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Following the MTA A and B block auctions, the FCC scheduled auctions for the entrepreneur blocks. These blocks are C acid F and are licensed on a BTA basis. Tl�e C block represents 30 tilEIz, while the F block composes 10 Mf{z of specUum. In late December, 1994, d�e FCC decided to auction each block separately rather than together as had been platu�ed. Due to legal challenges a�id a US Supreme Court decision oii affirmative action, [he C b(ock auction was postponed to December, 1995. 'Che remaining D and E btock auctions represent 10 MHz each of spectnim on a BTA basis. At this time, these blocks are open to all types of businesses. [(owever, d�e ECC is still evaluating how these blocks will be a�ictioned and may have DE provisions on at least one block. Strong Competition As was noted eflrlier, diere is likely to be a lot of competition in each market for mobile telephone service. At I present, tl�ere are cellular operntors wid� existing infrastructure in most areas of t�ie country. This is because the �CC i provided for two cellular operators in each MS� and RSA almosi a decade abo. I In terms of PCS, the FCC is providing two licenses for each MTA and four licenses for each BTA. Only two of t�ie ! licenses for euch IITA offer favorable terms to small businesses and businesses owned by women or minorities. i fiowever, DEs can bid on all of the licenses if they have the funding, i t3TAs roll up to MTAs which overlap MSAs and RSAs. Thus, with two existing cellular operators and six separate '� PCS license holders, it is conceivable that ei�ht competitors could vie to provide wireless telephone service in a �� sin�le geographica! area. ' i "1'he 80-20 rule is a d�eory based on observation tl�at market share is generally dominated by relatively few firms. I Given d�is, it is unlikely diat all eight competitors in an area will be able to survive by providing the same type of I service. Expenditures on promotion and pnce-cutting from the well-financed Frms wili thin the number of I competitors. As a result, a PCS network operator must have an identified niche or talent that is not easily replicated. ' "I'his niche or talent rnust become a critical success factor important to the growth and continued viability of the firm. One od�er competitive issue is the ttu-eat of regulation. The federal government is active on telecommunication I issues and is likely to implement many new laws and regulations that will impact wueless communications. Relative ' to wired telecom�nunications, wireless telecommunications is loosely re�ulated. Organizations such as d�e PCIA and � d�e Cellular Telecommunications Industry Association(CTIA) are actively tracking and responding to the many ' regulatory issues facing�yireless telecommunications. ', High Costs for Set-Up While equipment costs for PCS are likely to be less for PCS service providers than cellular operators, diere are costs, I� nonetheless. Estimates are that 100,000 new transmission towers will be required for the next generation of wireless services. Not only does radio equipment liave to be set up, but networking equipment such as switches, controllers, '' and intelligent network devices has to be placed as well. Some financial analysts and industry consultants estimate this could cost upwards of$500 per subscriber and result in tens of millions of dollnrs needed by a PCS provider in a moderate-sized mFu�ket. ' Support operations for billing and customer service must also be established. This usually requires obtaining I� soRware from outside vendors and hinng consultunts to install it. There are also marketing and promotion costs that I have to be expended to attract customers and to generate revenue. �', In addition to network and operations set-up costs, there are charges placed upon PCS license winners for relocating � existing users of d�e radio spectrum. The spectrum that the FCC is auctioning oFf is cuirently used for microwave transmission by private companies and public utilities. Before beginning commercial operations, a PCS service operator must ensure little interference with incumbents and malce plans to relocate them at the licensee's expense. ' Anotlier important cost consideration is diat of interconnection charges to the Local Exchange Carrier(LEC). A LEC is die local telephone company, and it can be an independent company or one tl�at is part of a Bell Operating Company(BOC). Since die LEC's parent company may also have PCS or cellular operations, the LEC may agree to allow connection to its wired network but may drag its feet on completing the work. It may also provide inadequate access and charge excessive fees for t1�e interconnection. This is anotlier issue d�at tl�e PCIA and CTIA is addressing with lawmakers. It is also the same issue that many CAPs have made in wired telecommunications at die loca! level. Por die entrepreneur, it is important understand thut there are mairy cost considerations in entering the PCS industry, � ioD1GY �D Web Hrowser: Specific Information on PCS (http://www.cyberpeak.com/PCS/PC9_spec.htm) paqe 6