UPDATE 1-Falcone-backed telecom hires top Democrat to lobby

* LightSquared inks lobbying deal with ex-Gov. Rendell

* Former Pennsylvania governor is now a law firm partner

* Falcone’s telecom increasing lobbying spending

(adds detail to first paragraph)

By Matthew Goldstein

NEW YORK, March 31 (Reuters) – Billionaire hedge fund
manager Philip Falcone’s upstart wireless telecom investment
recently hired former Pennsylvania Governor Edward Rendell as a
lobbyist as it seeks to counter U.S. Department of Defense
complaints about its planned network.

Rendell, a prominent Democratic politician and a political
commentator for the cable news channel MSNBC, registered last
month as a lobbyist for LightSquared, a Virginia-based company
that is backed by Falcone’s $6 billion Harbinger Capital
Partners hedge fund.

The former Pennsylvania governor is now a partner with the
law firm Ballard Spahr. Adrian King, who served as Rendell’s
deputy chief of staff and also is a partner at Ballard Spahr,
is also registered as a LightSquared lobbyist on a federal
government website.

Rendell and King join a growing list of paid lobbyists with
political connections to both Democrats and Republicans who are
doing work for LightSquared.

Anyone taking a fee to lobby federal officials is required
to register with the clerk’s office of the U.S. House of
Representatives and disclose their clients.

The telecom company is beefing up its lobbying at the same
time it is trying to fend off complaints from the U.S.
Department of Defense about potential interference problems
with LightSquared’s planned wireless network. The Defense
Department and other government agencies are concerned that
LightSquared’s high-speed mobile communications network will
create interference problems with global positioning systems
used by the military and the aviation industry.

So far, Rendell, whose office declined to comment, has not
disclosed doing lobbying work for any firm other than
LightSquared. During his tenure as governor, Rendell served as
chairman of the National Governors Association. Shortly after
President Barack Obama was elected in November 2008, some in
Washington, D.C., had speculated that Rendell might be offered
a position with the new Democratic administration.

Falcone, whose Harbinger partners has sunk some $3 billion
into LightSquared and owns most of the fledgling telecom,
declined to comment. A LightSquared spokeswoman, Audrey
Schaefer, said, “Governor Rendell has been a strong advocate
for increasing American investment in our infrastructure and we
share those values with him.”

In 2010, LightSquared paid $265,000 in fees to three firms
to lobby for it in Washington, D.C., according to the Center
for Responsive Politics’ website Opensecrets.org. Rendell’s law
firm, Ballard Spahr, did not do any lobbying work for
LightSquared last year.

The increased lobbying activity by LightSquared is notable
given the company’s rather small size. The amount spent by
LightSquared on lobbying fees in 2010 is comparable to the
$285,000 that wireless competitor Clearwire Corp (CLWR.O: Quote, Profile, Research). paid
to lobbyists, according to Opensecrets.org.

The uptick in lobbying comes at a time that it is trying to
sign up potential customers and deal with concerns about the
potential interference caused by its planned network.

On March 25, Deputy Secretary of Defense William Lynn and
Deputy Secretary of Transportation John Porcari sent a joint
letter to the Federal Communications Commission raising
concerns about the “inclusiveness” of a study group
LightSquared has put together to review the interference
issues. The FCC, which last year approved LightSquared’s plans
to provide high-speed wireless communications to all corners of
the United States by 2015, authorized the study group earlier
this year.

LightSquared is trying to position itself as a low-cost
alternative to the big wireless operators like Verizon
Communications Inc (VZ.N: Quote, Profile, Research) and AT&T (T.N: Quote, Profile, Research), which recently
proposed a $39 billion deal for Deutsche Telekom AG’s
(DTEGn.DE: Quote, Profile, Research) T-Mobile USA. LightSquared recently announced deals
with Best Buy Co (BBY.N: Quote, Profile, Research) and Leap Wireless International
(LEAP.O: Quote, Profile, Research).

For Falcone, LightSquared has emerged as his hedge fund’s
single biggest bet. A little more than half of Harbinger’s
assets are committed to LightSquared and some of his hedge fund
investors have grown uneasy waiting for the telecom bet to pay
off.

Bankers with UBS (UBS.N: Quote, Profile, Research), which helped LightSquared raise
more than $1 billion in short-term financing, are telling
prospective investors and telecom industry analysts that
LightSquared could be worth more than $10 billion when its
wireless network is built out, said several people familiar
with the hedge fund and the telecom industry.
(Reported by Matthew Goldstein, editing by Dave Zimmerman)

UPDATE 1-Falcone-backed telecom hires top Democrat to lobby