WASHINGTON-The Federal Trade Commission has suggested a series of front-end consumer-education electives be taken by the Federal Communications Commission that could protect potential investors from fraud promulgated by application mills and telemarketers pushing shares in paging licenses. The FTC also endorsed in its comments suggestions contained in a prior FCC order regarding new auction rules.
Although the FTC’s Project Roadblock has been successful in putting many less-than-honest marketers out of business during the last two years, others have continued to prey on investors who received licenses via an application mill to maximize their holdings “through various schemes” or they have tried to build large limited partnerships to bid on licenses at auctions, pocketing most of the money and never moving forward in earnest on actual bidding.”
Anyone considering investing in a paging license should be able to access information on the market from the FCC, the FTC wrote. “If the customers of applications mills had understood from the start that FCC licenses alone were not marketable commodities, they would have been less likely to succumb to the telemarketers’ pitch about applying for licenses in the first place,” it added. “Consumers who receive these disclosures also may be more likely to make inquiries to the fraudulent telemarketers themselves, to the FCC, and to the FTC and other consumer-protection agencies.”
According to the FTC, consumer information could come from expanded Form 600s that would include FCC rules against speculation and trafficking, construction requirements and the potential for fraud. The commission also could require application preparers to certify that each applicant has been provided with the FCC rules regarding licensees along with the number of the FCC’s call center that handles consumer inquiries.
Frequency coordinators like the Personal Communications Industry Association also could be required to provide all applicants, not just the application preparer, with notification cards that include the names of all pre-existing co-channel licensees for each frequency. “Since the number of other co-channeled licensees often exceeds 1,000 for shared 929 MHz licenses in major metropolitan areas, this disclosure might educate consumers who were told falsely by telemarketers that they would be applying for valuable exclusive licenses rather than heavily utilized shared licenses,” the FTC added in a footnote.
And for those investors who are being solicited to join limited partnerships that could become involved in upcoming auctions, the FTC reiterated its previously released suggestions that the FCC require bidding agents to disclose real parties of interest prior to an auction and to provide those real parties of interest with copies of FCC rules regarding licenses bought via an auction.
“This disclosure requirement would impose only a modest burden on the bidding agents and would provide the FCC with the ability to identify, and thus to communicate with, the potential victims of fraudulent build out schemes,” the FTC wrote. This suggestion, of course, would require the FCC to do some due diligence at the front end, a practice it does not follow currently; it prefers, instead, to examine participants after an auction has ended, which has caused problems in several of the last 13 spectrum sales.
