Federal regulators overseeing the fast-growing paging industry these days have a “good problem” that could easily turn into a bad problem with a few missteps by Washington officials in the coming months.
Here’s the good problem: Paging, the most competitive sector of the wireless telecommunications industry, is bursting at the seams with more than 27 million subscribers and nearly 40 percent growth. Scores of paging firms duke it out daily for a share of the low-end, multifunctional paging market. At the same time, massive consolidation is occurring.
The FCC has become a victim of its forward thinking and the success of the paging business
it oversees.
Demand, especially among consumers, is expected to dramatically increase for simple paging and sophisticated, next-generation messaging-known as narrowband personal communications services-in the coming years.
New nationwide and regional narrowband PCS licenses were sold last year. More auctions are planned either later this year or next year to deal away hundreds more permits.
Therein lies the dilemma for the Federal Communications Commission, whose rules fostered fireworks in the paging industry long before competition became a fashionable telecommunications policy. The FCC has become a victim of its forward thinking and the success of the paging business it oversees.
New rules
The industry is simply moving too fast for the commission. Applications are arriving at the agency faster than regulators can process them in some cases. As a result, people remain in line for paging licenses in New York, Los Angeles, Chicago, Miami, Dallas and other major cities. Outdated rules of a bygone era cannot be changed quickly enough. Newly proposed rules, deemed regressive by industry, are moving forward too quickly.
No one can accuse the FCC of not trying to keep up, though. Just last year, the agency streamlined paging guidelines and overhauled the entire mobile communications rule book under tight deadlines set by Congress.
As such, the transition to deregulation and competition is creating numerous policy predicaments for regulators and lawmakers: Which rules should stay and which should go? Should the FCC cease licensing paging transmitters and begin licensing market areas instead? To what extent should auctions be used?
“I don’t think this (competitive bidding) is going to balance the budget,” quipped Carl Northrop, an attorney who represents AirTouch Paging and Arch Communications Group-two major paging operators-before the FCC.
Yet, with federal money in short supply, auctions likely will be the paging licensing tool of choice for 900 MHz and lower bands in the future.
Where will spectrum come from to fuel future growth? Should incentives continue to be offered to women and minorities bidding for regional and local narrowband PCS licenses at a time when affirmative action is under attack in Congress and the courts? Is there a good reason to subject competitive paging firms to regulations designed primarily for monopoly common carriers? Don’t get industry started on that one. Should local zoning boards be permitted to block or tax the construction of antenna sites? And so on.
All this greatly worries the paging industry for a couple of reasons. First, there is fear the FCC will make the wrong policy cuts and thereby undermine the competitive nature of the industry it helped create.
“It isn’t as if I can’t get the service I want today,” said Judith St. Ledger-Roty, an attorney for Paging Network Inc., the nation’s top paging company. St. Ledger-Roty is among those who believe there is little room for regulation in an industry as competitive as paging. The idea, for example, that the FCC-which regularly touts competition and deregulation-continues to contemplate interconnection and resale requirements for paging firms and other commercial wireless carriers, does not go over well with industry.
Yet, she concedes, “There are some functions the industry needs the FCC to do.”
Thus, perhaps a bigger concern is whether federal regulators will spend too much time trying to get decisions just right and consequently slow down license application processing to the point of hurting business.
“You can’t stop the world while you’re getting your procedures perfect,” said George Wheeler, a communications lawyer.
Today, rules for traditional paging and narrowband PCS differ. That has complicated matters for the FCC. Only recently have regulations governing common carrier paging and private carrier paging moved closer to the parity Congress mandated in 1993. Meanwhile, it remains unclear how telecommunications reform legislation will affect the paging industry if a bill passes this year.
“What should be the regulatory structure is a big issue,” notes Katherine Holden, an attorney who represents the Personal Communications Industry Association.
The challenge for policymakers is managing the transition with as little disruption as possible. For now, that’s proving difficult.
Northrop said the key is “not to allow licensing to grind to a halt.”
Application mountains
In one case, it has. The FCC is trying to move a mountain of more than 5,000 applications for 931 MHz paging facilities. The backlog has worsened in recent years and made processing even more complex. In other words, nothing is happening. In fact, no one is quite sure where mutually exclusive applications begin and end.
“They basically have a big mess on their hands,” said Kenneth Hardman, another lawyer waiting to see which way the FCC will jump.
But the commission thinks it has a software fix for the problem. “Our goal is that we’re not going to have a backlog by June 30,” predicts Rosalind Allen, chief of the Commercial Wireless Division at the FCC.
Initially, Allen said requests for minor modifications of paging systems will be processed in 30 days and major, uncontested changes in 90. As time passes, she said, those numbers will drop.
A big FCC initiative expected to be announced soon involves the prospect of licensing paging systems on the basis of geographic areas. It would cut down on paperwork for industry and federal regulators.
Currently, paging systems are licensed one transmitter at a time whereas narrowband PCS and pocket telephone systems are authorized market by market. But market-area licensing raises other public policy questions. How does it impact existing paging licensees?
“It gets to be a tricky transitional issue,” said Mark Golden, vice president of PCIA.
In addition, policymakers must decide whether it makes sense to auction geographic pockets left unclaimed. “If you create value,” Hardman questions, “you trample all over the rights of the incumbents.”
Still more issues
Other issues dog the industry as well. PageNet, for example, has advocated the right of paging carriers to receive monetary compensation for terminating calls that originate on the local landline telephone network.
Access to telephone numbers is a looming problem, one that reared its ugly head last year when Ameritech Corp. proposed a numbering relief plan for the Chicago area but later withdrew it after paging and cellular carriers protested that the initiative was discriminatory.
On the local level, school districts increasingly are banning pagers from classrooms as a means to curb drug trafficking. Nevertheless, parents still find it useful and comforting to equip kids with the colorful devices.
Communities also have indicated they do not intend to roll over while the wireless telecommunications industry lobbies Congress for legal leverage to construct antenna sites where they like. That fight continues.
On the technical side, broadcasters are being given flexibility to use their frequencies for other than video purposes. That means potentially new paging competition.
Paging companies, like other segments of the telecommunications industry, will be trying to secure federal
government spectrum recently reallocated to the private sector. For without it, you might see one long traffic jam on the wireless lane of the information superhighway in the not too distant future.
