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FCC Spokesperson claims FCC “Didn’t have a choice” in handing US Taxpayers a 74 million dollar loan default?

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In a recent Washington post article. A FCC spokeswoman, Tammy Sun, was quoted as saying that the FCC didn’t have a choice, but to deny Globalstar’s December 2009 extension request which directly led to the default, according to Open Ranges CFO in court testimony, of a 74 million dollar Government loan to Open Range Communications.

In the Wahsington Post article, Tammy Sun Public Relations Director of the FCC, who joined the FCC well after the Globalstar decision was handed down, was quoted as stating:

“Globalstar conceded failure to comply with its obligation to provide nationwide satellite service, which led to the agency’s decision to deny its extension request,”

Our take away from this is…. THAT’S IT? YOU MUST BE JOKING? Globalstar failed to comply with its obligation to provide nationwide satellite service, and that was justification for handing the US Taxpayers a bill for a 74 million dollar loan default, in addition to the eventual liquidation of one of the largest US Wireless Rural Broadband providers?

So we took a look at Globalstar’s 10-Q for the fourth quarter of 2010, when the FCC found that Globalstar was “so far out of compliance” with it’s regulatory satellite coverage requirements that the FCC had “no choice” but to effectively push Open Range into covenant defaults.

On September 30, 2010, Globalstar showed that it had 431,000 total subscribers on its satellite network vs. 382,000 from the same period a year earlier. So Globalstar GAINED almost 50,000 satellite subscribers to its network during the time frame that Globalstar requested additional time to come into compliance with complete coverage requirements as required by the FCC. We don’t know about anyone else. But, the satellite coverage provided by Globlastar doesn’t seem to be that bad, because they were adding tens of thousands of subscribers during the same period. Was coverage really bad enough to warrant a 74 million dollar bill to the US Taxpayers? Obviously, those subscribers that used the network didn’t think so, or why would they have continued to add new subscribers to their satellite service? This just does not make sense?

If we look at other companies in the same market as Globalstar, which claim they have “no coverage defects” during the same period. Iridium claimed that they only had 413,000 subscribers in the same period. 15,000 LESS than Globasltar? What is even more interesting is that Lightsquared (Skyterra) only reported 18,039 subscribers (page 53) during their last public release in December 2009, before being taken private by Lightsquared, but had a year over year DECLINE in subscribers.

So let’s review this data. Globalstar according to SEC filings had 431,000 subscribers and grew by nearly 50,000 subscribers from the previous year during this period of extension request. Iridium had 415,000 during the same period, and Lightsquared (Skyterra) only claimed just over 18,000 total subscribers, and showed a year over year decline in subscribers.

If Globalstar’s “nationwide” satellite coverage was so horrible as to justify the refusal an extension that led to the 74 Million dollar “goose egg” for the US Taxpayers, then why were they growing at such a aggressive rate? After all, the FCC IB noted that “they had no choice” but to deny the request for additional time by Globalstar despite being warned by the USDA RUS that doing so would potentially lead to saddling the US Taxpayer with a massive multi- million dollar loan default via Open Range. The facts of the issues appear not to correlate with the FCC IB’s actions, given the commercial data compared to its competitors that the FCC appears to claim have NO SATELLITE COVERAGE issues, due to lack of regulatory action?

The FCC spokesperson, Tammy Sun, also claimed in the Washington Post article:

“But unlike Open Range and Globalstar, LightSquared so far has followed through with its obligations, the FCC said.

“Comparing the two is like comparing apples and oranges,” Sun said.”

Well, for once the FCC got it right, because comparing Globalstar and Lightsquared is like “comparing apples and oranges”.

First, to date, Globalstar has launched 72 satellites since mid-1998 serving the United States, Lightsquare and its predecessors has launched 2 for US serivce. Globalstar has an additional 12 satellites sitting at the launch compound in Russia which are scheduled to be launched in the next several months. Also Ms. Sun fails to mention that like Globalstar, Lightsquared also missed it’s milestone date to launch the new Skyterra satellite into operation and Lightsquared requested an extension (SAT-MOD-20100405-00064) to come into compliance at the same time period Globalstar was asking for their extension. Of course, the FCC International Bureau approved the Lightsquared Extension without even a single request to justify the delay in satellite readiness on the part of Lightsquared. While demanding hundreds of pages from Globalstar and it’s main satellite manufacture Thales, which the FCC IB systematically either ignored, reworded, or intentionally REDACTED publicly available information in order to fit their agenda. (We will detail these “tactics” again over the next several days, as we did in the past).

Globalstar, despite what appears to be “horrendous” coverage issues according to the FCC, has 100′s of thousand MORE satellite subscribers than the Commissions “poster child”, Lightsquared’s “fully compliant satellite service” as per their last public count.

Speaking of Lightsquared’s “waiver obligations” and the FCC spokespersons “incorrect claim” that Lightsquared has “so far” followed through on “all of its obligations.”

The FCC’s January 2011 Lightsquared waiver stated @ (D,II,B) page 19 Actions and Conditions, that the deadline for Lightsquared to come into compliance with its Conditional Waiver.

