Hosting this week’s PCS ’96 conference and expo in San Francisco is Jay Kitchen, president of the Personal Communications Industry Association; as many as 15,000 people are expected to attend this year’s event. Kitchen, who also served at the helm of the National Association of Business and Educational Radio prior to its merger with PCIA some two years ago, has been busy guiding his paging, private radio and personal communications services constituency through some interesting times, including the Federal Communications Commission’s most recent decisions regarding competition, interconnection and microwave relocation.
Kitchen took some time just before the convention to talk about PCIA’s accomplishments during the last year and plans for the future with Washington reporter Debra Wayne in PCIA’s new Alexandria, Va., offices overlooking the Potomac River.
RCR: What is the main focus of the show this year?
Kitchen: What we certainly want to kick it off with is to get everyone thinking about the future. There is the telecom bill, the interconnect item, so many things working their way through the Hill, and it’s time to sit down and ask if the future is different now than it was six months ago.
We’ve seen the tremendous impact of auctions and what they’ve done to the value of spectrum. I don’t think anyone had the remotest idea of what would happen in the A- and B-block auctions, and for the C-block to come along and you could pay more per pop than you did for A and B really talks about the value of the spectrum.
I think it’s very exciting seeing Sprint Spectrum come on the air and, subsequently, Western Wireless. BellSouth is on in Charlotte and a number of communities down in that direction, so it’s been real exciting watching all of that happening.
So you take all of that and say, “Okay, we’ve moved a long way in the last year or two. Now what’s out there in the future, and where do we go from here?” So the first day, we’re going to focus on the vision of where we’re going, and we’re excited about the panelists. We’ll talk about digital and what that’s doing for the industry and what that means for the analog operators out there as far as capacity. We’re excited about paging; perhaps we’re going to finally get to the point where we’ll start calling it messaging instead of paging. It just aggravates the hell out of me when people refer to it as the beeper industry.
We also are looking at more than 200 product announcements and demonstrations. Every single press conference spot is gone. We sold the show out, exhibit space-wise, months ago; we have in excess of 60 companies on the waiting list.
We’re excited that Federal Communications Commissioners James Quello, Susan Ness and Rachelle Chong have agreed to participate; many of the staff will be participating on panels and roundtables. Chairman Reed Hundt will speak via videotape.
RCR: What are new developments at PCIA this year that you’re really going to tout? Frequency coordination? The clearinghouse?
Kitchen: Certainly the clearinghouse, which is up and running. We’re very pleased about this. It’s the culmination of all the effort we spent on microwave relocation. That whole process took two years, and the final rulemaking should be out soon regarding relocation.
What we are so excited about is that most of the major A- and B-block winners signed on with the clearinghouse as upfront funders because they believe in what it’s going to do and they see the advantages. We’ve had them and their staffs work to develop all of the concepts. The PCIA staff did not dream all of this up; it came from the industry, down to coming up with the budget for running this thing. It is going to be governed by industry itself.
RCR: Was there anything left undone this year that should have been?
Kitchen: Probably the first thing that pops into my mind when you say “undone” is refarming. It was at least two or three years before the formation of the Wireless Telecommunications Bureau last year that Ralph Haller (former Private Radio Bureau chief) promised that it would be done every quarter. It’s four years old, and it hasn’t made it yet. Every once in a while it rears its ugly head.
RCR: With the emergence of PCS, how has PCIA’s membership grown during the last year?
Kitchen: In numbers, it hasn’t, with all the consolidations and mergers that have taken place in the industry.
Has it grown in stature? Yes. The biggest area we’ve concentrated on for growth during this past year was the broadband PCS segment, and to have nine of the major players signed on, we’re very pleased.
Paging certainly has held its own; mergers there have been the talk of the year, so that automatically increases [our number of paging units] and we end up with strong companies. The paging industry has maintained its 30 percent annual growth.
There is no way that you can be a part of this industry and not be excited. You’d have to be comatose.
RCR: Is there any perceived or real competition between PCIA and the Cellular Telecommunications Industry Association for membership?
Kitchen: I don’t want to characterize it as competition, but I will say that there is an overlap of membership. We certainly think we do a number of things for our members that they find very pleasing, and that’s why they’re willing to pay us the big bucks.
RCR: What is PCIA’s relationship now with Congress? Improved? The same?
Kitchen: It’s very good. It hasn’t changed. It’s as good as it’s ever been. We think that Congress has been very supportive of our industry. Our relationships are even stronger after going through the whole telecom bill process.
The only disappointment that I can think of in years is that we would have liked to have stronger language included in the budget reconciliation bill over microwave relocation and the negotiation period. We were happy to get tower siting in the telecom bill; that was a real plus for us.
