To the Editor:
Starting a two-way radio business has always been a good way for radio technician/entrepreneurs to accomplish The American Dream.
The financial barriers for market entry were relatively low. All that a competent technician needed was an FCC license allowing a repeater on a high building or mountain top and a willingness to work long hours selling and servicing radios while looking for enough customers to make the radio system profitable.
In an age of cut-throat competition from nationwide ESMR carriers, a small shop could still do well by offering a more personalized service to its private system customers.
In the current environment of broadband spectrum auctions bringing in billions of dollars, the public policy of the FCC has still allowed small businesses to continue to get licenses for narrowband systems at a relatively modest cost. However, market place reality has recently evolved into the driving force that effectively counteracts this policy, and creates an insurmountable barrier to the continued existence of small businesses in the two-way radio market. This is because several large publicly traded real estate firms have recently bought control of virtually all of the local high-elevation radio rental sites (mostly on U.S. Forest Service land) in the Los Angeles area. I understand the same thing has happened all over the country. These firms primarily profit by renting low-elevation sites to the cellular industry.
These real estate firms have established terms and conditions that effectively bar small business from operating repeaters at any of their high-elevation sites. Only the deep pockets cellular and ESMR companies are able to afford their very expensive rental rates because of their much larger subscriber bases, however, those systems don’t use high-elevation sites because they need to re-use their spectrum at multiple locations within a market area. This dictates that they use only low-elevation sites.
There is now an oversupply of near-empty radio site buildings on Southern California mountain-tops that the real estate people have wasted millions of dollars of their shareholder’s money to acquire. Either they don’t know what they are doing, or their motives are less than honorable. They must have realized by now that they can never recover their large investment by renting repeater space to the only licensees that have any use for these sites. Their price gouging has now been instrumental in driving most of their former tenants into shutting down their radio systems with the users then subscribing for service from major carriers. Perhaps the real intent of the real estate companies is their desire to control the entire radio site market (even as a money losing venture at some sites) and to destroy the business of the small business repeater operators and radio service companies by forcing all of their customers to migrate to the systems of the large carriers that are the primary (and profitable) tenants at low-elevation sites. Presumably having more users on those systems somehow translates into more revenue for the site operators.
The real estate companies have used their check-book as an instrument to re-shape public policy. They have turned the basic economic law of supply and demand upside down. They have a large supply of space available, but at such a high price that no one who has a use for it can pay for it. In a true free market, the price would then come down. However, this group appears to have a hidden agenda.
The government should not allow a small number of real estate operators to monopolize the market in radio sites for the purpose of limiting the public’s freedom of choice and destroying an entire small business industry, especially when most of these sites are located on U.S. government land. This is detrimental to the public interest, and the American system of encouraging free enterprise. Even in an age of mega-mergers, the anti-trust laws are still on the books. We need to see some enforcement!
Ted S. Henry, President
Henry Radio Inc.
