LightSquared Vows to Replace CEO, Find ‘Solutions' to Regulatory Issues

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By Paul Barbagallo  

Amid increasing regulatory uncertainty, LightSquared is now faced with the task of finding a new chief executive officer.

CEO Sanjiv Ahuja announced his resignation Feb. 28, forcing Doug Smith, the company's chief network officer, and Marc Montagner, chief financial officer, to fill in as interim co-chief operating officers while the company searches for Ahuja's replacement. Ahuja will continue to serve as chairman of the board, the company said.

The news comes just two weeks after the Federal Communications Commission moved to reject LightSquared's proposal to offer high-speed wireless internet service on a wholesale basis to as many as 260 million people in the United States on airwaves formerly reserved mainly for satellites. Government testing has found that the company's network signals will interfere with critical navigation equipment, including gear used by aircraft.

In a rare press statement, billionaire hedge fund manager Philip Falcone, CEO and CIO of Harbinger Capital Partners, LightSquared's parent company, vowed to continue his efforts to obtain the regulatory approvals.

“LightSquared's objective, through its wholesale business model, is to provide increased competition and lower prices in the telecommunications industry, and to bring broadband cellular phone service to rural areas that currently don't have such service and that has not and will not change. That has been our vision from day one,” Falcone said Feb. 28. “The absence of affordable and reliable wireless service options is frustrating for consumers, particularly in these challenging economic times.”

“We are, furthermore, committed to working with the appropriate entities to find a solution to the recent regulatory issues,”he added. “We, of course, agree that it is critical to ensure that national security, aviation, and the GPS [global positioning systems] communities are protected. I am confident that working together, we can solve this problem and bring the American consumer the lower priced 4G [fourth-generation] wireless alternative they need and deserve.”

With Ahuja's resignation, Falcone will now join the company's board of directors. The company said the CEO search will be completed in the “near future.”

LightSquared has until March 1 to respond to the FCC's notice proposing to revoke the company's conditional waiver to build a ground-based broadband network.

Tech analysts say LightSquared is likely to appeal whatever decision the FCC reaches on the matter, though the company has not yet publicly revealed its strategy.

Commerce Republicans Seek Documents.

In a separate development Feb. 28, Republican leaders on the House Energy and Commerce Committee sent letters to the FCC, the Commerce Department's National Telecommunications and Information Administration, and the National Executive Committee for Space-Based Positioning, Navigation and Timing, an inter-agency body that advises federal departments and agencies on matters concerning GPS, calling for additional information on the yearlong interference dispute.

“As the committee with jurisdiction over federal communications policy, committee members have been monitoring the progress of the proposed deployment of the broadband network. However, with the recent tentative decision [by the FCC] to limit LightSquared's license to satellite-based service, there remain many unanswered questions, particularly whether the processes used by the FCC, National Telecommunications and Information Administration, and the National Executive Committee for Space-Based Positioning, Navigation and Timing were appropriate,”Committee Republicans said in a statement. “The issues underlying the dispute also have broader implications for spectrum management generally.”

The inquiry is being led by Energy and Commerce Committee Chairman Fred Upton (R-Mich.), Communications and Technology Subcommittee Chairman Greg Walden (R-Ore.), and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-Fla.).

The lawmakers want “all written and electronic communications”from April 2009 to the present between any individual associated with LightSquared, Harbinger Capital Partners, GPS manufacturers, and PNT ExCom “regarding the process used to evaluate the proposed spectrum license transfer, testing, and potential interference.”

Grassley Lauds Move.

The decision to seek the documents was hailed by Sen. Charles Grassley (R-Iowa), the most outspoken critic of the process by which the FCC granted LightSquared a waiver to begin rolling out its broadband network.

Grassley has suggested that the FCC may have given LightSquared preferential treatment once Falcone began contributing to the Democratic Party. He has repeatedly called for similar documents from the FCC, LightSquared, and Harbinger related to the FCC's conditional approval, and has even threatened to place a hold on the confirmation of two FCC commissioner nominees.

“The FCC said it wouldn't give internal documents about LightSquared to any members of Congress except the chairmen of the two committees that oversee the FCC. Now one of those two committee chairmen is asking for internal documents,” Grassley said in a statement Feb. 28. “It will be hard for the agency to ignore this request. The House committee that's seeking information from the FCC is fulfilling its oversight responsibilities. As a federal agency, like all government agencies, the FCC should account for its actions.”

Grassley said he intends to maintain his hold on the FCC commissioner nominees until he receives the documents that the agency submits to the Energy and Commerce Committee.

For the letters from House Energy and Commerce Republicans, visit