THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, August 13, 1994 TAG: 9408130249
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORT
DATELINE: WASHINGTON LENGTH: Medium: 65 lines
The Federal Communications Commission could come under pressure to resell space on the airwaves.
A massive auction last month raked in millions for the government, but the two top bidders as well as a number of other winners have failed to make down payments for the interactive television licenses.
Industry observers contend the FCC might have erred in the way it conducted the auction and could have to go back to the drawing board and stage the sale again.
Last month, 178 businesses won the interactive licenses in one of the government's first auctions of the airwaves. But when faced with a deadline to make down payments on their bids Monday, some didn't put up the money.
One winning bidder in Hampton Roads, Phoenix Data Communications Inc. of Chesapeake, was among those that didn't pay. It wasn't immediately clear Friday whether the area's other two winning bidders made down payments.
Phoenix president Larry Williams said Friday that the company has raised from investors the required $576,000 down payment for licenses in Hampton Roads, Richmond, Petersburg and Las Vegas. But Phoenix has asked the FCC for an extension before making that payment so it can gather more information on the technology to be used, he said.
The FCC hasn't replied, Williams said. He added that Phoenix is prepared to make the payment next week if the extension is denied.
``The money isn't the problem. It's the engineering,'' said Phoenix vice president Tal Shamgar. ``We're excited about the technology. It'll be here within six to 12 months.''
Interactive TV is intended to bring services such as home banking into living rooms.
Shamgar said Phoenix is willing to pay a penalty for its late down payment - if it is required to do so in order to maintain its license.
Gerald Vaughan, an FCC official, said Friday that 85 percent of the bidders have made their initial payments. But the top two bidders nationwide, Commercial Realty St. Pete Inc. and Interactive America Corp, have not paid up. Industry observers speculated the auction may have to be repeated. ``When the top bidders default in an auction, the whole thing could fall like a souffle,'' said David LaFuria, a partner at the Washington law firm Lucas, McGowen, Nace & Gutierrez.
LaFuria said several companies have indicated they are upset they may have paid too much for licenses because the two highest bidders have defaulted.
FCC officials Friday dismissed suggestions that the agency should scrap the auction. They said they plan to resell the licenses surrendered when the winners didn't pay.
The FCC said it will fine companies that default on payments, and might investigate them or have the Federal Trade Commission or the Justice Department see if the winning bidders lied about their ability to pay for the licenses.
Andy Sernovitz of the Interactive Television Association in Washington said Commercial Realty is threatening to sue the FCC, however, on charges that it fraudulently misrepresented interactive-TV technology, as well as the estimated worth of the licenses.
Two winning bidders for Hampton Roads licenses, Community Teleplay of Washington and 22nd Century Communications of New York, couldn't be reached Friday for comment. by CNB