fast-track" approval for Harbinger to take advantage of a little-known spectrum loophole for satellite licenses.

The Loophole

FCC policy regarding satellite license holders allows the holders to "supplement" satellite spectrum withfree terrestrial (land-based) spectrum. The policy was implemented because satellites have limited transmission power, and the opaque nature of rooftops and buildings limits effective coverage.

Satellite operators are thus permitted to run base stations on the ground, at the same frequency and use free terrestrial spectrum to "fill in the gaps." The land-base spectrum is known as Ancillary Terrestrial Component (ATC), and is free to use for companies possessing a satellite license.

Thus, the loophole Harbinger was seeking allowed LightSquared to essentially build out its

national 4G state-of-the-art wireless and broadband network using the

-frun

terrestrial spectrum rt

is permitted to use as part of its satellite license, avoiding the requirements to immediately invest upfront capital to launch expensive satellites. The terrestrial spectrum can then be leased to wireless providers.

It is important to note that other companies that want to compete in the IJ.S" wireless phone and Internet market have to pay billions of dollars at auction to use the public airwaves (spectrum), and those billions accrue to the benefit of taxpayers. By contrast, Falcone's bold plan would build out ancillary wireless network taking advantage of free spectrum paid for by taxpayer expense.

Clearwire, for instance, already has invested substantial sums to secure spectrum and

build out its wireless network.

Falcone's Pluns Required Unprecedented FCC Intervention on his behalf

None of Mr. Falcone's plans would be successful, however, unless he was successful in

persuading the Administration and the F CC to intervene on his behalf. And over the course of

the past year, a series of odd decisions, questionable meetings and procedural anomalies at the

Federal Communications Commission and White House highlight Mr. Falcone's growing

influence in the hallways of government.

Mr. Falcone's plans required the investment of the majority of Harbinger's assets into a littleknown satellite company (SkyTerra) despite substantial investor opposition. The merger

between Harbinger and SkyT erra was conditioned on FCC approval, and accordingly, in October of 2009, the parties sought such approval for majority control of SkyTeffa and atransfer of their satellite license in a proposed merger transaction.'

The transaction moved through the FCC at an accelerated pace and was approved within five

months of filing its restructured takeover request in October 2009. For comparison sake, given the slow speed in which the agency acts, the FCC typically decides merger transactions in 180 days. Since many merger transactions go well beyond that period, the FCC has an informal 180-, day "shot clock" as a method of keeping transactions moving inside of the agency. Falcone's approval arrived a month before the FCC's shot clock period.

On February 26,2010 during the FCC's public comment period on the proposed transaction,

Harbinger filed a confidential business plan document that included certain conditions the

comp any agreed to in order to obtain FCC approval of the license transfer" These conditions

included an unprecedented agreement that without prior approval from the FCC, Harbinger

During FCC merger proceedings, parties typically file confidential materials that are protected

from the public. under FCC rules, however, the public must be notified within 24 hours that a

filing of confidential material was submitted into the record. In this case. the FCC withheld

The letter was made public only on March 31, 2010, five days after the FCC approved the license transfer, and nine days after the Harbinger/SkyTerra merger was approved by SkyTerra shareholders.

The FCC also violated its own precedent by failing to place in the record and publicly disclose

the merger conditions (non-confidential data) before the deal was frnahzed so that interested

parties would have an opportunity to comment on the proposed conditions.

The FCC's electronic filing system also reveals additional anomalies with respect to Falcone's

transaction

-

a confidential document filed on February 12 also appeared on the electronic

docket on March l2-the document has yet to be made final. In fact. no public notice of the

earllr 2010 until weeks or months later.

On April 27,2010 Senators Hutchinson, DeMint, Vitter and Brownback sent FCC Chairman

Genachowsk i a joint letter with numerous inquiries regarding the Falcone transaction"

On May 10, Genachowski replied with a non-responsive letter. These correspondences were not posted electronically), for weeks after they were filed. In addition to violating FCC procedure and precedent, the FCC's actions in withholdimg these documents from public view directly contradicts Chairman Genachowski's promise to maintain an open and transparent process at the FCC".

On November 19,2010, Mr. Falcone implemented the final stage of his plan, applying for a

waiver of FCC's rules to allow SkyTeffa (nowre-named Lightsquared) to begin selling wireless

phone and Internet services utrhztngfree tercestrial spectrum (ATC) to wholesale customers

without having to operate its satellite system. In an unprecedented move for the agency, the FCC placed Mr. Falcone's waiver request on a "fast track" approval schedule with a truncated 10-day, comment period over the Thanksgiving holiday. On the Friday after Thanksgiving, the FCC granted a three-day extension of the comment period, still well short of the standard 3 0-day period for public comment.

How Phil Falcone ensured a "suitably flexible FCC"

Sensing an opportunity to exploit FCC satellite license "loopholes" while playitrg into the

Administration's agenda to find another facilities-based wireless and broadband provider, it now appears that Mr. Falcone worked throughout 2009 to secure special consideration and tilt the playing field to get his wireless venture off the ground.

According to White House visitor access logs, on September 22,2009, Mr. Falcone and

LightSquared CEO Sanjiv Ahuja personally visited the White House and met with the Chief of

Staff at the Office of Science and Technology Policy (OSTP). One day later,the

Harbinger/SkyTerra merger agreement was signed.

Mr. Falcone's contributions to the DSCC were anomalous he long has been a much larger donor

to the Republican Party.

