WASHINGTON-“Auctions have revolutionized the way governments will distribute valuable resources and assets,” said Jerry Vaughan, deputy chief of the Federal Communications Commission’s Wireless Telecommunications Bureau. “This will transfer to the states and then will go international.”
“Sometimes auctions create an artificial scarcity,” countered Washington, D.C.-based attorney Judith St. Ledger-Roty of Reed, Smith, Shaw and McClay, whose most recent accomplishment was helping Paging Network Inc. bid successfully for 900 MHz specialized mobile radio licenses. “We’re not in the business of auctions purely to create revenue.”
The future of spectrum auctions led the list of topics thrown out by Personal Communications Industry Association President Jay Kitchen during a no-holds-barred roundtable during last week’s Spring Government Conference here. Tied in directly were questions relating to what will happen to small businesses that built the industry but that may disappear due to lack of funding, the impact of the Telecommunications Act of 1996 on the way the industry will conduct itself and ongoing FCC regulation.
Moderator Kitchen pointed out that while FCC Chairman Reed Hundt has said auctions are a form of spectrum management and not of generating revenue for the U.S. Treasury, “he will spend the next few sentences talking about how much money was raised for the Treasury*…*how much money was raised per FCC employee and that the C-block auction was bigger than the Onassis auction. What he needs is a new PR firm.”
There are those who think the FCC failed to carry out its auction mandate to help small businesses enter the field, as witnessed by the large number of C-block dropouts who bailed when prices got too high. “It depends on how you define `small,”‘ said Rudy Baca, legal advisor to FCC Commissioner James Quello. “Auctions don’t mean that everyone has the right to lose money in PCS. We can’t protect people from bidding more than they should. We plan to define `small’ service by service.”
Agreeing with Baca was Kathleen Abernathy, vice president/regulatory for AirTouch Inc., who said the inherent small-business quandary can be set at the feet of Congress and not with the FCC. “Congress wanted the money but they also wanted to support small business,” she said. “In any auction, you’re going to sell to the highest bidder. It’s also not the FCC’s fault that the courts eventually said `no set-asides.”‘
On a different note, PCIA constituents expressed concern that the commission will not be able to handle pending wireless issues in light of the stringent Telecom Act regulatory schedule set by Congress. Will the FCC have the resources to satisfy burgeoning industry needs, Kitchen asked?
“Of course not,” Baca shot back. “But we will get it done. But it won’t be right, and you will take us to court. That’s why the bill has been renamed the `Telecommunications Lawyers Full-Employment Act.”‘ He continued, “Because of the rush, there is no opportunity to compare how a certain rulemaking affects other things. There is no time to compare what one bureau is doing with another. We will have to depend on the industry to tell us.”
Kitchen pointed to recent incidents of state and local jurisdictional foot-dragging when considering such zoning requests as antenna and tower siting. Vaughan believes many of the problems could be solved by licensees themselves.
“This industry is the worst when it comes to dealing with people,” he said. “We do a lousy job in dealing with zoning people. We’re not talking about a few small antennas here and there. Few of our [large] antennas have been [designed to be] cloaked.”
Abernathy disagreed that zoning boards are less to blame. “[In California], we’ve been in meeting after meeting. We’ve given them designs and technical standards, and it doesn’t matter. They are not reasonable people. That’s not to say we can’t get better. We just can’t get nicer.”
Then Kitchen touched on the most immediate concern-microwave relocation and the problems some new PCS licensees are having with moving incumbents. “We’re seeing blackmail through cash payments,” he told the panel, “and the FCC is surprised.”
“This is the voluntary period. If someone is outrageous during this time, it will come back to them during mandatory meetings,” Vaughan answered.
Baca added that Capitol Hill is partly to blame. “Congress did a 180 on the length of time it set for relocation [at first, up to 15 years] once they saw the [auction] money come in. Now they want the FCC to fix it,” he said. “Eighty percent of negotiations are good. The remaining 20 percent occur in areas of aggressive buildout.”
In some cases, according to Baca, new licensees have demanded that incumbents move their links quickly, sometimes in a matter of weeks or months. In turn, incumbents demand a certain premium for doing so. “Tell us who is being outrageous?” he said.
