Firms Seeking Cellular Phone Permits Alerted : Application Preparers May Mislead, FCC Says
The Federal Communications Commission said Wednesday that promises made by firms offering to prepare applications for cellular telephone licenses “may be fraudulent and are certainly misleading.”
The commission asked the Federal Trade Commission, the Internal Revenue Service, the Securities and Exchange Commission and the Postal Service to investigate the practices and alerted all 50 state attorneys general.
“Individual investors should exercise extreme caution before pursuing one of these proposals,” a commission letter said.
Award by Lottery
The FCC’s alert follows the proliferation of companies promising to submit applications for cellular telephone licenses that the commission will award by lottery for hundreds of small- and medium-size towns throughout the nation. Such licenses let the holder operate mobile phone systems, such as those used in cars.
The FCC warned that some companies, many of which charge upward of $10,000 per application, are making promises that they cannot deliver.
“There’s nothing wrong with hiring someone to file an application,” said Maureen Peratino, deputy director of public affairs for the FCC. However, she added that some firms are suggesting that “even the average guy on the street has as good a chance of winning as the big companies.”
“This is a total perversion of the commission’s intent,” said William A. Russell Jr., director of the FCC’s office of congressional and public affairs.
Some of the application preparers are inflating the potential profits to be made from these licenses, Peratino said.
The FCC is now accepting applications for markets ranging from Trenton, N.J., with a population of 313,800, to Fayetteville, N.C., with 251,300. The deadline for applications to serve larger cities has passed.
Claiming to be the nation’s largest application sales firm is American National Cellular of Century City.
Several Hundred Sold
The company, aided in part by Mike Douglas, its spokesman and a former television personality, has sold several hundred applications since incorporating last September solely to take advantage of the “unique opportunity” offered by the FCC cellular license lottery, according to Jerry Dobin, marketing director.
Dobin, who said he has previously marketed a broad spectrum of financial products, said American National charges $10,000 to prepare two applications for each customer. Dobin said lottery winners are required to pay American National a one-time fee of $5,000.
Dobin said, however, that American National does not promise applicants that they will win the lottery and stresses that the application is a “high-risk, high-return” proposition.
According to the FCC, the applications in many cases are simply fill-in-the-blanks form letters executed with the name of an applicant and then attached to photocopies of the basic technical data for a city, such as the location of transmitters and the like.
After the technical data is prepared once, the cost to the preparer is not much more than the cost of running the material through a copying machine.
Furthermore, the FCC said that not all applicants would be able to assume the financial obligation of building and operating the cellular system if they end up winning the lottery.