D. Action and Conditions
36. We therefore grant LightSquared a waiver of the integrated service rule set forth in Section 25.149(b)(4) of the Commission’s rules, and permit LightSquared to proceed with its proposed service offerings, SUBJECT TO THE FOLLOWING CONDITIONS

II. “B. LightSquared shall ensure that integrated, dual-mode MSS/ATC-capable L-Band devices are readily available in the marketplace “NO LATER THAN SEPTEMBER 30, 2011, for datacards”

Lightsquared has applied for no waiver of this REGULATORY CONDITION applied to it’s continued access to it’s ATC waiver and September 31, 2011 has come an gone and there are no datacards.

The FCC better come up with a better excuse for their “74 million dollar taxpayer “public interest” bill”, than “coverage requirements” on a satellite system with 2,500% more subscribers than Lightsquared. By the way, did we mention that the FCC’s action demanding Open Range to find new spectrum, also sent Open Range to Lightsquared’s doorsteps?

As far as the FCC “policy” on this goes. No one can say it better than an FCC spokesman stated earlier this year….

“As part of the waiver conditions, until harmful interference concerns involving GPS receivers operating in adjacent spectrum bands have been adequately addressed, LightSquared will not be permitted to move forward under the waiver. … The FCC waiver approval granted to LightSquared was based on the merits of its proposal, following a process that included ample opportunity for comment. LightSquared’s planned commercial service will result in billions of dollars in investment, offer consumers a new wireless competitor, and create tens of thousands of jobs across America. IT DESERVES EVERY OPPORTUNITY TO SUCCEED

IT DESERVES EVERY OPPORTUNITY TO SUCCEED¿¿¿ We thought EVERY FCC licensee deserved “Every opportunity to succeed? Or is the FCC in the practice of choosing “Winners and Losers” amongst their licensees? So Lightsquared deserves “every opportunity to succeed” according to the FCC. While it appears that the FCC’s policy toward Lightsquared’s competitors appears to be that they “DESERVE EVERY OPPORTUNITY TO FAIL”. Ladies and Gentlemen, this FAILURE at the hands of the FCC International Bureau appears to have cost you and I, 74 million dollars, which it appears they attempt to justify on satellite coverage requirements? Who is kidding whom here?

Remember those “conspiracy theories” we spoke of in an earlier article about the FCC IB action against Globalstar/Open Range, actually being a retaliatory action against Adelstein at the USDA/RUS by the FCC for bypassing the International Bureau? Well, if you read the comments from the “FCC official” in the Washington Post article whom spoke on the condition of anonymity, then the conspiracy theory starts to sound rational.

One FCC official added: “It was bad all around. Open Range had bad technology, and Globalstar’s request was extraordinary…. (We) had no idea why the USDA approved this thing, and even staff at [the USDA] were (“telling us”) they were concerned about it.” The official spoke on the condition of anonymity because of the controversy surrounding the firms.

In the statement above, the anonymous FCC official made the statement…

“WE had no idea why the USDA approved this thing, and even staff at [the USDA] were “telling US” they were concerned about it.”

Our question is? Who is “We, and us?” in the above statement?

Obviously not the FCC Commissioners who voted for the waiver, and a we/us group that appears to think they are better at selecting RUS Loan applicants than the USDA RUS themselves, so that might leave a group that had some regulatory responsibility for this action. So that sounds like there was some “group” at the FCC that were against the entire Open Range proposition, which would have most likely been the FCC International Bureau, as they were the division in charge of Globalstar and would have had to approve the “extraordinary request”, but were effectively bypassed by the vote by the full FCC Commissioners. So now FCC Commissioner Adlestein, who was heading for the RUS, appears to have performed an “end run” around the International Bureau’s “authority”, and went directly to the other FCC Commissioners to vote for the deal and got it approved. Hence, it appears on the surface that the International Bureau did not appreciate the “appointees”, i.e., FCC Commissioners vote, (Adelstein) performing an “end run” around the International Bureau’s authority. After all, We can’t have FCC Commissioners overstepping the regulators authority at the FCC International Bureau, and you wouldn’t want something like this to have “every opportunity to succeed”. So when Globalstar came back to the International Bureau to seek an extension to meet their coverage requirements, PERHAPS the International Bureau acted out of “vengeance”, rather than “public interest” as the conspiracy theorists have advanced?

After all… 74 MILLION DOLLARS is a lot of “public interest” if you ask us. Here at Orbitrax, we would not be surprised if the subpoena’s are about to roll out of the Department of Justice. Because if you are following the Open Range Bankruptcy proceedings, it appears that the UNITED STATES OF AMERICA wants to know how this thing went bad and is starting to “take names”. Open Range appears to be pointing the finger at the members of the FCC International Bureau which operate under “Delegated Authority” . “In a prepared statement, the USDA/RUS Chairman Adelstein said that he was “disappointed” Open Range went bankrupt and that 99 percent of all USDA broadband loans are paid back.

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