FCC Ponders Pioneers Preference Again

The issues surrounding the allocation and auction of scarce radio spectrum has once again come to the fore in the United States. The Federal Communications Commission (FCC) has asked the Federal Appeals Court in Washington D.C. to let it reconsider its program to reward wireless technology pioneers with free spectrum.

As we reported in the May, 1994 issue of this newsletter, the FCC had previously granted pioneers preference awards to Mobile Telecommunication Technologies Corp for narrowband PCS, and American Personal Communications, Cox Enterprises, Inc., and Omnipoint Corp. for broadband PCS.

However, a recent request by Pacific Bell and Bell Atlantic Corp.—two regional Bell operating companies—asked the Federal Appeals Court to reverse that decision. The FCC has now requested the Court to allow it take the ball back to its own field and come up with a new scheme that will likely involve the pioneer paying for much of the value of the license.

Rep. John D. Dingell (D., Mich) has been among the most vocal in calling attention to the pioneer’s preference, and its implication in terms of fairness and expected revenue to the Federal Treasury. Dingell, chairman of the House Energy and Commerce Committee, has introduced a bill that authorized the FCC to collect money for the licenses, while giving pioneers a modest reward of 10% off a comparable license.

There is little question that the idea of auctioning this valuable spectrum serves the public interest better than the previous policy of issuing licenses by lottery, as was the procedure for the mid-80’s cellular bonanza. However, the FCC is clearly sailing in uncharted waters as it attempts to reconcile this well-worn but worthwhile programs already in existence.

The pioneers preference system was designed to recognize significant contributions in ideas and technologies, which in part has lead to technologies such as PCS. However, the very companies that played fair by the rules are now being short-changed. A 10% discount seems like a poor reward for a pioneer.