WASHINGTON-Following what they characterized as an unsuccessful meeting with Wireless Telecommunications Bureau personnel last week, three personal communications services small-business concerns filed a petition for reconsideration regarding revised D-, E- and F-block auction rules.
Personal Technologies Services Inc., DigiVox Corp. and the National Paging & Personal Communications Association reiterated their position in writing that the Federal Communications Commission has cut the chances that true small businesses will be able to participate in the next round of PCS auctions because it “quadrupled the upfront payment amount, doubled the down payment requirement and cut by two-thirds the interest-only repayment period.”
“It looks like we have a full-scale battle on our hands,” said NPPCA executive director Micheal Walker. “The bureau and the FCC are anti-small business. We got the impression that they were [irked] that small businesses want to participate in the auctions. It wasn’t so much the position they took, but their tone.”
According to Walker, last Tuesday’s meeting with WTB chief Michele Farquhar, Auction Division chief Kathleen Ham and other staffers lasted more than an hour. The small-business attendees, which included Walker, several attorneys and a representative from a Washington, D.C., public-relations firm, were told that the D-, E- and F-block auctions would continue to be scheduled for Aug. 26; any changes would have to be court-ordered. Walker also said his group was told that there would be many upcoming auctions-specialized mobile radio, narrowband PCS and others-in which small businesses could participate.
“This makes me wonder if we have the right chairman at the right time,” Walker said.
Jeff Craven, who represents DigiVox and PTS Inc., attended the meeting with Walker and told RCR, “We were hoping to remind the staff that there were some FCC tenets to provide for small businesses. They seemed more concerned with never having another default, with making the auctions a bulletproof lending program. They have forgotten that there is a modicum of risk with any new venture.”
The FCC looked at several auctions, cut-off options, industry comments and financial studies before it made its decision regarding the D-, E- and F-blocks and “still is developing the rules,” said WTB deputy chief Jerry Vaughan. “When we loosened the terms for C-block, it was a result of the prior auction. We could re-adjust after the next auction if it doesn’t work. Clearly, you’re dealing with social architecture, and every person has a view. The pendulum swings the other way.”
Ham added, “There is a notice of proposed rulemaking coming up regarding disaggregation and partitioning. This will have a lot of potential for small businesses.”
Besides taking the commission to task for bumping up the financial requirement for the Aug. 26 auction, the petition for reconsideration brought up the FCC’s alleged non-compliance with the Contract for America Advancement Act of 1996. That act requires any agency that adopts a new regulation to declare whether it is a “major” rule, one that has an economic impact of more than $100 million. The FCC did not view the D-, E- and F-block rule changes as being major, and the petition contains a copy of an e-mail message to those administering the act, saying that because the rule change wasn’t major, no cost/benefit analysis needed to be submitted for review.
According to the petition, each of the three changes made to the rules constituted a $100 million impact on the economy. “The new rules change the number of bidders who will participate in the auction, substantially increase the amounts of funds bidders will need to secure prior to entering the auction and disrupt existing financial arrangements,” the groups wrote. “Using the number of bidders and the amounts bid by the participants in the C-block auction as a guide, it is clear that shortening the interest-only period from six to two years, increasing the deposit requirement by 300 percent and doubling the down payment required each will affect the economy by more than $100 million.”
Because the new rule is major, the petition said, it cannot take effect until 60 days after Congress receives information about it from the FCC or 60 days after is appears in the Federal Register. Because the rule appeared in print July 1, it should have become effective after Aug. 30; instead, the effective date was set at July 31. “This action clearly violates the act,” the petition said, and the FCC should move the date back.
The petition also contained written testimony from Dr. Ronald M. Harstad, a game theorist and economist, confirming that a short delay in the auction-between six and eight weeks-would not harm the financial outcome of the sale and would not influence any head-start concerns.
The petitioners had submitted questions relating to the rule changes to members of the House Telecommunications subcommittee-in particular, Rep. Bobby Rush (D-Ill.)-in hopes that they would be addressed to FCC Chairman Reed Hundt during a FCC oversight hearing July 18.
