LightSquared's CEO resigns as FCC moves to kill 4G network

The CEO of LightSquared resigned on Tuesday as the company battles to save a planned high-speed cellphone network that regulators are moving to kill. 

Sanjiv Ahuja will continue to serve as chairman of LightSquared's board of directors, and the company said it plans to hire a new CEO "in the near future."

Doug Smith, LightSquared's chief network officer, and Marc Montagner, the chief financial officer, will lead the company until a replacement is named. As part of the shake-up, Phil Falcone, who has invested billions of dollars in the company, was appointed to LightSquared's board of directors. 

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The Federal Communications Commission (FCC) moved to block LightSquared's 4G network earlier this month after tests showed it would cause widespread interference with GPS devices, including ones used by airplane pilots. 

The president's top adviser on telecom issues, Lawrence Strickling, determined there was "no practical way" to fix the interference problem. 

Approval of the network is critical for LightSquared's future, and the company has vowed to fight the FCC's decision.

“We are, furthermore, committed to working with the appropriate entities to find a solution to the recent regulatory issues," Falcone said. "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."

If LightSquared cannot convince the FCC to change its position, the next step would be to file a lawsuit in federal court.

Testing showed that LightSquared's signal does not bleed into the GPS band. Instead, the problem is that GPS receivers are too sensitive to filter out LightSquared's powerful cell towers operating on nearby frequencies.

LightSquared agues that it is the GPS industry's responsibility to build receivers that only listen to their own designated frequencies, but GPS companies argue that LightSquared is trying to build a cellphone network relying on frequencies that should only be used by satellites, which transmit much fainter signals.

Some Republicans have questioned whether the FCC and the White House have shown inappropriate favoritism to LightSquared. Sen. Chuck Grassley (R-Iowa) has vowed to block President Obama's two FCC nominees unless the agency released internal records on its review of the company.

The White House and the FCC have denied giving any special treatment to LightSquared, but expanding broadband access has been a top priority for both agencies. 

Last September, Rep. Michele Bachmann (R-Minn.) accused Obama of "crony capitalism" for allegedly giving favor to his political supporters, pointing to Harbinger Capital's Philip Falcone.

Falcone, who has donated thousands of dollars to both Democrats and Republicans in recent years, says he is a registered Republican and denied any attempts to influence the process through political connections.