Harbinger Says Grassley Letter Was Off Base

LightSquared owner Harbinger Capital Partners Wednesday took
strong issue with Iowa Republican Senator Charles Grassley's suggestion it had
pressured the Senator to "pull punches" in his inquiry into
LightSquared's FCC waiver to offer terrestrial wholesale wireless broadband,
but the Senator was not backing off.

In a letter to Grassley dated Jan. 31, attorneys for
Harbinger disputed various claims Grassley made in a letter to the company last
week. In that letter, Grassley had said that that contact, comprising e-mails
from both Harbinger principal Philip Falcone and a person, a "Mr.
Ruelle," claiming to represent LightSquared, "intimated benefits for
Grassley if he softened his inquiry of government approval of the

Harbinger attorney Mark Paoletta wrote the senator that his
allegations were unsubstantiated, that the "person" did not speak for
LightSquared or Harbinger, and that the senator's accounting of events was
"inaccurate," including his suggestion that there had been a quid pro
quo between a "purported" request that Grassley drop the
investigation in exchange for a call center in Grassley's home state.

"It concerns me that Senate staff would propose such an
unsubstantiated story without giving Harbinger and LightSquared an opportunity
to address the allegations."(In B&C/Multi's story on the Grassley letter,
Harbinger provided the following response: "Mr. Ruelle does not, nor has
he ever, worked for Mr. Falcone, Harbinger or LightSquared as an employee or a
consultant," said Harbinger spokesman Lew Phelps. "No one at Harbinger or
LightSquared has had any discussions or negotiations with Mr. Ruelle with
respect to approaching or contacting Sen. Grassley's office regarding an
alleged quid pro quo, or a call center in Iowa, which in any event would be
inconsistent with the LightSquared wholesale business model. If such
conversations occurred, Mr. Ruelle was acting entirely on his own and without
the knowledge, authority, or endorsement of Mr. Falcone, Harbinger or

In Tuesday's letter, Harbinger turned the accusation back on
Grassley's office. "The problematic presentation of events and conclusions
in your letter, coupled with the fact that your staff suggested prematurely to
Bloomberg News that they run a story based on them, have reinforced our
concerns about the fairness of the inquiry into LightSquared."

Grassley's inquiry has effects beyond the issue of
LightSquared's interference with GPS devices, the issue that prompted the
senator to seek info on how the FCC waiver was obtained. Grassley has pledged
to hold up the confirmations of the nominees of the two empty FCC commissioner
seats until he gets answers to his questions at the FCC.

Paoletta said Harbinger was still interested in getting
Falcone together with the senator to talk about his issues.

Grassley's office was sticking by his letter.

Contacted Wednesday, Grassley spokeswoman Jill Gerber said:
"Sen. Grassley's letter was and is accurate and fully reflects the contact to
his office and his subsequent efforts to seek the companies' perspective before
sending his letter. Those efforts prior to the letter were not fruitful, and
Harbinger's attorneys are misrepresenting the facts. Incredibly, Harbinger is
just now confirming a relationship with and describing the details of
interaction with Mr. Ruelle, after having issued a misleading statement to the
press that made it appear there was no relationship."

"Now Harbinger says Mr. Ruelle had ‘numerous' contacts
with Mr. Falcone, helped to arrange a meeting between Mr. Falcone and John
Deere, and helped to arrange Mr. Falcone's appearance on Fox News. Why did the
company indicate otherwise when asked by reporters in January? However, Sen.
Grassley's focus is shedding light on why the FCC gave LightSquared the fast
track for approval without adequate consideration to widespread interference
with the GPS devices used by the military, aviation, consumers, and precision

The FCC did condition its LightSquared waiver on resolving
interference issues with GPS, and is currently awaiting a recommendation from
the National Telecommunications & Information Administration on its
recommendation following tests that showed there were still interference
issues, though LightSquared disputes the validity of those tests. FCC
Chairman Julius Genachowski said this week he was still waiting for NTIA's
report, but that "in the interim and beyond we are not going to do anything
that causes harmful interference. "

Grassley continues to seek info from LightSquared and the
government. Gerber says the companies have not provided documents related to
third-party contacts with consultants and lobbyists, and the FCC has provided
"zero documents," she says.

The FCC did make some documents available online in response
to FOIA requests, but did not provide documents directly to Grassley since he
was not the chairman of one of its relevant oversight committees -- he is
ranking member of one of them, the Senate Judiciary Committee.
"Transparency about the FCC and this project is still completely lacking,
despite strong public interest in the process and the outcome."

An FCC spokesman had no comment.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.