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Michele Bachmann: "Crony capitalism" helping communications company LightSquared

Michelle Bachmann, Iowa
Republican presidential hopeful Michele Bachmann speaks to employees during a plant tour at Sukup Manufacturing, Sept. 19, 2011, in Sheffield, Iowa. AP Photo/Charlie Neibergall

Republicans like to argue that one of the biggest obstacles to job creation in the country is government's over-regulation of the private sector. But GOP presidential candidate Michele Bachmann is calling out President Obama for not regulating one potentially promising company enough.

In a letter posted to her congressional website Thursday, Bachmann accused the administration of allowing the tech company LightSquared to "put millions of Americans in harm's way" by activating a wireless signal that will jam global positioning systems, which would affect both civilian and military operations.

In fact, the Federal Communications Commission has blocked the company, LightSquared, from operating in the wireless spectrum until it resolves the interference issue.

Bachmann charges that LightSquared is benefiting from "crony capitalism" because one of its top investors, Phil Falcone, donated to Democratic campaigns. She suggests that the billionaire's political largesse is the reason that the FCC recently granted a waiver allowing LightSquared to accept contracts from communications companies interested in using its innovative satellite and land-based broadband network.

(At left, Bachmann discusses "crony capitalism," President Obama and Rick Perry with CBS News' Jan Crawford)

The waiver is conditional, however: The FCC's approval is conditional upon LightSquared resolving technical problems with its new system. Recent tests have shown that LightSquared's technology does interfere with global positioning systems and the FCC has said the company must resolve the problem.

Bachmann is seizing on an issue that has recently galvanized Republican lawmakers, after a Center for Public Integrity report revealed communications between the White House and the wireless firm.

But the congresswoman's accusations of cronyism elicited strong pushback from LightSquared. "Phil Falcone is a registered Republican and two thirds of his political donations go to Republicans," the company said in a statement to National Journal and CBS News. The statement also pointed out that the original FCC approval for LightSquared's proposed system was granted in 2005 - during the administration of Republican President George W. Bush.

In an effort to resolve its system's interference with GPS systems, LightSquared moved its signal to a new wireless spectrum plan in June, and just this week the company's CEO Sanjiv Ahuja announced a new technical fix he said would solve the issue entirely. Ahuja's announcement was met with skepticism amongst the GPS industry and defense officials, who point out that the technology has not yet undergone rigorous testing.

Republican lawmakers have currently opened an investigation into the ties between LightSquared officials and both the White House and FCC. LightSquared's opponents include an array of corporate interests who see the upstart company as potential competition. Among them: Garmin, TomTom, and the National Association of Manufacturers.

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