NEW YORK-The C-block auction for personal communications services radio-frequency licenses “was the only thing I presided over that was seen as a catastrophe,” Reed E. Hundt, former Federal Communications Commission Chairman, said last week.
“There are some other catastrophes that haven’t yet come to light,” he added without elaborating.
Hundt, now senior adviser on information services to McKinsey & Co., a worldwide consulting firm, was the keynote speaker at the “Telecommunications Billing and Operational Support Systems Conference,” sponsored by Jefferies & Co. Inc., a Los Angeles-based investment bank.
When he saw that bidders in the C-block auction were “in effect, taking options on spectrum and the money wasn’t there,” Hundt said he tried unsuccessfully to convince fellow FCC commissioners to “take back two-thirds of the licenses.”
Aware that he planned to leave his post and angry at him “for a variety of reasons,” the other FCC commissioners would not go along with his alternative plan to sell the licenses at a price tied to market value, as is typical in bankruptcy proceedings, Hundt said.
“I warned them that, in the end, the courts would impose a solution and they would be embarrassed. The courts are imposing a solution, but they (the FCC commissioners) are not embarrassed,” he said.
“The lawyers are in charge, and they want to litigate this through the appellate courts.”
However, a potential white knight is on the horizon for the C-block frequencies, Hundt added.
“The good news is there is a chance that wireless data will save the C-block if it turns out to be the ideal spectrum for wireless data,” the former FCC chairman said.
The Internet is a huge and positive force driving data communications demand. Due to what Hundt called an oversight on the part of Congress, one that never would have gotten through if lobbyists had noticed it, the Telecommunications Act of 1996 retains instructions to the FCC to promote the Internet.
“We can regulate to promote data or voice, and we chose to promote data over voice,” he said.
Wireless penetration in this country will reach 120 percent, with people owning many more than one handset, just as they now own more than one radio or wireline phone, Hundt predicted.
However, he said he doesn’t see wireless local loop as a serious competitor to cable for stationary communications on either the voice or the data side. By contrast to newcomer WLL, cable infrastructure already is in place and is generating revenues to help finance its upgrade for new kinds of communications services.
“The key event is that AT&T (Corp.) decided to get into cable,” Hundt said. “AT&T is the only company with deep enough pockets to invest in this.”
