Bubble Bursts on FCC Auction of Airwaves : Communications: Concerns stem from delayed payments and lack of minorities and women among those to receive licenses.


The euphoria over the rich bids in the federal government’s first-ever auction of the airwaves is beginning to fade amid bidders’ efforts to delay payments and concern about the failure of women and minorities to get some of the choicest licenses.

The two top bidders in last month’s Federal Communications Commission auction of licenses for a new interactive TV service failed this week to submit deposits to cover the $58.35 million they offered the FCC for 35 licenses.

One of the firms, Interactive America of Sun Valley, Calif., could not be reached. But Commercial Realty of St. Pete Inc. of St. Petersburg, Fla., said alleged interactive TV product delays as well as patent litigation over the technology, known as Interactive Video and Data Service, forced it to withhold payment. The FCC has said it will fine and revoke the licenses of any firm that did not submit its deposit by the close of business last Monday.

The disclosures came as some FCC officials, disappointed by the showing of minorities and women, launched an effort to find ways to improve their odds at success in future auctions. Late Thursday, the agency was circulating a proposal to increase bidding credits for women, minorities and small businesses to 40% from 25%, while also considering a plan to delay the next auction by up to 45 days.


The FCC’s auction drew a record $833 million in bids for 10 nationwide, two-way paging licenses and 593 IVDS licenses. But no women- or minority-owned firm won any of the nationwide licenses. What’s more, if Commercial Realty, whose majority stockholder is an unidentified woman, is stripped of its 20 IVDS licenses, women’s share of that category of licenses would drop to less than 30%.

“The concern is that no minorities were among final winners . . . because there were no set-asides and they were bidding against” companies with very deep pockets, said James H. Quello, an FCC commissioner. Quello said he favors revising payment schedules and bidding credits for minorities and women to improve their success and bidding.

David E. Honig, executive director of the Minority Media Ownership and Employment Council, a Washington educational group, agreed that rules needed to be revised to help minorities and women. But unlike Quello, Honig was also sympathetic to big companies that complained they didn’t have enough time to meet FCC deadlines.

“No one should be excused from making payments, but the commission ought to allow considerably more time between the end of the auction and the date the first payment is due to give people time to” arrange for their financing, Honig said.


Any mid-stream rule changes, however, would face stiff opposition from some officials and could potentially delay future auctions and set off an ugly round of litigation over the auction process.

“I fought very hard for the (bidding preference) rules,” said FCC Commissioner Andrew Barrett. “I think some companies may have overbid in terms of pricing, (but) I am not about to go back and correct what the market has done.”

The Clinton Administration has championed wireless communications technologies as a source of more than a million jobs in the next decade as well as a $100-billion boost to the American economy. But bickering over the controversial auctions--which could eventually raise more than $10 billion for the U.S. treasury--now threatens to delay any economic payoff.

One disgruntled license winner, American Personal Communications of Washington, has filed suit in the U.S. Court of Appeals over an FCC decision to reverse itself and make so-called “pioneers” of new wireless services pay for their licenses.


Earlier this year, the FCC had voted to give APC and two other companies free licenses to offer so-called broad-band PCS. But Wayne Schelle, chairman of APC, criticized the FCC in a statement released Wednesday for bowing to pressure by competitors who will have to bid for broad-band PCS licenses in auctions to be held later this year.