Faced with the prospect of a Republican-led congressional inquiry into their bid to build a spectrum-based broadband network, as well as a charge of crony capitalism from GOP presidential candidate Michelle Bachmann, LightSquared has ramped up their public outreach efforts in an effort to change the public’s perception of the start-up.
Over the weekend, the company argued that neither CEO Sanjay Ahuja nor his company had used political donations as an incentive for the White House to push their bid on an unwilling group of federal agencies.
Ahuja himself penned a letter — which ran in the New York Times, the Wall Street Journal and the Washington Times Monday morning — making the case that Democrats and Republicans had for years supported LightSquared’s network as a way to tackle the “imminent” issue of broadband scarcity.
“Within the next 24 months, demand for broadband wireless will outstrip the current total spectrum available in the United States — jeopardizing everything from the smartphones and tablets we love to the emergency responder services we rely upon to keep us safe,” he wrote. “The current nationwide wireless providers have failed to innovate and in the process have failed to keep pace with consumer and technological demands.”
The lack of broadband access grew more apparent following the explosion of demand from smartphone users who want constant access to email, GPS navigation and other applications. By December, nearly half of all Americans will own smartphones, according to a Nielsen study released in 2010. What’s more important, however, is how quickly smartphones have penetrated the market: Three years ago only ten percent of Americans owned smartphones.
The finite resource of spectrum is not only unable to support the present demand, but also faces government regulations that cannot quickly adapt to paradigm shifts in the market.
Currently, the Federal Communications Commission (FCC) governs commercial spectrum use, and has conditionally approved LightSquared’s bid to build a ground-based, satellite-backed network, which they will lease to wireless carriers as a means to provide easily accessible broadband to the public.
The conditions for approval stem from concerns and reports from a group of federal agencies, the military and advocates from industries dependent on GPS. According to these groups, which include the Department of Defense and the Federal Aviation Administration, LightSquared’s signal interferes with GPS. Gen.
William Shelton of the Air Force noted in a House Armed Services hearing earlier this month that LightSquared’s signal is five billion times stronger than that of GPS, which was designed to function in a “quiet neighborhood.”
Filtering out LightSquared’s signal would be possible, he said, but it would cost nearly $49 billion dollars and “likely degrade the accuracy of high performance receivers, which is critical to many key GPS users.”
Around the time that these agencies began voicing their concerns over the GPS interference, a series of stories came out alleging that LightSquared’s political donations were timed to coincide with lobbying visits to the White House, and that the administration had been pressuring government agencies to overlook the GPS issues and state their support for the network.
The timing of the Solyndra bankruptcy added extra Republican scrutiny to the startup. As the Obama-backed high-tech company publicly imploded, Republicans began questioning whether LightSquared had received similar preferential treatment at the expense of the taxpayer.
The issue filtered into the presidential campaigns, bringing a beleaguered LightSquared into the general public: Over the weekend, Michelle Bachmann published a letter on her website condemning the “crony capitalism” that “put millions of Americans in harm’s way.”
Understanding the political climate, LightSquared is trying to distance itself from comparisons to Solyndra. While Solyndra executives plead the Fifth in last week’s hearing, their silence enraging both Democrats and Republicans, LightSquared has been on the offensive.
Its majority shareholder, Philip Falcone, was on Fox News last week to defend himself against charges of cronyism, and Friday’s letter was directed towards Republicans petitioning the House Committee on Oversight and Government Reform to launch an investigation of the company.
“The January waiver actually blocked LightSquared from moving forward until it resolved the GPS interference issues,” they wrote in the letter. “In addition, it tentatively allowed LightSquared’s customers to offer devices that did not connect to the company’s satellite network.”
They also took umbrage at the suggestion, made by multiple Republicans, that they were hurrying their project through the approval process at the expense of national security and public safety.
“LightSquared has made a $150 million commitment to fixing the interference issues and is a long way toward completely solving the problem. It has moved to new spectrum which eliminated interference issues for more than 99 percent of GPS devices.”
In addition, the company has announced multiple partnerships in the past week with companies that would resolve the remaining GPS interference.
Questions remain as to how complicit the Obama Administration is in pushing LightSquared’s network through the regulatory process. Though LightSquared’s critics point to the fact that Obama once held a financial stake in the company, the more pressing matter may be an issue of policy and political stances: The president and the FCC have both publicly pushed for nationwide Internet access, particularly to rural and under-served areas that lack wireless access.
Reports that the White House Office of Management and Budget had pressured agency representatives to change their testimony add to the possibility that, much like Solyndra, the administration may have hastened LightSquared’s approval to show progress in their effort to build out wireless access.
For now, LightSquared says it is the victim of an unfortunate political climate that is drawing attention away from the impending spectrum crunch. “Disappointed we’re being used for political purposes,” they tweeted from their official account last week. “We’ve worked w/ both parties — innovation isn’t partisan.”