In fact, just prior to the $60,800 in contributions to the Democrats, the most Mr. Falcone and his spouse previously contributed during that political cycle was $2,400.

As for Sanjiv Ahuja, his $30 ,400 contribution to the DNC was his first political contribution in

eight years, and prior to that he contributed only to Republicans between 1998-2002.

On January 21, 2010, Mr. Falcone visited the White House again, this time for an appointment

with John Holdrer, the Director of the Office of Science and Technology Policy.

Falcone Hired Husband of Senior FCC Staffer, Steve Glaze, to Lobby the FCC on Mobile Satellite Services In addition to well-timed political contributions to the DSCC at the height of merger review discussions, Mr. Falcone's Harbinger also secured the assistance of a lobbyittg firm, the Palmetto Group, via Harbinger's legal counsel Goldberg,

On January 12,2011, the National Telecommunications and Information Authority(an authority housed within the Department of Commerce responsible for working with other Executive Branch agencies to develop and present the Administration's position on telecom issues) sent a letter to Chaffman Genachowski objecting to the ATC waiver for SkyTerra and stating that the "grant of the LightSquared waiver would create a new interference environment and it is incumbent on the FCC to deal with the resultitrg interference issues before any interference occurs." (emphasis in original)

Attached to Assistant Secretary Strickling's letter was a letter from Danny Price, Director of Spectrum and Communication Policy at the Department of Defense to Strickling, stating that DoD is concerned with the order and authorization being conducted without the proper analysis requred to make a well informed decision. Given the potential negative impacts to GPS.

Inmarsat and AMT operations request NTIA advocate to the FCC to defer action on the waiver request and place this application under a Notice of Proposed Rule-Making....

The United States GPS Industry Council (USGPSIC) has also raised concerns in a letter to the NTIA: "the potential for interference to existing terrestrial and adjacent mobile space services from the introduction of a primary terrestrial voice and data broadband service...is order of magnitude more significant than under the original MSS ATC mode of operation."

The USGPSIC letter continues, "none of these changes can be fully and fairly vetted without an open rule making proceeding, as the current application process initiated by the FCC is insufficient for the proposed changes.

Indeed, the FCC governing statute and its rules and regulations require an Administrative Procedure Act (APA)-sanctioned rulemaking in order to implement this transformation.

Notably, the letter raises serious concerns about interference with E911 and law enforcement GPS Applications.

Summary

Last Tuesddy,the FCC, or delegated authority, officialft granted the request by LightSquared to drop the FCC's long-standing requirement that its new 4G service be a satellite service. In

One can speculate whether or not those "unique" circumstances are related to Mr. Falcone's

September 30, 2009 meeting with the White House, and subsequent political contributions to the.

DSCC (in fact, the maximum contributions allowedby law), butthe outcome of the FCC's

decision means other similarly situated satellite companies will not be able to take advantage of the same loophole, as the license modification is only valid for LightSquared.

The ramifications of the FCC's favoritism are enormous. Consider for instance other competitive nationwide mobile providers like Clearwire, which have purchased terrestrial spectrum at auction for substantial sums and have invested millions more -- in Clearwire's case -- to build out its 4G network.

For them, the message couldn't be more clear: Companies who play by the rules,

create jobs, and invest in building out competing networks, are now at great risk of seeing their

plans entirely upended by the FCC's arbitrary "unique" circumstances that give a Clearwire

competitor the same terrestrial spectrum for free and essentially exempt them from requirements to invest and build out a competing network by using a wholesale model where free satellite spectrum can be leased and "laundered" to other terrestrial mobile providers.

Based on this evidence and the record outlined above, it would app ear that Mr. Falcore, a hedge fund trader currently under federal civil and criminal investigation, purchased a distressed satellite company to obtain a federal government bailout worth billions of dollars by shrewdlytaking advantage of existing loopholes and preferential treatment by the FCC.

Mr. Falcone, who previously was almost exclusively a supporter of GOP causes and candidates

gained access and influence to the Obama Administration and Democrats through well-timed

White House visits and contributions to the DSCC - weeks before filing his merger application

at the FCC" Since then, at virtually every step of the way, Mr. Falcone has received favorable treatment and expedited consideration of his plans to offer wireless satellite services utilizing free terrestrial spectrum that would cost billions in the marketplace.

The FCC for its part, has fast tracked the merger, granting approval with lightnitrg speed in

March of 201 0. During the entire process, the FCC has cut procedural corners, failed to publicly disclose ex parte contacts between Mr. Falcore, his representatives and the FCC, failed to consider the legitim ate concerns of governmental authorities and GPS stakeholders about the ATC license waiver, and as announced last week, ultimately granted the crucial final waiver

necessary for LightSquared (and only LightSquared) to begin offering wireless services using

terrestrial spectrum.

Given the above, and given the special responsibility of federal agencies to not only avoid

conflicts of interest, but to avoid even the appearance of conflicts, the above record is troubling.

No fair-minded person could look at the record so far and not believe that further investigation is

warranted. These actions call out for your committee to conduct a thorough investigation so that citizens will have the benefit of the full record.

Ken Boehm

Chairman National Legal and Policy Center "

Source of Post

http://www.nlpc.org/sites/default/files/HarbingerLetter.pdf

Philip Falcone Asks Where Did you Get that Letter Anyway ? More on That Coming Soon. And Philip Falcone says Ken Boehm is Not Credible, more on that Coming Soon.