Michael Roberts: Blazing a Telecom Trail for Black Americans
A strategic switch saved the wireless entrepreneur millions and made him a role model
In early 1998, entrepreneur Michael Roberts jumped at what looked like
an opportunity to make millions. He shelled out $800,000 at a U.S. government
auction as a downpayment on seven wireless-phone licenses serving the St.
Louis area. The balance of $7.2 million, plus interest, would be due in
The auction was part of the government's plan to boost the minuscule
minority ownership in telecommunications by selling licenses to small businesses.
A great idea -- in principle. But Roberts, an African American who had
started two broadcast television stations, soon saw that this scheme to
own a little cellular empire could kill him financially. He figured he
would have to shell out $65 million more and knew that the government's
good intentions had already backfired for a number of other black entrepreneurs:
The huge cost of building a network had overwhelmed them. "A lot of [small]
companies went into bankruptcy," he says. "Not me."
Instead, he approached Kansas City-based Sprint PCS, the deep-pocketed
wireless carrier, which wanted small-business partners across the nation
to help build and service the network that handles its calls. Sprint, which
had never done business with a black-owned cellular operator before, was
skeptical at first. But Roberts argued that he was their man: After all,
he had started two successful companies in the TV business. Roberts said
he would build the cell sites -- the towers that direct calls from cellular
phones -- and market the service through his own retail outlets to college
students and other rural consumers. Impressed, Sprint officials agreed
to let him sell their service throughout most of Missouri, making Roberts'
company Sprint's first black-owned affiliate. Roberts gave the licenses
back to the government and signed with Sprint. That "sacrifice" gave him
twice the territory his seven licenses had covered and the clout of a marquee
name (Sprint handles all the billing and other paperwork). He also shook
a $7.2 million debt load from his shoulders.
"HE'S A MAVERICK." The St. Louis businessman expects Roberts Wireless Communications to reap $11 million in revenue
this year. By 2002, he's banking on 35,000 subscribers and his first profits.
He's one of just a handful of black entrepreneurs who have broken into
the telecom business. "He's proactive and energized," says Thomas Mateer,
vice-president for affiliations at Sprint PCS.
How did he get here? Roberts' evolution as an entrepreneur has taken him from selling
African goods at Lindenwood University in a St. Louis suburb to ownership
of 25 companies. Excluding the telecom venture, their revenues are about
$10 million now. Roberts now considers himself a capitalist, rather than
an entrepreneur. "An entrepreneur's primary drive is to identify resources
and make money for himself," he explains. A capitalist owns the tools of
production and can spread the benefits where he wants to. Put another way:
If Henry Ford had been black, his chain of managers probably would have
been too, Roberts says. "In the Information Age, power will be in the hands
of he or she who owns the backbone. I own a telephone company."
A few weeks ago, Roberts' trailblazing was recognized at the conference of the National
Association of Black Telecommunications Professionals in Washington, where
he was given the Granville T. Woods award, named after the legendary black
inventor who built the first transmitter and sold it to Bell Telephone
Co. "He's a maverick," says Monica Huddleston, NABTP president. "Entrepreneurship
is the single most important thing we can be doing."
Roberts hasn't forgotten his roots as a struggling entrepreneur in St. Louis. The Roberts
Companies buy at least 40% of their equipment and services from businesses
owned by people of color and women. "As I build out my business, I bring
people along and give them the chance to grow in the Information Age,"
PUSHING THE BIG FISH. Who gets left behind in the Information Age is no
minor social or economic issue. The 1996 Telecommunications
Act, which opened communications markets to competition for the first time,
let small businesses compete where huge monopolies once reigned. The law,
which affects wireless and wireline telephone service, cable programming,
broadcast companies, and services to schools, has spurred tremendous growth
in communications businesses. But minority companies, which lack access
to capital and deep industry connections, have been stuck on the sidelines.
The NABTP is eagerly
capitalizing on Roberts' success to encourage other African Americans get
into the telecom business as entrepreneurs, rather than pursue corporate
careers. At the Apr. 22-25 conference, Roberts spoke about his experience
in the wireless industry. It struck a chord with another entrepreneur, James Brady, vice-president at
Telecon Ltd., a telecom products and services company in San Francisco. Brady, who
spoke on careers, urged black telecom professionals to look beyond a nine-to-five job
and toward creating companies -- and to seek inspiration from their pre-industrial African heritage.
"Our ancestors did not look for jobs," says Brady. "They built institutions."
NABTP also organized sessions on financing, introducing attendees to principals
of small venture funds such as the Telecommunications Development Fund
based in New York, which invests as much as $1 million a year in minority-owned
another promising telecom entry point. Big companies are committed to spending
billions of dollars for services from minority-owned businesses each year.
Bell Atlantic, alone, says it will invest $1 billion in such ventures by
Roberts uses his
growing financial clout to encourage the big fish among his business partners
to make diversity a priority as well. After agreeing to pay $34 million
to wireless gear maker Lucent Technologies to expand Roberts' Missouri
territory, he demanded that the vendor employ people of color on the installation
project. "My organization is about making sure we pass the benefits of
success to others," he says. Surely, Granville T. Woods would have approved.
By Roger O. Crockett in Washington