Once Bankrupt, a Tiny Broadband Company Thrives in the Trump Era

(Bloomberg) -- Ligado Networks LLC overcame powerful opposition to its proposed broadband network with some help from inside-the-Beltway figures close to President Donald Trump’s White House.

As late as Friday, the Defense and Transportation departments said they were “strongly opposed” to Ligado’s plan to use airwaves they feared would interfere with global positioning system navigation.

The Democratic and Republican leaders of both armed services committees also called last week for rejecting Ligado’s plan. And in March, agencies including the departments of Interior, Commerce, Justice and Energy and Homeland Security all signed a letter opposing the company’s plan.

But on Monday the U.S. Federal Communications Commission, led by a Trump-appointed chairman, Ajit Pai, reversed itself and signed off on the plan anyway, realizing a vision set out by hedge fund manager Philip Falcone a decade ago.

Once Bankrupt, a Tiny Broadband Company Thrives in the Trump Era

The Reston, Virginia-based company prevailed with a costly persuasion campaign overseen by a blue-chip roster of lobbyists and board members. Since emerging from bankruptcy in 2016, Ligado has spent about $7.9 million on lobbying, including more than $2.5 million during 2019, according to a Bloomberg News tally of Congressional disclosures.

During the first quarter of 2020 alone, Ligado spent $730,000 on its advocacy, a 20% increase over the previous three-month period, according to the documents.

The company engaged Matt Schlapp, chairman of the American Conservative Union and husband to Mercedes Schlapp, an aide in the Trump White House now working on his re-election campaign. Other figures in its camp include Jeff Miller, a prolific fundraiser for Trump.

Related: Ligado Wins Approval for Airwaves Plan U.S. Military Opposes

Ligado cast its service as a fit with the Trump administration’s push for deploying fast, advanced 5G service -- and doing so ahead of China.

The FCC’s engineering analysis found that Ligado’s network could be deployed “to advance our country’s economic and security interests while fully protecting GPS,” Doug Smith, the company’s chief executive officer, said in an emailed statement.

Once Bankrupt, a Tiny Broadband Company Thrives in the Trump Era

That argument won it the support of Attorney General William Barr, who last week called the company’s airwaves plan “essential if we are to keep our economic and technological leadership and avoid forfeiting it to Communist China.”

Secretary of State Mike Pompeo called approval of Ligado’s plan “vital to our national security.”

Ligado received FCC approval more than eight years after the agency blocked its proposed wireless network over concerns the service would interfere with GPS. That led to a trip through bankruptcy for the company, founded as LightSquared by Falcone who then lost control to investors.

Earlier: Ligado’s Airwaves Plan ‘Strongly Opposed’ by Defense Department

The company emerged from bankruptcy with backers including JPMorgan Chase & Co. and private equity firms Centerbridge Capital Partners LP and Fortress Investment Group LLC. The event brought with it a new board, a new name and a modified plan that Ligado said would resolve interference concerns from the Defense Department and other GPS users including U.S. airlines.

At the American Conservative Union, Schlapp, a former White House political director under President George W. Bush, leads a group known for its annual CPAC event that draws speakers including Trump, Vice President Mike Pence -- as well as FCC commissioners.

Mercedes Schlapp, was director of strategic communications for the White House from late 2017 through last July.

Matt Schlapp leads a lobbying firm, Alexandria, Virginia-based Cove Strategies, that says it “specializes in established relationships and connections to Republican officeholders and center-right influencers.”

Cove has received $200,000 for its work on behalf of Ligado since September 2018, according to disclosures. In the documents, Cove listed no contacts aside from individuals in the Executive Office of the President.

Cove didn’t respond to a request for comment on their efforts on behalf of Ligado.

Since early 2019, Miller has raised almost $2.8 million for Trump Victory, a joint fundraising venture between Trump’s re-election campaign and the Republican National Committee. Over the same time, Miller has written at least $77,300 of his own checks to the president’s campaign committee, the RNC and Trump Victory.

Ligado has paid his firm, Miller Strategies, at least $390,000 since signing on as its client last February. Its efforts were focused almost exclusively on the offices of the president and vice president, according to public records.

Lobbying Shops

Ligado has nine other lobbying shops working on its behalf, according to disclosures filed with Congress. Ashley Durmer, its in-house lobbyist, didn’t respond to a request for comment on the effort.

At the end of February, Ligado hired David Urban, a longtime Trump ally who runs the lobbying firm American Continental Group and has been a vocal defender of the president as a CNN political commentator, to work on its behalf. Despite only working for the company for a little more than a month, the company paid American Continental Group $100,000, according to disclosure forms released Monday.

Urban, who didn’t respond to a request for comment, was a member of the West Point class of 1986 along with Pompeo, the secretary of state, and Defense Secretary Mark Esper. Urban lobbied the White House, the Pentagon and the State Department, according to disclosures.

Board members for Ligado include Reed Hundt, a former FCC chairman; Ivan Seidenberg, former chairman of Verizon Communications Inc.; and Timothy Donahue, former executive chairman of Sprint Corp.

Hundt said the FCC has a “proud legacy of showing bipartisan leadership in times of crisis, looking ahead to strengthen our communications infrastructure.”

Approval of Ligado’s plan will help extend U.S. mobile leadership, Hundt said in a statement.

The Department of Homeland Security issued a statement Tuesday that said it “remains concerned that an approval creates a high degree of uncertainty” for GPS users. The department said it would watch for interference.

Falcone, who was was forced from the board in 2014 amid the bankruptcy proceedings, said the FCC action “is welcome news that has been 10 years in the making.”

Falcone’s Harbinger Capital Partners remained a minority investor as the company left bankruptcy, the FCC said.

“We look forward to seeing Ligado execute on its plan and support the development of 5G,” Falcone said in a statement.

©2020 Bloomberg L.P.

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