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LightSquared CEO Quits, Falcone Joins Board

Tue, 02/28/2012 - 10:21am
Maisie Ramsay

LightSquared CEO Sanjiv Ahuja resigned today after failing to get government clearance for the company's planned wireless network. 

The ouster comes two weeks after the FCC said it would block LightSquared from using satellite spectrum to run a wholesale LTE network because it was unable to fix problems with GPS interference. 

Philip Falcone, who has staked his Harbinger Capital Partners hedge fund on LightSquared, has taken a seat on the company's board as part of the executive shakeup. Harbinger could lose billions if its bet on LightSquared falls through.  

LightSquared had planned to sell wireless connectivity at low rates to third-party providers and signed up dozens of customers for its still-unlaunched service, including Leap Wireless International and Best Buy. The FCC’s decision leaves LightSquared with few ways to move forward, and will likely mean the end of the company’s plans. 

Falcone pledged to advance LightSquared’s wireless plans against seemingly insurmountable government opposition. 

LightSquared is "committed to working with the appropriate entities to find a solution to the recent regulatory issues," Falcone said in a statement, but did not lay out a specific plan to move forward. 

Network chief Doug Smith and CFO Marc Montagner will serve as interim co-chief operating officers while the company looks for a new CEO. Ahuja  will keep his post as chairman of the board.

LightSquared reportedly plans to lay off 45 percent of the 330 people it currently employs to preserve its dwindling cash reserves. Falcone said the company is "taking an aggressive approach to its finances to ensure that it has adequate financial runway while it works through these issues."

Government tests found last year that LightSquared's network interfered with a large swath of GPS receivers, which run on spectrum located next to the bands used for LightSquared's wireless network.  

Test results showed that LightSquared's signal doesn't bleed into neighboring bands. Instead, the problem stemmed from GPS receivers which pick up on signals from neighboring bands to fine-tune coordinates and were drowned out by the strength of LightSquared's transmissions. High-precision devices used by the military and aviation industries were found to be particularly susceptible. 

LightSquared has attempted to place blame on the GPS industry, arguing manufacturers should be held liable for flawed designs that eavesdrop on its spectrum.  

But the NTIA sided with the GPS industry and reported earlier this month there was "no practical way" to mitigate LightSquared’s impact on GPS.  

The conclusion prompted the FCC announce it would vacate LightSquared’s original waiver and suspend its ability to use satellite spectrum for land-based wireless services, effectively killing LightSquared’s mobile broadband ambitions. The FCC is currently collecting comments on its decision and has not yet taken action. 

The FCC granted LightSquared a conditional waiver for its wholesale LTE network in January 2011. The waiver stipulated that LightSquared address any issues with GPS before launching its service.  

Early on, LightSquared shrugged off the challenge of addressing the interference problem. It inked multi-billion deals with vendors including Nokia Siemens Networks, Qualcomm and Nokia, and signed up more than 30 customers for its network before the FCC handed down its decision.   

The company is rumored to be considering legal action against the government, but has not yet filed suit. 

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