LightSquared CEO resigns after FCC failure; Update: House panel to open probe? Update: Grassley statement added

With the end near in the LightSquared saga, it comes as no surprise that the leadership of the company that failed to get the FCC to allow LSQ to interfere with GPS systems has decided to pursue other opportunities.  LightSquared CEO Sanjiv Ahuja departs as questions remain about how LSQ connections at the White House impacted the decision-making process at the FCC:

LightSquared CEO Sanjiv Ahuja abruptly announced his resignation Tuesday amid revelations LightSquared’s political proximity — and his own closeness — to the White House and Obama administration officials.

The Daily Caller first reported one week ago on emails and documents that indicate the Federal Communications Commission propped up LightSquared with favorable regulatory decisions as company executives met with administration officials at the White House and in other places. Obama’s FCC also appears to have used its regulatory muscle to eliminate LightSquared’s competitor, GlobalStar.

TheDC also uncovered a pattern of political contributions to Democrats that appear engineered to create a favorable political climate for LightSquared. Ahuja, who had never donated to Democrats before and has not since, gave the maximum allowable $30,400 contribution to the Democratic National Committee on the same day his lawyers were trying to arrange a meeting for him at the White House with top Obama technology adviser Aneesh Chopra and other officials.

In emails between Ahuja’s lawyers and White House officials Ahuja wanted to meet with, his lawyers pointed out that he would attend an Obama fundraiser on or about the same day he wanted the meeting.

I’d assume that the resignation proceeds from the failure to deliver on the FCC waiver than any worries about suspicions of crony capitalism.  Philip Falcone, whose hedge fund owns LightSquared and who is also a donor to Obama, has taken an even closer role with LSQ than before — and still intends to get the FCC to grant the waiver:

The move could signal an even greater role for LightSquared’s controversial backer, Philip Falcone. As LightSquared’s top financier, Falcone has long been the public face of the controversy and will now take a seat on the board of directors.

Falcone’s Harbinger Capital Partners hedge fund has put about $3 billion into the LightSquared venture and on Tuesday Falcone vowed to take an “aggressive approach” to ensure the company has enough money to operate. Last week LightSquared said it is cutting 45 percent of its 330-person workforce. …

Falcone said he is still working to overcome the GPS interference issues and launch a network.

“We of course agree that it is critical to ensure that national security, aviation and the GPS communities are protected,” Falcone said in a statement. “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.”

Be sure to check out the links below to see how Falcone proposed to get that “lower priced 4G wireless alternative,” but it’s probably academic at this point anyway.  Testing of the LSQ system showed beyond a doubt that it created significant interference with a wide range of GPS services, including in aviation and defense applications.  The FCC has now terminated LSQ’s permission to use its terrestrial towers for developing the network.  Ahuja got out ahead of the collapse.

Update: Or perhaps Ahuja got out ahead of the investigation.  A press release from the House Energy and Commerce Committee announced that the panel would seek documents relating to the failed LSQ venture and FCC actions taken over the last year:

Leaders of the House Energy and Commerce Committee today requested additional information regarding the interference dispute between LightSquared and GPS and the actions taken by federal agencies, including the Federal Communications Commission, in approving LightSquared’s terrestrial network without better addressing potentially serious interference concerns. 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 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 interagency National Executive Committee for Space-Based Positioning, Navigation and Timing were appropriate. The issues underlying the dispute also have broader implications for spectrum management generally.

As noted in the links below, Sen. Charles Grassley demanded answers on these same points, but got stonewalled by FCC chair Julius Genachowski because Grassley wasn’t a committee chair with jurisdiction over the FCC.  Rep. Fred Upton chairs House Energy and Commerce, which has direct jurisdiction over the FCC.  This could get very, very interesting.

Update II: Grassley’s office sends his statement on the House Energy and Commerce letter:

“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.  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.  The House request is good news for accountability and transparency. Since the FCC has refused my document request since last April, and it’s too early to tell whether the FCC will comply with the House request, I’m maintaining my hold on the two FCC nominees until I receive access to the documents I requested, whether that’s from the FCC, the House Energy and Commerce Committee, or the Senate Commerce Committee.”

Stay tuned.

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