The Federal Communications Commission set an Aug. 2 date to begin the proceedings when Telephone Electronics Corp.-after aligning itself with PCS PrimeCo L.P., the consortium of three Baby Bells and AirTouch Communications-dropped its lawsuit challenging FCC rules that give bidding preferences to women and minorities. The FCC plans to auction 493 licenses in the 2 GHz band. Short form applications must by filed by June 15.
But even as the auction proceeds, the legal questions are far from over as challenges to affirmative action issues are set to take place this summer before the Supreme Court and in Congress. Already one company, Consolidated Communications Inc., has tried to keep the TEC case alive. That effort, however, was denied by the court earlier this month. Consolidated is a holding company for an Illinois rural telephone company.
Regardless of how you feel about affirmative action, the issue is affecting the wireless telecom industry.
The National Telecommunications and Information Administration noted that minorities will have more difficulty getting traditional kinds of financing for any telecom projects and would be wise to look at other options.
NTIA reports that minorities owned less than 1 percent of the nation’s telecommunications companies in 1991, but represent about 25 percent of the population. Overall, minority firms account for about 9 percent of all domestic business.
A worried FCC has proposed not to offer bidding credits to women and minorities in auctions for 900 MHz specialized mobile radio licenses.
Zoe Hazen, a woman planning to bid as a designated entity in the Aug. 2 auction, claims the threat of the Supreme Court striking down affirmative action laws-and therefore eliminating extra bidding credits she would receive as a woman PCS licensee-frightened her investors and forced her to scale back her PCS plans.
And Go Communications Corp. is worried the delay caused by TEC’s challenge to affirmative action preferences will mean lost customers for Go because the larger PCS operators will be first to market.
I don’t have a crystal ball and therefore am not sure who is at a disadvantage because they are not in the Good Ole Boys club, or if minority- and women-owned companies are simply not getting as much investment capital because others have the better PCS build-out strategy.
I like the idea of designated entities competing for spectrum to offer PCS. I can’t wait to see how these plucky little companies think they’re going to be able to compete side-by-side with wealthy telecommunications giants.
But despite bidding credits or any other preferences, PCS is going to be an extremely competitive business and only the strongest will survive.
However, it will be a shame if five years after PCS licenses are granted, NTIA again reports that while minorities make up 25 percent of the nation’s population, they account for less than 1 percent of the nation’s telecommunications business.
