Financial catastrophe has MobileMedia Corp. in the news almost daily with talk of corruption, stockholder lawsuits and bankruptcy. But the company now faces heightened pressure from competitor Paging Network Inc., which aims to expose MobileMedia’s violations of Federal Communications Commission rules.
PageNet petitioned the FCC to disclose and open for public comment MobileMedia’s rule violations, based on the premise that the violations-if deliberate-place PageNet and other paging carriers at a competitive disadvantage.
MobileMedia issued a prompt reply to PageNet’s request, asking the FCC to deny the petition. In its opposition statement, prepared by counsel Latham & Watkins, Washington, D.C., MobileMedia says information submitted to the FCC about its violations is confidential, and PageNet’s petition is “little more than a transparent attempt to prolong and publicize a competitor’s regulatory problems.”
The FCC has not addressed the petition publicly.
In September, MobileMedia announced it discovered that, under prior management, the construction status of between 400 and 500 local paging stations were falsely reported. For about half of these stations the Form 489s, which indicate a station is built, were filed late. For the other half, the Form 489s were filed prior to completion of the stations, said MobileMedia’s Laura Wilker.
First news of the FCC violations came concurrent with MobileMedia’s public disclosure of financial and operational troubles stemming from the unification of MobileMedia’s and MobileComm’s operations.
MobileMedia said it commenced an internal investigation of the filing errors and the findings were handed to the FCC.
In its petition, PageNet suggests MobileMedia’s violations were calculated. “There appears to have been an unprecedented level of violations which could not be the result of error or inadvertence.” Certain facts “suggest a deliberate scheme to evade the rules, one which almost of necessity must have been a matter of corporate policy,” states PageNet’s petition, compiled by counsel Reed Smith Shaw & McClay, Washington, D.C.
“If MobileMedia were able to serve customers by installing facilities without proper authorization or increasing station coverage beyond the limits prescribed in the rules or to retain control of spectrum in certain areas without actually constructing facilities, it would have a huge advantage over its more law-abiding competitors, at least until it was caught,” reads PageNet’s petition.
MobileMedia maintains in its statement to the FCC that “granting PageNet’s request is neither necessary nor in the public interest.” FCC rules and practice allow the commission to keep the “explicitly commercial and financial information” confidential. PageNet’s and other competitors’ interests in the violations are self-serving, says MobileMedia. Public disclosure of the violations would impair the FCC’s investigative abilities, cause delays and set a precedent discouraging voluntary self-disclosure of rule violations. Further, there is no reason that making the information public “will in fact illuminate potential competitive harms that are not already obvious,” added the company.
In its petition, PageNet outlines what it says are potential effects of MobileMedia’s violations:
Filing false form 489s for unconstructed sites could reduce the amount of “white area,” or unlicensed area, available in future paging spectrum auctions.
Filing false form 489s for unconstructed sites could be means around the FCC freeze on new applications, as it could “preserve” spectrum otherwise available to other operators.
A false claim that a site is built would allow MobileMedia to expand coverage-when otherwise it would be prohibited to do so-as the freeze permits new filings within 40 miles of existing stations.
Filing false form 489s for constructed sites would allow MobileMedia to channel resources to areas with the best return, instead of building to meet FCC construction deadlines.
Since compliance with regulations is costly, MobileMedia could indirectly benefit by not complying.
Since-calling only on available facts-PageNet describes for the FCC how the 489 filing process could be manipulated for competitive advantage, PageNet’s “cogent description thus disproves its claimed need for more details and a public comment period to evaluate the harm done by the Company’s inaccurate filings,” counters MobileMedia. “Site-specific information will not change the nature of PageNet’s alleged competitive harms.”
“The company’s whole point in coming forward was to make clear that new management did not intend to countenance rules violations or retain any competitive advantage that might have been gained improperly,” added MobileMedia.
