Grassley Wants FCC’s de Sa to Answer Questions on LightSquared

Genachowski agreed in October to make staff available to respond to questions, Grassley reminded Genachowski. But FCC officials now say de Sa isn’t available, Grassley wrote. “The FCC chairman should make this staff member available to fulfill his commitment,” Grassley said in a separate statement. “Otherwise, the words weren’t meaningful. And the FCC’s lack of transparency on LightSquared and the questions it raises will continue."

Grassley said de Sa appears to have specific knowledge of the regulatory decision making that led to LightSquared’s receiving conditional approval. “Mr. de Sa has been an integral part of the LightSquared waiver process and as recently as January 4, 2012, Mr. de Sa met with Philip Falcone, the majority owner of Harbinger Capital, the hedge fund parent of LightSquared, in order to discuss LightSquared’s plans moving forward,” said Grassley in his letter. “An interview with Mr. de Sa would shed light on LightSquared’s interactions with the FCC and help me gather facts in my investigation of the FCC.” LightSquared didn’t comment.

"The Commission has already accommodated multiple requests from Senator Grassley’s office for briefings to help his staff understand the proceeding, including a recent meeting that lasted nearly three hours with senior FCC officials,” a senior FCC official said. “However, picking and choosing individual staff to cross-examine is nothing less than a witch hunt."

De Sa is the “father” of LightSquared at the FCC and the original advocate of the FCC approving LightSquared’s plan to offer terrestrial broadband service using satellite spectrum, one FCC official said. De Sa is close to the chairman, one of only a handful of FCC officials, other than those on Genachowski’s personal staff, with an electronic key that opens the door to Genachowski’s suite of eighth floor offices.

It’s still unclear what effect the departure of one of the key advocates for LightSquared will have as the commission considers whether to let the company start terrestrial operations given recurring interference concerns and Capitol Hill opposition, led by Grassley. LightSquared remains one of the most viable options for the FCC to get some spectrum online quickly for wireless broadband.

Consultant Tim Farrar said the departure of de Sa may not make that much difference. Based on emails released by the White House last year as the result of a Freedom if Information Act request, “LightSquared’s support in government had faded considerably by last fall,” Farrar said Wednesday. “Regardless of de Sa’s departure, it is far from clear that the FCC still had the desire to push ahead with the LightSquared plan."

Pending decisions by the FCC on LightSquared are in the hands of the Wireless and International bureaus, and the Office of Engineering and Technology, not de Sa’s office, said Public Knowledge Legal Director Harold Feld. “While de Sa may have had an important role in highlighting Lightsquared (and MSS/FSS flexibility generally) as a way to get more spectrum out for broadband, there is no indication he has had a significant role on the matter recently,” Feld said in an email. “Resolving Lightsquared is much more in the hands of the relevant Bureaus. … It will set significant precedent for how to handle complicated interference disputes between legacy users and those seeking flexibility for new uses. That stays true even after de Sa leaves."

"I tend to doubt the upcoming departure … will significantly alter the dynamics that continue to keep LightSquared in limbo,” said Jeff Silva, analyst at Medley Global Advisors. “While questions about the degree of LightSquared GPS interference potential and options for addressing it remain in dispute, the strongest headwinds confronting the startup wireless firm are essentially political. It is hard to envision a scenario where the Obama Administration ignores opposition to LightSquared by the Pentagon and other federal agencies.” LightSquared is running out of time, he added. “The risk factor for LightSquared, given the prospect of facing a liquidity crisis in the not-too-distant future, is heightened with each passing day that the regulatory overhang remains in place."

An email exchange between de Sa and Rural Utilities Service Administrator Jonathan Adelstein released as part of Open Range’s bankruptcy proceeding points to de Sa’s role as an intermediary between the FCC and LightSquared and its largest investor Harbinger Capital Partners. “Would you 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?,” wrote Adelstein. 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 email exchange, dated Sept. 13-14, 2010, happened just before the FCC ruled that Globalstar wasn’t in compliance with mobile satellite service/ancillary terrestrial component rules (CD Sept 16/10 p6) and Globalstar would no longer be able to lease its spectrum to Open Range, a decision that Open Range contends ultimately led to its failure. A couple of days before the email exchange, Adelstein wrote to Genachowski, voicing concern about the “single largest loan of the RUS Broadband Program,” Adelstein warned. “A loan failure of a large magnitude could significantly affect the subsidy rate of the program and necessitate larger Congressional appropriations, or would otherwise result in what could be a major reduction of the agency’s present lending level,” said Adelstein at the time. The emails were filed as evidence by Open Range creditors in a motion to compel the FCC and Department of Justice to provide additional documents on Open Range.