Regulating Technology The feds’ new credit union
In case you missed the news, the Congress of the United States adopted an interesting piece of legislation as part of the Telecommunications Act of 1996, which is intended to provide benefits for small business. Within the Act, Congress set up something called the Telecommunications Development Fund, or if you like, the Local Operator’s Credit Union.
The fund will be created by interest on upfront payments, made by the FCC auction participants, which is earned by having those payments sitting in an interest-bearing bank account. If it uses my bank, that means that the fund will get the 0.0000314% uncompounded interest rate I get (providing it’s willing to pony up the ten bucks for personalized checks). I guess my first question is, who gets the free toaster? For those of you who haven’t yet discovered the peccant aftertaste of a valium-and-scotch shake, following a day of fun participating in an FCC auction, you probably don’t know about upfront payments. That’s the amount of money the FCC wants you to pay upfront to show that you really want to play in an auction. Think of it as an ante. Toss a few chips into the federal pot and you’re in the game. Anyway, the interest on the ante makes up the fund.
In theory The fund board is supposed to use money created by interest on this ante to promote small business in ways such as financing small businesses’ use of emerging technology, making loans and giving quarters to needy local operators who are willing to wash the board members’ windshields while they’re waiting for the light to change. So, in theory, this idea is pretty great.
Because the biggest upfront payments come from the fattest cats in the industry, this fund would provide for a kind of revenue sharing. If word gets out, the blueprint for the Telecommunications Development Fund might be used to solve the next baseball labor dispute. In the meantime, it might just do some real good.
If you read this column regularly (It can’t be blocked by the “V” chip), you know that I have shown some tendencies toward skepticism. To say that I’m jaded is to barely scratch the surface of my paranoia. But, in all fairness, I believe that the fund has a chance to be something really worthwhile.
The fund could be used to capitalize ventures that otherwise would be unable to come to market, due to the limited resources of the operators. It could serve as a way of assuring that legitimate local operators don’t run short in their race to compete with larger competitors. It might provide ways for small operators to provide equipment necessary for disabled Americans to access small, local systems. Or, it could finance new forms of resale, interconnection and other functions which would be tailored to serve the needs of the industry’s smallest players.
But for every benefit that the fund might bring, there are hurdles standing in its path. First, the language of the Telecommunications Act states that every business with less than $50 million in average revenues is considered a “small business.” Although I haven’t checked his latest IRS 1040EZ Form, that might mean that Donald Trump is eligible for a loan from the fund.
Second, the board members are to be selected by that champion of small telecommunications businesses, Chairman Reed E. Hundt. Given his demonstrated compassion for small business (which can be found in his support for auctions at 800MHz, 900MHz, paging, and PCS), this is akin to having Attila the Hun create the first Welcome Wagon committee. The spoils systems is really living up to its name.
Finally, there is Chairman Hundt’s recent appointment of the Interim Chairman of the Board of the all new and really exciting Telecommunications Development Fund, Mr. Solomon D. Trujillo. Let me be one of the first people to congratulate Mr. Trujillo on his appointment. I wish him well.
You note that I refer to the new interim fund board chairman as “Mr.” I think anyone who reaches the exalted position of president and chief executive officer of US West Communications Group deserves our respect. I’m certain that his experience with the financial problems suffered by US West prepared him well for his newly appointed position.
Mr. Trujillo also brings a wealth of experience in serving small business. His biography includes his former position as vice president and general manager of US West Communications’ Small Business Group, “serving nearly 800,000 small business customers in 14 states.” Those 800,000 windowed envelopes sent each month by his group are compelling evidence of his willingness to address the problems suffered by local operators.
All teasing aside, Mr. Trujillo might do a fine job. I hope so. I believe the fund can do fine things if it focuses on truly providing necessary relief for small businesses that are falling behind in the gadget race. The question remains, however, as to who will serve on the board. Who will assure that it is real small operators, who have suffered financially during these changing times, that get a little help in making the transition to newer technologies? Many people supported my nomination, including (get this) a real U.S. senator. To those people who supported my nomination, I wish to give you my sincere thanks. There’s no reason you can’t have a sense of humor and a sense of purpose.
If selected by Chairman Hundt, I will first pick up my jaw before someone steps on it, then I will do my best to live up to the industry’s expectations. If I am not selected, I will wish the new board well in its difficult task ahead. The fund isn’t very large right now, but the need is great.
