CEO exit leaves Lightsquared in the dark

De­par­ture fol­lowed reg­u­la­tory set­back

The Washington Times Daily - - Nation - BY SHAUNWATERMAN

The am­bi­tious plans of Re­ston-based tech firm Lightsquared, Inc. to build a $14 bil­lion new na­tion­wide mo­bile data and phone net­work are in limbo af­ter the abrupt res­ig­na­tion this week of the com­pany’s boss on the heels of a ma­jor reg­u­la­tory set­back.

CEO San­jiv Ahuja quit Tues­day, af­ter reg­u­la­tors at the Fed­eral Com­mu­ni­ca­tions Com­mis­sion nixed Lightsquared’s plan, say­ing it would in­ter­fere with GPS — the ubiq­ui­tous satel­lite-based nav­i­ga­tion sys­tem upon which the U.S. mil­i­tary, com­mer­cial avi­a­tion and mil­lions of driv­ers on un­fa­mil­iar roads all rely.

“If the decision stands, it’s the end of Lightsquared,” said An­drew Sey­bold, a wire­less com­mu­ni­ca­tions tech­ni­cal con­sul­tant who has been a long-stand­ing critic of the com­pany’s pro­posal.

Lightsquared’s cred­i­tors, who have lent the com­pany $1.6 bil­lion, “have a lot of lever­age to force the com­pany into bank­ruptcy” now that it can­not move ahead with the pro­posed net­work, said telecom­mu­ni­ca­tions busi­ness con­sul­tant Tim Far­rar.

The FCC decision was the lat­est and seem­ingly final blow to the com­pany’s plan to com­bine a new gen­er­a­tion mo­bile phone sys­tem us­ing ground-based ra­dio tow­ers with a satel­lite net­work, pro­vid­ing the first high-speed broad­band data ser­vice that cov­ers the en­tire coun­try and di­rectly chal­leng­ing es­tab­lished car­ri­ers such as AT&T and Ver­i­zon Wire­less.

The plan sparked a mas­sive lob­by­ing bat­tle, with crit­ics con­tend­ing the FCC’S con­di­tional ap­proval in Jan­uary 2011 for Lightsquared’s pro­posal ig­nored con­cerns from gov­ern­ment sci­en­tists about pos­si­ble in­ter­fer­ence with GPS. The FCC on Feb. 14 an­nounced it would with­draw its ap­proval, ef­fec­tively pulling the rug from un­der Lightsquared.

In­dus­try an­a­lysts say the FCC decision leaves the com­pany own­ing what is, at least for the time be­ing, a use­less as­set: the rights to spec­trum space meant to sup­port its net­work.

If the FCC decision stands, the rul­ing will mean that not only can Lightsquared not use that spec­trum, but no one else can use it ei­ther, ex­cept for a much more limited satel­lite-only ser­vice, ac­cord­ing to Mr. Sey­bold.

“No­body’s mak­ing any money in the satel­lite phone busi­ness these days, so the value of the spec­trum they own has fallen to al­most noth­ing,” he said.

The news web­site eweek re­ported that Sprint last year signed a 15-year agree­ment with Lightsquared that in­cluded giv­ing Sprint the op­tion to ac­quire up to 50 per­cent of Lightsquared’s ex­pected L-band 4G ca­pac­ity. That deal is also in limbo af­ter the FCC decision.

Mr. Ahuja’s de­par­ture as CEO — he will re­main Lightsquared’s chair­man — ends his 13-month strug­gle to per­suade reg­u­la­tors that Lightsquared could ad­dress the in­ter­fer­ence prob­lem. In Septem­ber, he called the strug­gle to get reg­u­la­tory clear­ance for his com­pany “one of the most politi­cized [reg­u­la­tory] pro­cesses” he had ever ex­pe­ri­enced, say­ing es­tab­lished net­works were threat­ened by his com­pany’s busi­ness model.

He said at the time that Lightsquared would upend “an in­dus­try in which the United States has be­come a lag­gard, not a leader.” The United States ranks 17th in the world in terms of high-speed wire­less pen­e­tra­tion, “com­pa­ra­ble to Malta or Bahrain,” he said.

He said the ma­jor fault for the con­cern about Lightsquared’s sig­nal was with the GPS in­dus­try, which built de­vices sub­ject to in­ter­fer­ence from neigh­bor­ing parts of the spec­trum.

Doug Smith, chief net­work of­fi­cer, and Marc Mon­tag­ner, chief fi­nan­cial of­fi­cer, will run the com­pany while the search con­tin­ues.


San­jiv Ahuja

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