It probably is unlikely that we will see any other telecom legislation during this session; Congress has moved on to other things.
RCR: How do you anticipate things changing if there is a switch in administration after the election or even if it doesn’t? What will Congress do under a Dole administration?
Kitchen: Telecom issues have been fairly bi-partisan. It’s not like you have a strong pro-auction or anti-auction party, or a pro-competition or anti-competition party. Certainly, any time there is a change, you lose contacts that you have to go and rebuild. But a lot of times you lose those even if the party doesn’t change. People generally don’t stay in those jobs for a long time. Our one person who has been steady as a rock up there for years has been (professional staffer) David Leach, and sometimes we hear he wants to make a change. He really has been the kingpin up there.
RCR: With this being an election year, has PCIA’s political action committee been active?
Kitchen: It has not been an area that we have concentrated a lot of time on because the political environment has changed, and there are a lot of candidates who will not accept PAC money. You also have changes in the characteristics of the industry itself. As member companies have gotten larger and larger, they have PACs of their own. Many of them also do organized fundraisers for those who don’t take PAC contributions. But we have made PAC contributions during the past year.
RCR: Since February 8, what has gone through the minds of the membership regarding the signing of the Telecommunications Act of 1996? Are they confused, concerned, waiting to see what will happen?
Kitchen: All of the above. I think the biggest thing to come out of the telecom bill is interconnection, and we are excited over the progress we have made on that front-from the broadband PCS side, the possibilities of competitive local exchange carriers; from paging’s point of view, now when you ask folks who was the big winner in the interconnection proceeding, they will say
paging.
The paging folks are going from a situation where even though they’ve had the provisions to pay for termination of calls on their networks, they never were able to negotiate those agreements with the LECs. Now, with the interconnect proceeding, they’ve got the force of the FCC and ultimately the states if necessary to go in and say, “You’ve got to sign these agreements.”
Now, instead of the paging company having to pay a LEC to terminate a call, the LEC will have to pay the paging company. This isn’t going from neutral to positive; it’s going from negative to positive as far as termination charges go.
The other big change is that paging companies in the past have had to pay for their numbers, and it was a very discriminatory process because they were charged a lot more than anybody else. Under the new act, LECs can’t charge a paging company any more for numbers than it charges anybody else, including itself. So that is a big plus for the industry, and right now we’re trying to get a handle on what that savings will be. We are anticipating tens of millions or hundreds of millions of dollars.
A recent study of the paging industry pointed out that if the interconnect rules had not been changed, the wireless industry would have paid the wireline industry $34 billion over the next 10 years.
RCR: Will the pending petitions for stay of the interconnection rules filed at the FCC and their accompanying appeals in court have any impact on what the industry is doing about interconnection now?
Kitchen: First, we have to see if the petitions for stay get granted or not. I don’t know if anyone had met the requirements for stay. It would be astonishing if they did. What it does say is some lawyers made a lot of money filing stays they know will not be granted, but it is the first step to getting the case into court. This proves the point of my $34 billion-there is a lot of money at stake.
Without a stay, 30 days after the public notice, the rule goes into effect and we will start taking advantage of it. We will be happy to pay the low rates and collect the low rates for as long as we can.
It is as if the status quo has shifted to the wireless industry. For the first time in its history, the wireless industry is in a good operating mode while all the fighting and arguing is going on.
RCR: How have things been between PCIA and the FCC? Are there certain things, besides refarming, that you’d like to see them expedite?
Kitchen: We’ve always had a terrific relationship with the commission. The door is always open. But, again, change is something we have had to learn to live with. We’ve gone from Ralph Haller to Regina Keeney to Michele Farquhar in a very short period of time. You have to keep going back.
The most important thing to say about the commission is “Hats off to them.” They have met all their telecom bill deadlines, and they are in a position to meet more during the next six months.
They have done an absolutely incredible job; to put out a 750-page interconnect order and to have it be as good as it is, I think is just remarkable.
RCR: What have PCIA members been saying lately about past, current and future auctions?
Kitchen: As far as the auctions go, during the first one there was a big hoopla and I remember going down there for the big ceremony. Then there was the first check presentation. But now they’re pretty passe. They come and go now, and the commission can run multiple auctions at the same time. They will start the paging auction before the end of the year and some private-radio auctions. Auctions have become routine.
Everyone is a little shocked at some of the prices people are paying. but by and large, the response from our members is “this is not a bad way of getting on the air in a hurry.” Sure, paging and private radio carriers are a bit nervous about upcoming auctions, but they are nervous just like anyone who has never participated in an auction before. Anytime people go through radical change, it takes a while to come around.
