Deregulation: Bonanza Or Bust?

The Telecommunications Act of 1996 vowed to break up communications monopolies and spark competition. Here's how you can take advantage of a multibillion dollar industry.

says Conley. “It merely opened up some avenues for other businesses besides the traditional big players to come in. But your pockets have got to be so deep that the only kind of business most African American entrepreneurs can afford is the subcontracting type of business,” she says.

Gerard Adams, CEO of Integrated Communications Group (ICG), a PCS carrier in Pasadena, California, agrees. “I think the Telecom Act has probably created procurement opportunities, but as far as becoming a PCS carrier, for example, it’s very tough for a minority business owner because you are competing with some of the largest companies in the world for capital to purchase a PCS license,” says Adams.

In 1995, Adams, who is Hispanic, partnered with three other minority firms–one Hispanic and two black-owned–to form ICG, which now has three partners. “We got together in 1994 to combine our resources and talents so that we could bid at FCC auctions for PCS licenses,” says Adams. “Since that time we have acquired 10, and now we’re in the process of putting together an investment group to build out these licenses,” he says.

It costs millions to purchase PCS spectrum. These licenses can be us
ed to provide wireless communications that can link pagers, portable computers, cellular phones and fax machines. ICG says it paid a total of $4.5 million for its licenses.

But purchasing the license is just the beginning, says Conley. “Once you do, then you have to get money to build all the equipment necessary to operate, then run [it]; and you have to go after customers that major players such as Southwestern Bell, Bell Atlantic and AT&T already have or are going after,” he adds.

Conley says this is the stage at which many African Americans who have purchased PCS spectrum get into trouble. “I knew a black business owner who bid on some spectrum and what he came up with was a $13 million outlay that would not start paying back for five years because it takes that long to build out your equipment, get your market share and start to earn revenue past what you’ve already spent,” she explains. Conley says she hopes that newly elected FCC Chairman William Kennard, the first African American to hold the position, will devise strategies to help black business owners keep the licenses they’ve purchased.

However, as a small business owner, you should nor expect to purchase a PCS license. Helping carriers to develop these systems (for example, those who can help build the infrastructure for voice data) offers perhaps the greatest opportunities for minority-owned firms.

But for those ambitious few, wireless licenses can be obtained through FCC auctions over the course of the next few years. For more information, contact the FCC at (202) 418-0990 or visit their Web site at www.fcc.gov.

CASHING IN ON THE HIGH-TECH CLASSROOM
When Carole Colvin, CEO of Southern Telecom Communications, a voice, data, video and sound systems cable installation company in Tampa, Florida, started her firm in 1993, she had seen the future’s handwriting on the board.

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