LightSquared CEO resigns amid regulatory failure

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Sanjiv Ahuja has resigned as CEO of embattled LightSquared following the company's failure to get regulatory approval to operate its 4G LTE network. Ahuja will be replaced by Chief Network Officer Doug Smith and Chief Financial Officer Marc Montagner as interim co-CEOs while the company searches for a permanent replacement. In addition to failing to gain regulatory authority to operate its data network, LightSquared failed to make a $56.25 million payment to Inmarsat on February 20. LightSquared's primary investor, hedge fund manager Philip Falcone has joined LightSquared's board.

LightSquared's woes were highlighted on February 20, when the company was forced to lay off 45 percent of its workforce. Meanwhile, LightSquared's partners are starting to jump ship. Wireless internet provider FreedomPop has announced that the company has terminated its contract with LightSquared and signed on with Clearwire. FreedomPop has begun to offer free wireless internet services using the Clearwire network.

The LightSquared implosion came after the Federal Communications Commission rejected the company's authority to operate its service because tests revealed that LightSquared's 40,000 terrestrial transmitters would effectively blank out the vast majority of GPS receivers in the United States. The FCC action came after the National Telecommunications and Information Administration (NTIA) determined that correcting the LightSquared interference with GPS did not seem to be possible. At that point, the FCC issued a letter requesting comments to the NTIA by March 1.

The problem with LightSquared and the FCC continues to have repercussions. The leadership of the House Energy and Commerce Committee has demanded documents from the FCC and other government agencies regarding the FCC's initial approval of the LightSquared network. LightSquared initially received approval for its planned network prior to testing, but operation was made contingent on LightSquared proving that its ground stations--which would operate in a band adjacent to the GPS band--didn't interfere with GPS operations.

The evidence of interference generated strong opposition from the Pentagon, the Department of Commerce, the Coast Guard and the Federal Aviation Aadministration, among others. In addition, thousands of GPS users sent comments to the FCC opposing the operation of the LightSquared LTE network.

While LightSquared remains alive as a company, it is seriously weakened, and it has cost Falcone and his fund billions of dollars, to the point that the fiasco has seriously weakened the hedge fund in addition to Falcone and LightSquared. Falcone said that this turn of events would not cause LightSquared to shut down, but right now, its fortunes appear bleak indeed.

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