RCR missed boat on NextWave story
Dear Editor:
RCR is a respected wireless trade publication known for its journalistic standards. It inexplicably departed from those standards in its Jan. 13 edition, which contains analysis and commentary on the Federal Communications Commission’s recent decision to conditionally grant NextWave Telecom Inc.’s C-block personal communications services license applications.
The articles suggest (1) that the FCC has found NextWave to be in violation of foreign ownership limitations by as much as 10 to 15 percent; (2) that, despite such violations, NextWave received preferential treatment from the FCC in the licensing process; and (3) that such treatment is attributable to NextWave’s attempts to have FCC Chairman Reed Hundt dictate to the Wireless Telecommunications Bureau a result on the merits of NextWave’s applications. These allegations are unsupported, at odds with easily obtainable public records, and too serious to pass without response.
NextWave has had to respond to an extraordinarily broad array of wild charges, brandished both at the FCC and in print, with regard to its qualifications to hold C-block licenses. In the end, after unprecedented disclosure on our part and scrutiny by the FCC, the sole concern raised by Bureau staff involved the application of the Rupert Murdoch-Fox Television Stations Inc. precedent to determine whether two NextWave financial instruments are appropriately classified as debt or equity for purposes of Section 310(b) analysis. It is hardly surprising that substantial uncertainty exists in this area, given the newness of the Fox standards and the increasingly complex arrangements that characterize modern finance. NextWave treated the instruments in question as debt after working carefully with outside counsel to structure them in compliance with commission precedent. Our view on this issue is at least partially shared by the very parties who opposed our applications, who at one point filed a pleading that cited one of the two instruments as the model of a lawful debt agreement.
For present purposes, the important points about the licensing process are straightforward. The Bureau has stated publicly that NextWave acted in good faith, and that reform of our financial structure over the next six months eliminates any potential for concern in this area. The Bureau also has accepted NextWave’s proposed reform plan, which we filed on Dec. 30, 1996. That plan is based on calculations showing that NextWave is no more than 3 percent above permissible foreign ownership levels, once the Hughes’ debt instrument converts to equity.
We emphasize here our willingness to comply with the conditions of our licenses, but we do believe that it is important to underline the context in which those conditions were imposed.
RCR’s allegation that NextWave somehow received preferential treatment in the licensing process is difficult to comprehend. We were one of the few C-block applicants that were not granted licenses last September. We experienced regulatory uncertainty and delay, as well as the negative business and financial impacts they incur.
We were asked to submit thousands of pages of commercially sensitive information to the commission, and to respond to many pages of questions about our financial structure and business operations. We put in very long hours to respond fully, accurately, immediately and publicly to every Bureau request. We supplied business documents that no PCS applicant ever has been requested to share.
We made such documents available to the entire world, including our competitors, because time constraints relating to our survival as a company did not allow us the procedural luxury of undergoing protracted confidentiality proceedings. RCR may consider that “preferential” treatment. I assure you, NextWave does not share that view.
The implication in your articles that NextWave lobbied Chairman Hundt to intervene on the merits in our behalf is flat out wrong. Our Dec. 10, 1996, public letter to the chairman addressed the procedural issue of needing a rapid decision to ensure the company would have sufficient resources to make its second down payment in the event of a license grant. That emphasis on timing was most appropriate.
All financing agreements have a definitive shelf life, and Wall Street was not going to wait indefinitely while NextWave was tied up in FCC litigation. Your suggestion that the Dec. 10 letter caused the chairman to overrule Bureau Chief Michele Farquhar in the decision making process is, quite frankly, an insult to both of them, and to Bureau staff members who devoted long hours to addressing NextWave’s applications. In the heat of the moment, we often thought the “preferential” scrutiny we were receiving was unduly harsh, and we said so publicly. But we never questioned the integrity of the process, or the professionalism of the people involved.
Finally, I am somewhat bemused by the negative commentary directed at NextWave over the past year, first with our choice of technology and business strategy, then with prices we bid at auction, and most recently with “favoritism” shown us in the licensing process. The facts tell a different story.
Our Code Division Multiple Access technology choice and resale strategy have been lauded recently by everyone from RCR to George Gilder. The most relevant observations about the auction are that we assembled a team of individuals willing to take an entrepreneurial leap of faith in the best American tradition; that we bid what the market dictated; and that we have paid every cent of our obligations on time or earlier-a total of more than $470 million thus far.
