Delegation and education on auctionization

“Has the FCC ever considered a double-coupon day?”

There is a flurry of unrequited interest in the upcoming (now postponed) auctions of VHF and UHF common-carrier channels. The FCC is also tossing in some 900MHz channels that nobody picked up in that earlier auction. In all, more than 10,000 discreet channels are on the block, and a lot of local operators are itching to get at them.

The primary prizes are the traditional RCC channels first used for Improved Mobile Telephone Service 30 years ago. Many of those channels were later converted to provide paging service when cellular tore up the IMTS market. Then paging migrated to the 900MHz band, and, once again, those channels became less-used spectrum.

Some of the UHF pairs were never used much. They were licensed to RBOCs that used them about once per presidential administration, mainly to tell a maintenance crew to go knock out your phone service until you paid the bill. Vinny and the other guys in the crew were later outfitted with cellphones, so the remaining stations were often of the single-stick variety, with a license held by a large LEC. Unfortunately, these place-keepers on the regulatory landscape were usually only burping out a station ID — from the center of the best urban markets.

To divest themselves of unwanted, unused (and sometimes unconstructed) assets, the RBOCs sometimes sold off some of these licenses for single-site facilities. Sometimes the price was reasonable, and sometimes it was just plain cheap. One such garage sale included 10 channels at 10 sites, with the equipment tossed in for $50,000. The LEC’s idea was that the future was broadband, and you just couldn’t offer that on old RCC channels.

The FCC’s database reveals a hodgepodge of licensing on VHF and UHF channels, with many unused or underused frequencies throughout market areas. Don’t assume that the rural areas are unlicensed. These channels were also popular for that dinosaur, Rural Radio Service, and some of those systems are still cooking.

Now, there is converging interest in collecting a few blocks of these babies. Entrepreneurs see a chance either to fulfill pent-up demand for paging system build-outs or to stack blocks neatly and provide UHF or VHF trunked service to an underserved business and industrial market. Truth is, these channels work well — particularly for local operators seeking a big bang in rural markets where a cellular signal bumps over the terrain, afraid of its own shadow.

Duh — legation

When the FCC announced readiness to auction this spectrum, we alerted our clients. Many called back to find out the ins and outs of the auction process, including which rules to follow to obtain bidding credits, to demonstrate eligibility in the application preparation, and to determine if they would have to report their inheritance from Aunt Minnie in the financial data.

I was ready. I had delegated. Enter the cavalry in the form of Delaney DiStefano, a.k.a. my auction guru. You see, I had tried to read the rules, booklets, forms and charts and to learn about the concept of exponential smoothing. (Really — the FCC cares about well-smoothed exponents.) But, at some point, my eyes got bleary, my brain checked into a clinic for the chronically bored and my chin bounced off the desk blotter. Time to delegate.

Many auctions ago, I designated a member of my staff — Delaney — to become the world’s leading expert on FCC auctions. Although this title is unlikely to get her on the cover of Time, it is essential to making sure the clients (and I) have our “go-to” person for auction stuff. Delaney has become a combination grizzled veteran, encyclopedia, soothsayer and all-around legal eagle, making sure that every t and i are in place to ensure our clients’ best chances to be successful bidders.

Unbeknownst to all (well, now I’ve shot my mouth off), Delaney enters my office before each auction and provides me with a rundown of all of the auction rules, nuances, changes and software wonders that are included in each upcoming sale. I sit there and lap it up in big gulps, asking such probing questions as, “Has the FCC ever considered a double-coupon day?”

My lessons have taught me that every auction participant should have someone who truly knows their way around the process. It’s one thing to read the rules and reports. It’s quite another to devote weeks of time to ensuring that the application and the bidding process go off without a hitch.

Brain delay

So, with Delaney’s help in steering the course, my office completed a number of applications for clients seeking to enter the paging auction. Each application was completed with care, including the proper collection of financial and ownership information. Delaney poured over the newest changes in the process and ensured that each question regarding each applicant was answered correctly. Although she did not complete all applications, Delaney made sure that the rest of the staff didn’t screw them up, while providing insight into new wrinkles in the attribution rules. We, and our clients, were ready for the big game.

Then the %$#&! FCC postponed the auction! We were ready. Our clients were ready. The market was ready. Everything was a go. We even purchased new computer equipment to make sure that there would be no hardware problems that couldn’t be immediately overcome.

But the FCC wasn’t ready. It seems that when the FCC beta-tested their newest bidding software, it didn’t perform up to expectations, or so they said. They postponed the auction for four months and sent the software back to the code crunchers and cyber-geeks that make all of those virtual checkboxes. (With all of the dot-com layoffs, you’d think the FCC would be well supplied with quality geeks.)

So, here we sit with our motors running. Our clients are ready for the big game, with financing and business planning in place. My staff is on “yellow alert” for any new developments. We’re all ready to play, FCC. Could you take part of that auction money and buy a starter’s pistol?

Schwaninger, MRT’s regulatory consultant, is the principal in the law firm of Schwaninger & Associates, Washington, which is counsel to Small Business in Telecommunications. Schwaninger is also a member of the Radio Club of America.