During this phase you can toggle ship transponders from private mode to public mode, or vice versa. A ship with a private transponder is visible on LRS only to the empires that you choose. (See the Identify Ships phase.) A ship with a public transponder is always visible on LRS to all other empires, known or not. By default all ship transponders are set to private mode.
Allies: Allied empires always identify their ships to one another, regardless of their ships' transponder modes.
Abandoned Empires: Abandoned ships will always enable private transponder mode.