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Scandal Watch: LightSquared partner ($267 million fed loan recipient) goes under; stonewalling at NTIA

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By Michelle Malkin  •  October 5, 2011 03:15 PM

Who knew three years ago when Culture of Corruption came out that we’d be up to our eyeballs in scandal today.

Well, I did!

Two weeks ago, I gave you a primer on Obama’s dangerous LightSquared Broadband Boondoggle.

A few, new key developments:

*Looks like the feds are playing their usual disclosure-ducking games. GPS World Magazine exposes the latest stonewalling:

The National Telecommunications and Information Administration (NTIA) has responded to a request under the Freedom of Information Act, filed on September 6 by GPS World magazine, saying it cannot or will not release documents prepared by other government agencies, outlining the operational and economic impacts of a LightSquared terrestrial signal on GPS services. GPS World has talked with two independent sources who confirm that the U.S. Departments of Defense, Homeland Security, Agriculture, Interior, Transportation, and two other agencies wrote such letters to the NTIA in the June-July 2011 timeframe, in response to a federal tasking by the National Coordination Office for Space-Based Positioning, Navigation, and Timing.

The NTIA essentially shrugs its massive shoulders and says “I don’t know what you’re talking about.” Such conduct is consistent with previous characterizations of the NTIA by a participant in the process, who stated in late August that the NTIA had not forwarded any of the letters to the Federal Communications Commission (FCC), which is weighing the matter. This source characterized the NTIA as “sitting on them” as part of a “massive bureaucratic game,” and further asserted that Senator Charles Grassley of Iowa and other Congressional representatives are getting “stonewalled” by the FCC in their efforts to investigate the matter.

*LightSquared is threatening to sue the FCC:

Start-up wireless carrier LightSquared threatened litigation if the Federal Communications Commission does not clear it to operate a network of up to 40,000 cell towers the GPS industry claims will interfere with GPS receivers.

Jeff Carlisle, LightSquared’s vice president of regulatory affairs and public policy, told reporters at a briefing Monday that any interference with high-precision GPS receivers from the company’s planned network results from the fact that those receivers “look” into the adjacent frequency band.

In a letter to FCC Chairman Julius Genachowski Monday, Carlisle said that GPS manufacturers have ignored standards developed by the Defense Department to block reception of transmissions from adjacent bands.

Martin Harriman, vice president of ecosystem development and satellite business for LightSquared, said that manufacturer Javad GNSS has developed a signal filter that will mitigate interference problems with high-precision GPS receivers.

Last month, the company said it planned to market filters for high-precision receivers for positioning applications by November 2011 and filters for precision timing devices by March 2012. Harriman said the filter technology developed by Javad “could possibly be used by other manufacturers.”

*OpenRange, a LightSquared partner here in my home state of Colorado is, undergoing massive layoffs after raking in nearly $270 million in federal loans. Surprise, surprise:

Open Range Communications, a privately held WiMAX operator with service in more than 140 markets spanning more than a dozen states, announced it will lay off the bulk of its employees and will stop accepting new customers. The company will continue providing service to existing customers. Further, the company’s CEO, Bill Beans, resigned last night; the company’s CFO Chris Edwards appears to be heading the company now.

Open Range will eliminate around 122 positions, leaving around 48 workers left. Those positions being eliminated include sales representatives, sales managers, sales support and other positions. Essentially, the company is laying off all positions in its markets outside of its headquarters in Greenwood Village, Colo.

The announcement was made this morning in a series of conference calls with employees. A company spokesman did not return requests for additional information.

Open Range in March inked a deal with LightSquared whereby it plans to transition its operations from the spectrum it leases from Globalstar to LightSquared’s planned LTE network. However, LightSquared’s network rollout has been hampered by concerns regarding how its planned network could interfere with GPS receivers.

Interestingly, Open Range was awarded a $267 million loan from the Rural Utilities Service of the U.S. Department of Agriculture, and the company scored $100 million in equity from One Equity Partners, the private equity investment unit of JPMorgan Chase. It’s unclear exactly how the company will address those finances.

GigaOm adds:

We covered the company in 2008 when it was approved for a $267 million loan from the United States Department of Agriculture’s Rural Development Utilities Program to provide wireless broadband to 500 communities in 17 states. It was the largest loan in USDA history at the time, and Open Range also scored an additional $100 million investment from One Equity Partners, the private equity arm of JPMorgan Chase & Co. It began offering WiMAX service in 2009.

The company was in the news earlier this year for reaching a deal with LightSquared, the non-network that the government is hoping will deliver a competitive form of wireless broadband. LightSquared has its own problems that are coming back to haunt the government, and now the reported failure of Open Range may end up giving the U.S. and the FCC another black eye as it tries to deliver acceptable broadband to rural America.

More government loans to nowhere

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