Industrial strength weenies
For decades, the federal government has extolled the virtue of our nation’s industrial might. Political advertising (wooing the labor vote) shows video clips of steel-plant blast furnaces spraying sparks, fields of perpetually pumping oil rigs, phalanxes of combines reaping a golden harvest, and manufactured products surging from factories and assembly plants to be carried by truck, plane, ship and pipeline to a waiting world while the Stars and Stripes wave over a Fort McHenry background.
These are the industries that provide jobs, wealth, hard assets and the ability to defend our nation. Together, they give us the quality of life that we all enjoy and form the foundation of our national wealth. Our industrial might is what we protect in trade agreements and treaties, because without our industrial capacity, we become hostages to foreign production and innovation.
The combined wealth of the industrial giants, including the Big Three automakers, the oil companies, the steel companies and agribusiness, is entrenched, formidable and vast. So, with all of the benefits and might of these industrial behemoths, why are they rolling over and playing dead like a pack of overly domesticated dachshunds when it comes to defending private radio?
At the fall meeting in Washington, DC, of the Industrial Telecommunications Association (ITA), speaker Michelle Farquhar, chief of the FCC’s Wireless Telecommunications Bureau told a luncheon audience that the future of industrial radio will consist of two options: private radio users can purchase service from commercial providers–or use unlicensed spectrum. Chief Farquhar was reflecting the newest political agenda of this commission, to eviscerate private radio in favor of commercial providers.
Although the FCC’s position is generally repugnant to industrial radio users that depend on the perpetuation of private radio, the attendees at the ITA conference did not voice coordinated resistance to Ms. Farquhar’s agenda. In other words, Farquhar got away with her test of the industrial waters without being publicly stoned for the agency’s heresy.
The FCC’s plan is to squeeze the spectrum capacity of private radio, through various agency-coordinated methods including frequency allocations, refarming and auctions. Will the FCC kill off private radio? Probably not. Some level of private radio will likely continue, but the ability of private radio licensees to enjoy the fruits of changing and improving technology will be curtailed. Many of these newer technologies require wider bandwidth, not the narrow bandwidth that will be the norm following refarming.
The FCC’s plan is not surprising. Commercial providers bid at auction. Private radio users traditionally have not bid because of the geographic-specific nature of private radio uses (manufacturing plants do not stretch across an entire economic area). Given the FCC’s often-repeated objective to raise federal revenues through auctions of the radio spectrum whenever and however such auctions might be held, it is clear why the FCC is turning its back on industrial users.
What is surprising, however, is the muted reaction from affected industrial radio users. Where is the courage of conviction that we might have expected? Is it that industrial users just haven’t “run the numbers?” If not, I humbly provide some here for anyone’s bean counter who hasn’t been keeping up with the eroding rights of industrial users.
Imagine a manufacturing plant that employs 500 line workers, supervised by and through the use of private radio transceivers. We can assume that at least one-fourth of the persons will be equipped with two-way radio devices. That’s 125 radios working every day, all day. If we then assume that each radio will be operated for only one-fourth of the time that its user is on the clock, each radio-equipped person will employ two hours (120 minutes) of air time per day. For the entire plant, that’s 15,000 minutes per day, or 75,000 minutes per week (assuming only one shift).
A check of the rates offered by commercial providers demonstrates that most wireless carriers charge around $0.25 per minute for air time. Often, there is a discount for the first minutes used. For example, 200 minutes of air time per month, per radio, is free, with additional air time at the twenty-five cents per minute rate. If we apply this formula to our hypothetical factory, the industrial user will pay, following the initial use discount, $75,000 per month or $900,000 per year for commercial service. Assuming lower prices through increased competition, the price tag is probably closer to $400,000.
So, the guy who owns the plant has increased costs of $400,000 per year, with no corresponding increase in efficiency, output or profit. Instead, the money is loaded onto the fixed cost side of the ledger and must be made up in pricing of the plant’s produced goods, which will affect what consumers pay and, perhaps, the size of the plant’s work force.
As if that weren’t bad enough, the commercial system is usually not designed to accommodate the specialized needs of the industrial users, including the assurance that the transceivers are rated for industrial use. Instead, the industrial user is offered the “vanilla” radios which the commercial provider has determined will be used in association with its system. Therefore, the industrial user may actually lose efficiencies while being forced to pay more for telecommunications capacity.
Although some industrial commenters have pointed out these economic facts to the FCC in some recent proceeding, there is yet to be found a coordinated, financed effort by industrial users to dissuade the FCC from its “auction at all costs” path, with commercial radio being viewed as the panacea for all telecommunication needs. The collective courage of the industrial community simply has not been found. Instead, the industrial giants are acting like political pygmies.
Perhaps the industrial users can take heart in a pledge made by Vice President Al Gore, who said at a Knoxville, TN, fund-raiser in October that the administration will not auction spectrum that is occupied by incumbent licensees. That pledge, if made good, should protect many existing industrial licensee’s use of the spectrum. It will not, however, provide future growth and access to newer technologies.
I’m just one loudmouthed lawyer in Washington, DC–the town that attorneys know as having personal jurisdiction over the devil. I don’t own a manufacturing plant, run a transportation business or raise thousands of acres of shining wheat. However, even a simple citizen like me can see that the demise of private radio will cost industrial users a huge chunk of money that will not raise our nation’s industrial competitiveness a whit. My naive advice to the industrial users, who will be the first victims of the FCC’s bias toward commercial operators, is fight back. At least you won’t keep looking like a bunch of doe-eyed wimps that haven’t the courage to complain.
