“The FCC Badly Mishandled LightSquared,” According to Grassley

Will he, or won’t he? The question on everyone’s mind for the past week has undoubtedly been whether or not Senator Chuck Grassley (R-IA) will finally lift the hold on FCC commissioner nominees Jessica Rosenworcel and Ajit Pai, who have been waiting patiently to take their seats all year. The telecom industry was buzzing early in the week that Grassley may lift the hold, but he later denied the rumors. Finally, on Friday, April 27, Grassley released a long statement about the LightSquared ordeal on his official website, where he said, “Since there is now a process in place to obtain all of the relevant documents from the FCC, I intend to lift my hold on the two FCC nominees. But my inquiry is not over. I’m told that there are 11,000 more pages of documents from the FCC on LightSquared that will be forthcoming to the House Energy and Commerce Committee. I look forward to receiving access to those documents.”

In his statement, Grassley details how he has struggled with the FCC over LightSquared for an entire year, and how the FCC “stonewalled” time and again when he requested information about why the company’s plans were approved despite questions about GPS interference and other financial and political concerns. Grassley was eventually granted access to 13,000 pages of documents, which he called “evasively superficial,” but noted that “Gradually, the document submissions began to include some substantive information.”

The more substantive documents apparently “show that rather than being an objective arbiter, the Commission appeared to be enthusiastic about the LightSquared project and wanted to see it materialize.” Grassley continued, “The prospect of a new broadband provider that could challenge current providers was appealing to the FCC, according to the documents. It’s impossible to draw a complete picture of the FCC’s considerations in green-lighting LightSquared because the documents available so fare do not offer a comprehensive view.” Grassley commented that the FCC may have “overlooked technical concerns or the financial implications if the project’s chief investor were to undergo SEC sanctions,” but so far Grassley doesn’t have enough information to definitively make this conclusion.

Regardless, he seems to have enough information to lift the hold, but we probably haven’t heard the last of Grassley’s crusade against the FCC over LightSquared documents. He stated, “The FCC badly mishandled LightSquared. Finding out exactly what went wrong is key toward preventing future debacles. I hope the pending nominees, and the rest of the commission, will use the LightSquared situation as a case study in what not to do.” We can probably assume that the new commissioners will try very hard not to cross Senator Grassley once they take their seats at the FCC.

Grassley Wants More Documents, Other Congressmen Want LightSquared Solution

Despite being declared all but dead, LightSquared has dominated telecom industry headlines all week as various members of Congress try to push agendas related to the troubled company. Meanwhile, LightSquared may head to bankruptcy and the FCC will forge ahead on industry-changing decisions like USF contributions reform with only 3 commissioners at the table. Is there any way for the characters involved in the LightSquared tragedy to emerge better off than they began—we’re talking the company itself, Congress, the FCC, the GPS industry, LightSquared investors and wireless partners, and wireless consumers?  

Kicking off the week of LightSquared news, Senator Chuck Grassley (R-IA) finally had a chance to review the tens of thousands of pages of documents he requested from the FCC—the plan was that once Grassley was satisfied with the documents, he would release the hold on the two new FCC commissioners Ajit Pai and Jessica Rosenworcel. The key word here is “satisfied,” which Grassley was not. The document issue has dragged on for months, as the FCC “declined to cooperate with Grassley’s probe because he does not serve on a committee with jurisdiction over the agency,” according to The Hill’s Hillicon Valley. To Grassley’s benefit, a committee that does have jurisdiction over the FCC (the House Energy and Commerce Committee) also requested the documents and agreed to share them with Grassley last week.

After what must have been a lightning-fast review of 13k pages of internal FCC documents in just a couple of days, Grassley concluded that the FCC was still holding back confidential documents. A Grassley spokeswoman told Hillicon Valley, “Sen. Grassley’s hold on the FCC nominees will continue until the FCC demonstrates its commitment to comply with the House committee’s request and produce new, internal documents.” The spokeswoman added, “Sen. Grassley expects this process will lead to more transparency from the FCC that will help to hold the commission accountable and allow the FCC commissioner nominees to move forward.”

In addition to Grassley, Representative Michael Turner (R-OH) is concerned about how much taxpayer money has been spent on LightSquared-related activity including the GPS interference tests. PCWorld reported that Grassley and Turner “want answers by April 19.” Grassley and Turner are concerned that “If LightSquared does indeed declare bankruptcy…the Federal government will be unable to recoup the taxpayer dollars it has expended funding testing on LightSquared’s network.”

Meanwhile, several Senators and Representatives are still carrying a torch for LightSquared and hope that the company and FCC will work together to ultimately launch the network. Hillicon Valley reported on April 10 and April 11 that Senators John Kerry (D-MA) and Lindsey Graham (R-SC) and Representatives Brian Bilbray (R-CA), Joe Pitts (R-PA), Jim Moran (D-VA), and Gerry Connolly (D-VA) sent letters to the FCC recommending that the FCC “move LightSquared to new airwaves or develop a technical solution that would eliminate the interference problem.”

The March 29 letter from Senators Kerry and Graham reportedly states, “Advancing LightSquared’s network in a consensus manner would increase competition in the wireless broadband market and promote the public interest.” The Representatives concurred on the competition issue, arguing that the FCC should “examine all potential paths forward before closing the door on what could be an opportunity to increase competition and access in the nation’s wireless providers.”

Neither moving LightSquared to different spectrum nor developing technical solutions to resolve the interference issue will be cheap or fast (if they happen at all)—and LightSquared does not have unlimited capital to idle along in regulatory limbo. There is further controversy on the Hill about whether or not the Democratic-controlled FCC and the White House gave “special treatment” to LightSquared by initially supporting the network’s plans. One can certainly expect that if the FCC yields to LightSquared and some members of Congress’ recommendations to move LightSquared to different spectrum—a resource that is not only extremely valuable but in higher demand than ever in all corners of the telecom industry—some people might consider this to be “special treatment,” too.

In an election year, a volatile political climate, and a wireless industry obsessed with the spectrum crunch, the LightSquared mess has all the elements of a spellbinding theatrical production about politics and regulation in the telecommunications industry. How do you think it will end?