WASHINGTON-The Clinton administration last week sent Congress trade legislation that includes a new plan for three companies awarded pioneer’s preferences to pay for personal communications services licenses.
Under a compromise reached by lawmakers, the White House and the three firms, the U.S. treasury would be guaranteed at least $400 million overall from American Personal Communications, Cox Enterprises Inc. and Omnipoint Corp.
The three firms, which received pioneer awards last December from the Federal Communications Commission, would have to pay 85 percent of the average auction price paid for broadband PCS licenses in most of the top 20 U.S. markets.
Many observers, though, believe the federal government will net at least twice the $400 million minimum eyed by the Office of Management and Budget.
Winners could pay in a lump sum or in installment payments, the latter alternative an apparent concession to Omnipoint, a small entrepreneurial firm based in Colorado Springs, Colo.
The auction prices paid for comparable PCS licenses in New York, Washington, D.C., and San Diego markets where pioneer winners plan to build huge wireless systems, would be excluded from the averaging because the single remaining 30 megahertz major trading area licenses in those markets should sell for higher than normal and, thus, skew the average.
The legislation would preclude the FCC from reconsidering the three broadband PCS pioneer’s preference awards, and shield the grants from judicial review.
The new pricing scheme is less harsh than that previously crafted by lawmakers and the FCC, and will be rolled into legislation implementing the new General Agreement on Tariffs and Trade that the White House forwarded to Capitol Hill Sept. 27.
Congress, which plans to adjourn this month for mid-term elections, cannot amend the GATT package and must vote it up or down.
Other provisions outline how the FCC should restructure pioneer’s preference rules, but require the program to end in four years.
The FCC and several key members of Congress wanted PCS pioneers to pay roughly 90 percent of each license’s auction value, while Vice President Al Gore opted for a plan requiring wireless pioneers to pay 80 percent of each permit’s value in the future.
Congress and the administration, according to sources, worried that if an earlier FCC decision requiring pioneer’s preference payments were overturned in court, the government might not get a cent from the three companies. Therefore, they decided to fashion compromise legislation to remove any doubt.
An FCC lawyer disagreed, saying the agency’s broadband PCS pioneer’s preference payment ruling is legally defensible.
APC and Mobile Telecommunication Technologies Corp., a narrowband PCS winner which is not affected by the GATT measure, have appealed FCC decisions forcing them to pay for their licenses.
“We’re going to take from the treasury a billion dollars,” said Robert Stewart, a spokesman for Pacific Telesis Group. Stewart, whose company, along with Bell Atlantic Corp., has been the loudest critic of the three pioneer preference winners.
Pioneer preference firms assert PacTel’s motives are driven by the Baby Bell’s desire to operate a wireless system in Southern California.
Cox plans to build its system in the San Diego area, while APC will build in Washington, D.C./Baltimore and Omnipoint in the New York/New Jersey area.
“PacBell and Bell Atlantic, beneficiaries of huge government-granted monopolies and billions and billions of dollars of free cellular and paging spectrum, have thrown their political weight against the GATT compromise, heedless of fair play and the truth,” said Wayne Schelle, chairman of APC. Pacific Bell is the landline telephone subsidiary of PacTel.
“We are not afraid to compete with you despite all of the disadvantages stacked against us,” commented Schelle. “Why are you so afraid to compete with us?”
