3/24/98 Statement of Chairman William E. Kennard

March 24, 1998

Press Statement of Chairman William E. Kennard
In the Matter of Amendment of the Commission's Rules
Regarding Installment Payment Financing for Personal Communications Services

Our action today places the future of the C-Block where it belongs: in the hands of the licensees and the markets. C-Block licensees will now have more flexibility in choosing among the options first established back in September 1997, and they should have greater access to capital as a result. The American public will benefit from the increased competition that will develop.

Last September, the Commission adopted an Order that was intended to maintain the integrity of our auctions while providing limited relief for small businesses seeking to enter the wireless telephony market. After carefully reviewing that Order, meeting with many C-Block licensees, and hearing from knowledgeable observers of this sector, I conclude that the September Order artificially constrained licensees who still sought to provide service and compete.

Today, we have loosened those constraints by allowing these C-Block licensees to make business decisions. The changes we make in this Order will allow licensees to scale back when they think it is appropriate, and pursue regional or local business strategies instead of being forced to make all-or-nothing choices. Those who choose to stay in the C-Block will pay what they owe but will operate from more secure financial foundations. Those who decide to leave the market will do so under reasonable conditions, and will return valuable spectrum for reauction.

I firmly believe that as a result of this new flexibility, some licensees who otherwise would have gone into bankruptcy will instead be able to revise their plans, access new capital, and build profitable businesses. Liquidation is a drastic measure that imposes tremendous financial and personal costs on the debtor; if today's Order prevents bankruptcies, that alone will be a huge public service. The Term Sheet which the government recently entered into with DCR Pocket is a good deal for the government and for the American people. It promises reasonable payment for licenses and holds out the prospect of still greater return, all within the framework of the original C Block rules encouraging small business and entrepreneur participation. But for the original Pocket license holders, who are now out of the wireless business, bankruptcy has been a disaster. I hope that today's Order will help others avoid the same experience.

I believe we have struck an equitable balance today between providing limited relief to C- Block licensees experiencing financial distress and ensuring the integrity of our rules and auctions process. The wireless telephone industry, which is already the exemplar of fierce competition, will become even more vibrant as a result.

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