Narrowband personal communications services companies have petitioned the Federal Communications Commission to have their license payments deferred along with those of broadband C- and F-block PCS licensees, citing issues of competitive fairness.
Conxus Communications, Benbow Ventures Inc. and Insta-Check Systems Inc. have separately filed petitions with the FCC to include NPCS companies in the BPCS deferment.
According to Conxus President Bill deKay, this is only fair.
“We are concerned that recent FCC actions allowing C-block companies to defer loan payments make it more difficult for NPCS companies to access capital, thereby tipping the scale in favor of broadband competitors,” he said. “Accordingly, we are petitioning the FCC for fair and equitable consideration in loan repayment schedules, so that narrowband companies such as Conxus are put on a level playing field with C-block companies with respect to the capital markets.
DeKay said he understands why the FCC is looking to give the C- and F-block licensees some relief but just expects that relief to be applied to all. His argument is that NPCS and BPCS companies compete for both customers and investors. Forcing one to pay up while allowing another to slide, he said, doesn’t add up to fair play.
“What we’re concerned about is that another class of licensees don’t have to pay for five years, while we pay every quarter,” deKay said. “It’s patently unfair to consider relief of payment to one class of PCS licensees and avoid giving it to another class.”
Why, asked deKay, should NPCS companies be punished for the ability to pay their loan interest while the BPCS companies are being rewarded for not being able to pay theirs, especially when some NPCS companies paid more for their licenses?
Conxus, for instance, bid $91 million for its license at 20 percent down, according to deKay, which he said is more than what 90 percent of the BPCS licensees paid for theirs. Yet Conxus has made its payments.
Since both BPCS and NPCS companies are start-up businesses, both have to pay for infrastructure costs before gaining revenue from customers. If the BPCS licensees don’t have to make their payments, deKay said, they then can put the money directly into infrastructure. NPCS licensees, however, must pay for infrastructure and loan payments at the same time.
“Just because I’m not bankrupt, doesn’t mean I’m not experiencing the same issues,” he said.
Also, both PCS licensees must compete for investors, at a time when investor interest in wireless communications businesses does not exactly overwhelm, especially for start-up businesses. According to deKay, investors will be more likely to choose a company with such a favorable debt structure, such as those with deferred payments.
“We have to go to Wall Street just like these guys,” he said.
Once their services are up and running, both NPCS and BPCS companies also will compete for customers on paging and voice mail services, and must compete for vendor and banker resources as well.
The issue will be pressed at a public forum June 30, and a decision should come soon after. Initial observations seem to show that the FCC is sympathetic to the NPCS cause, but no one is willing to bet on it.
