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A Windfall Lost In Space


News: Analysis & Commentary: TELECOMMUNICATIONS

A WINDFALL LOST IN SPACE

Back in 1982, when Daniel H. Garner heard that the Federal Communications Commission was giving away designated slots in space for satellite-TV operators, the Arkansas businessman jumped in and grabbed a few. Garner got then-Governor Bill Clinton to write a letter of endorsement to the FCC, and he drafted heavy hitters such as the late Wilbur Mills, ex-chairman of the House Ways & Means Committee, and ex-NASA Administrator James M. Beggs for the board of his Advanced Communications Corp.

Now, satellite TV is hot, and Garner looks like a genius: His company hopes to sell its free orbital "parking spaces" for a cool $45 million for use by PrimeStar Partners LP. There's just one hitch: The FCC is poised to bring the scheme crashing to earth. Agency insiders say that at its August meeting, the commission likely will deny Garner his pot of gold in a precedent-setting decision designed to send shock waves through the satellite-TV industry.

The FCC staff plans to recommend to the full commission that Garner be allowed to recoup only his expenses in any deal. His only other option: fighting the ruling in federal court. The case could give the FCC a precedent for stripping other speculators of their licenses, opening the business to new entrants. "You can't just take a public asset, not do anything with it, and then go off to the beach," says Scott B. Harris, a top FCC staffer. The recommendation is backed by Chairman Reed E. Hundt, who is expected to push a majority of the agency's five commissioners to go along.

WRINGING OUT. There's a larger message behind the FCC stand. It used to be that regulators would wink at those who got their licenses for free, then flipped them for a fortune. Now, the FCC is set to sell all new licenses at auction and wring out any speculators who are left.

Meanwhile regulators are coming under pressure to approve Garner's sale: Garner even persuaded the entire Arkansas congressional delegation to write to FCC's Hundt on his behalf. He calls his deal "perfectly legitimate" and says he might go to court if the decision goes against him. PrimeStar, which has 73 channels, wants Garner's slots so that it can expand its offerings to compete more effectively against rival DirecTV, which has 150 channels. No deal "would be a disaster," says PrimeStar Chairman James L. Grey.

Would-be PrimeStar rivals, such as MCI Communications Corp., are eager for the slots if the company's deal with Garner falls apart. But despite the pressures, the FCC is close to a big policy change: After letting its valuable property sit idle for years, the agency is determined to inject a dose of competition into this emerging business.By Mark Lewyn in Washington


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