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February 28, 2012

LightSquared CEO Calls it Quits

By Peter Bernstein, Senior Editor

With the announcement today that LightSquared CEO Sanjiv Ahuja (News - Alert) has decided to call it a day, the drumbeat of bad news this month continues for those seeking to establish an alternative 4G LTE nationwide wireless broadband network in the U.S. to serve as a wholesaler for companies wishing to compete against entrenched carriers AT&T, Verizon (News - Alert), and to a lesser extent, Sprint and T-Mobile.

For those who have not been following this closely, Ahuja’s resignation comes as LigthSquared suffered a major setback mid-month when The Federal Communications Commission (FCC) and the National Telecommunications and Information Administration (NTIA) stuck to their guns in saying that despite company protestations, LightSquared's (News - Alert) network would interfere with GPS and other devices. And, for good measure, investors joined the fray by suing troubled billionaire Philip Falcone's Harbinger Capital Partners for allegedly squandering billions based on its aggressive investment in LightSquared. It also comes just days after Google (News - Alert) decided it would abandon ship on its stake in another potential competitor Clearwire and sold its holdings in the company for a substantial loss.

Chief Network Officer Doug Smith and Chief Financial Officer Marc Montagner have been named as interim co-chief operating officers while the company searches for Ahuja’s replacement. 

In the press release announcing Ahuja’s resignation, Falcone, who today also became part of the LightSqaured board of directors, put the expected positive spin on it all, “As the company takes the next step forward, we continue to be excited about the prospects and look forward to working with new leadership to accomplish our goal of building and operating an innovative, competitive wireless network.”

He is further quoted as saying: “We are, furthermore, committed to working with the appropriate entities to find a solution to the recent regulatory issues. We, of course, agree that it is critical to ensure that national security, aviation and the GPS communities are protected. I am confident that working together, we can solve this problem and bring the American consumer the lower priced 4G wireless alternative they need and deserve.”  

Unfortunately the statement in its entirely points to three interesting LightSquared challenges:

  1. With the investor suit and Google having pulled the plug on Clearwire (News - Alert), Falcone, again despite protestations to the contrary, may not have the financing to continue on.
  2. LightSquared may be interested in working through the regulatory issues but the regulators may not have the appetite, especially given powerful commercial and military interests who believe the interference problems are real resolution seems remote if not impossible.
  3. Finding a replacement for an industry vet of such high regard as Ahuja may be a struggle.

I have said in this space repeatedly that the demise of potential next generation nationwide wireless competitors is not a good thing. Unfortunately, with the two most promising on the ropes and possibly on the way out, how the competitive void this could create will be filled remains a mystery.

Edited by Tammy Wolf
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