Oh, the C-block PCS auction is becoming one of life’s little ironies.
Consider this:
Congress in 1993 demanded that spectrum be set aside for smaller companies that want to participate in the nation’s wireless telecommunications business. The C-block auction is dubbed the “entrepreneurial” auction in anticipation of all the “little guys” who will come to bid. Bidding credits will be given to women and minorities to help them compete against the telecom behemoths dominating the industry.
Not so, screams the United States Supreme Court, ruling that preferences given to women and minorities are unconstitutional.
Nevertheless, businesses that want to compete for spectrum in the C-block auction still have to meet certain small business guidelines. The bidders-seeing their chance to find gold at the end of the rainbow, be their own boss, set their own hours, and tell their grandchildren exciting stories about the early days of PCS in the comfort of their home, formerly owned by Donald Trump-rushed to find financing. They looked inside the nation and outside, careful (or not quite so careful depending on who you believe) to keep within the 25-percent ownership restrictions demanded by U.S. law.
The auction begins, and boy does it ever. The C-block auction-designed for the “little guys,” pays more per pop for spectrum than any AT&T corporation ever did.
Entrepreneurs fall left and right. They can’t find any more financial backing, even though the entire nation of Korea is ready to throw money at every one of them in order to not miss out on this new wireless opportunity. But the 25-percent foreign ownership restriction rules.
The auction ends. The two largest winners are NextWave Telecom and Pocket Communications Inc., both with significant foreign backing.
Buildout begins. Or doesn’t. NextWave is found to be in violation of foreign ownership restrictions and Pocket declares bankruptcy.
In the meantime, however, the United States agrees to toss away its foreign ownership restriction to comply with the World Trade Organization requirements.
So if both companies can hang on until July, NextWave and Pocket, both desperately in need of cash, will be able to seek more foreign capital to build out their dreams.
And years down the road, the Republic of Korea will be the largest shareholder of C-block spectrum, the “entrepreneurial” auction designed to help the “little guys” get into the wireless communications industry.
