Whether minorities, women or small businesses, some designated entities planning to bid in the government’s auction for personal communications services spectrum are concerned what effect the Supreme Court’s ruling on federal affirmative action laws will have on the auction and whether it will be postponed for a second time.
Following the court’s June 12 negative ruling in the Adarand Constructors Inc.’s case, FCC directives have elicited responses from potential bidders that vary as much as they do.
When the FCC announced it would delay the June 15 application deadline for entrepreneurial block PCS bidders, some players declared the game over, while others sustained confidence.
“The investors are gone,” asserted Zoe Hazen, president and chief executive officer of Boston-based Windkeeper Communications Inc. Up until June 12, Hazen was optimistic about investors. Windkeeper has worked to procure investors twice, Hazen said, from the onset of the auction and following the lawsuit involving Telephone Electronics Corp.
Unless designated entities have their financing in place today, the investment community will wait until after the auctions and invest in the winners, Hazen predicted. Without financial backing, the filing fees are too high, she said.
The purpose of creating designated entities was “to allow diversity and economic parity to occur,” Hazen said. Most of the disadvantaged companies are minorities and women, so changing the rules to allow for preferences based on economic status would be the best action the FCC could take at this point, she commented. Hazen said she is convinced the FCC will again postpone the auction.
Jack Robinson, president of National Telecom, a DE planning to bid in the auction, said he also is concerned about investors. “If the financial community believes that the C-block auction will not conclude by the end of this year, I fear that what scarce pre-auction financing that is available for DEs will evaporate entirely, since by then the `time to market’ issue with the MTA winners will be overwhelming,” Robinson stated.
But Robinson still remains optimistic, maintaining DEs and the financial community can withstand one more go around. NatTel is a minority-owned firm based in Stamford, Conn.
“Both the Commission and DEs would be best served by forgetting about the race and gender distinction, and get on with the deal by replacing the race/gender standard with a new small business standard,” said Robinson. He suggested a rewrite of rules to reflect these changes, but one which won’t postpone the auction more than 90 days.
Dan Riker, chairman of Washington, D.C.-based DCR Communications Inc. said the largest issue looming for designated entities is the possibility of a substantial auction delay. This is most damaging in securing investments, he said. Riker’s wife, Janis, is president of DCR.
Riker claimed the best direction the FCC could take now is to proceed as planned, keeping intact the guidelines regarding designated entities and sticking to the Aug. 2 auction date. “We’re not children. We understand the rules; we understand the risks.”
If the FCC does make a change, Riker agreed, “The benefits for women- and minority-owned businesses should be extended to small businesses as well,” as opposed to denying benefits to all.
The Adarand ruling “clears the air,” said John DeFeo, president and chief executive officer of U.S. Airwaves, a small business planning to bid in the entrepreneurial auctions. How affirmative action issues would affect designated entities has been cloudy until now, he added.
DeFeo noted advantages in the postponed application deadline, because it meant greater preparation time. However, moving the Aug. 2 auction date would be problematic, said DeFeo.