The FCC’s decision to grant our licenses clears the way for us to focus all our energy and resources on the real story here-which is about a new company’s very successful efforts to grow the wireless market, deploy innovative American technology, increase local exchange competition and expand consumer choice.
Janice Obuchowski
Vice Chairman
NextWave Telecom Inc.
Wireless access is paradox to deaf
Dear Editor:
I had to respond to the excellent editorial by Linda Kay Sakelaris on the marketing arena of Global System for Mobile communications-Code Division Multiple Access. It truly is amazing to me the amount of what I call “DoubleSpeak” going on in this industry.
I did notice two points that I felt compelled to respond on. The first is, I am sure your reporter did notice that NO ONE is advertising or promoting their products or services as “Accessible and Usable by people with disabilities.” Even though this is direct language from Section 255 of the Telecommunications Act of 1996.
It should also be stated that this section and its remedies are in effect NOW, as they have been since the bill was signed into law.
This bothers me for two reasons.
One, as an American who is deaf, I rely heavily on wireless telecommunications and multimedia communications that are accessible. Not just me, but more than 60 million other Americans with disabilities, who by law have the rights of access. And, the money to spend on access, which is why the assisting devices industry is more than a $600 billion a year industry.
Two, as a solution access company in the telecommunications and communications realm. My partner and I have worked very hard to promote the real accessibility of the wireless industry to both the Federal Communications Commission and to the general population.
Thus, to paraphrase the original comment of “Read my lips,” that was used in regards to the taxes, perhaps this is also appropriate … “Do you know how hard it is to read lips of people who talk out of both sides of their mouths?!”
I believe this is applicable and apropos for all people on many of the issues facing the wireless industry today.
Keep up the good work.
Jo Waldron
President and CEO
Phoenix Management Inc.
Passport shouldn’t matter to industry
Dear Editor:
Jeffrey Silva’s column “D.C. Notes” in the Jan. 13 issue of RCR hailed the arrival of Code Division Multiple Access as one of the most important industry developments of this past several months. At the same time, he seems to heave a sigh of relief, somehow oddly comforted that the U.S. cavalry has arrived!
Indeed, CDMA takes its rightful place as a credible technology for wireless communications. What’s disturbing is this figurative embrace of this air interface (remember, that’s all we are talking about, nothing more) as though it were a countryman!
Silva rightly lauds the perseverance of Irwin Jacobs, a man whom all agree is a pioneer and an innovator. We can delight in his success, but that pleasure should not be confused by feelings springing from a sense of national vindication. Jacobs deserves our praise for his creativity, not for the color of his passport!
As technologists, all of us in this industry with a long-term view are rooting for the best technology, not someone’s idea of the best country or people. When a technology matures and demonstrates “the goods” as CDMA may now do, all of us will cheer, whether we are Finnish, Swedish, Korean or American!
As marketers, we had better recognize that “the goods” are quality products and features at affordable prices. In that international spirit, Nokia has already announced plans to build CDMA wireless phones for the global market. RF technologies and misleading standards arguments based on nationalistic biases are not enough to bring long-term success.
As global citizens, about to enter a new millennium, we recognize that one of the wonderful things about science is that it is international.
Think about it; today’s machines, thanks to scientists who invented digital communications in this industry, all talk to each other in the same lingua franca, a digital stream of zeros and ones. Not all of us are able to say the same … but we could try.
Teh company I work for, Nokia, is based in Findland with two factories in Texas. As an American manufacturer, Nokia exports Global System for Mobile communications digital technology, along with handsets using a variety of digital and analog standards, from our Texas factories to customers around the world. Not incidentally, this goes into the plus column for the U.S. balance of trade. At the same time, when CDMA phones and infrastructure soon to be exported from Korea arrive on U.S. shores, they will likewise register as a minus to “our” trade deficit.
Go back and look up the law of comparative advantage. What David Ricardo and others taught is that, in a global marketplace, trade and competition bring out the best in all of us. Over the long term, it isn’t a question of pluses and minuses, or even of “us vs. them.” Ideally, for ourselves and for our trading partners, as well as for the individual companies operating in locations across the globe, the result will be a balance of trade.
With free and fair trade ensured by open markets, as John Kennedy said in support of the Trade Expansion Act of 1962, the “rising tide lifts all boats.” In the search for ever-improving levels of service for our customers, and for the end-user, Nokia will continue its embrace of world-leading technologies, even those “not invented here.”
Philip Ellison
Vice President
Nokia Americas Comm.
