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content


Regulating technology: This way to the egress!

Regulating technology: This way to the egress!

There probably was no greater showman than P. T. Barnum. His sense of the extravaganza was unmatched in the 1800s. Barnum could draw thousands of curious
  • Written by Urgent Communications Administrator
  • 1st August 1996

There probably was no greater showman than P. T. Barnum. His sense of the extravaganza was unmatched in the 1800s. Barnum could draw thousands of curious folks to see Cheng and Eng, the original Siamese twins; Major Tom Thumb, his diminutive moneymaker; and Jenny Lind, the Swedish Nightingale who enchanted audiences with her beautiful voice.

Yet, despite his ability to draw crowds to the halls and arenas he had specially constructed for his troupe of freaks, curiosities and wonders, Barnum had a serious problem. Once he collected their admission, he had difficulty getting the crowd to exit the building. So fascinated were the public in his sideshows, they wouldn’t leave promptly, allowing the next group of customers to pay and enter.

Barnum, ever the brilliant manipulator of people, devised an “exit strategy” to help him keep the turnstiles going. On the rear exit door he painted the words, “This Way To The Egress!” in bold letters. His customers were not all sufficiently sophisticated to appreciate that the word “Egress” meant exit. So, Barnum’s customers blithely passed through the door hoping to see the exotic, three-headed Egress that they were sure lurked on the other side.

Today, many industry commenters are advising small operators to come up with an “exit strategy.” As with Barnum, the strategy is supposed to allow the strategist to make additional money. The problem with the industry advisers’ opinions is that it is difficult to discern who, in their respective scenarios, is playing the part of Barnum, and who are the reubens. Many of the commenters appear to be advising the customers to paint the back door with the witty ruse, then pass through the same door to oblivion. In older days, some of these well-meaning folks would be called shills.

Over the years, I have advised clients on how to cash out. After all, no one should be forced to stay in the business, particularly if another company is willing to pay handsomely to buy assets. In each such instance, I advised my clients that leaving the business or selling some asset should be a choice, not a requirement. Each operator should be fully entitled to say, “no thanks,” and go on operating, building, competing and thriving.

Lately, some industry commenters appear to be stating that small operators should prepare to exit the business. These same commenters don’t explain where these displaced operators should go or what they should do, but whatever it is (in the commenters’ view), it won’t be selling land mobile services. Not so oddly, many of these commenters serve as brokers or agents of purchasers, and those commenters won’t make a dime if small operators don’t continue to participate in the consolidation movement throughout the industry.

Well, I’m a trendy guy. If an exit strategy is the latest “must have” for small operators, then I’m going to give each and every reader an exit strategy that you all can live with. With a few simple tips, each of you can prepare for the day that someone comes knocking on your door and tells you, “time’s up.”

First, lock up all of your customers to contracts for services. That way when a large competitor comes into your market and starts raiding your customer base, you can sue the hell out of them for tortious interference with a contract. Second, check to make sure that large competitors aren’t making inaccurate claims about your business in the marketplace to lure customers onto their system. If they do, sue the hell out of them for business libel. Third, if a large competitor begins creating harmful interference to drive you off a given frequency, sue the hell out of them for business torts, including creation of a private nuisance. Finally, if the efforts of a carrier are clearly designed to engage in unfair practices to monopolize a market, sue the hell out of them for violations of the antitrust laws.

Make sure that the large competitor constructs what they have claimed to construct; applies only for facilities that are spaced far enough from any protected facility you operate; follows the FCC rules as faithfully as the FCC would demand from you; and generally engages in lawful compliance with the FCC’s application, construction and operation rules. If they don’t, point out each violation to the FCC, and request that the large operator receive sanctions, forfeitures and cancellation of authorizations.

If you are wondering, “where’s the exit strategy?” you’ve missed the point. There’s more than one way to exit. There’s the generally recommended method of waiting until the value of your business has been eroded through unfair regulatory and business practices until any eventual purchase offer is so small that you wonder why you’ve been busting your backside for years in building your business. Then there’s the exit strategy that includes a premium paid for a business that stands clearly and forcefully in the way of a corporation’s big plans. It’s harder (and more expensive) to knock a guy over who’s dug in his heels.

Your exit strategy has to be based on getting at minimum full value for your assets. You cannot hope to achieve this goal if the value of your radio systems has been eroded by neglect. The most common form of neglect for small operators is a failure to inventory the efforts of competitors. That would be like GM not checking out the new Fords. Smart business demands that you keep as close an eye on your competitor as you do on your own business, particularly if your competitor is a large, dominating carrier.

Your exit strategy is weak if you can visualize going into negotiations with your hat in hand, begging your competitor for pennies. It’s strong if you are positioning your company to be a fortress of dynamic licensing, sales, site acquisition, personnel and marketing, where suitors are forced to come to you. Your success should never depend on the charity of others.

P.T. Barnum had an exclusive contract to showcase Jenny Lind in America. Tom Thumb was Barnum’s employee, no doubt including a covenant not to compete. Barnum’s business was joined solely to Barnum as closely as Cheng and Eng, and no competitor was going to be able to break the ties that Barnum built carefully to assure his continued success. Those are the exit strategies that worked for Barnum and that will work for all operators throughout the industry.

Don’t be fooled by the flim-flam artists who preach an exit strategy that doesn’t include your full success. All they are saying is “This Way To The Egress!”

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