Satellite Firm Tangles With AT&ampT and MCI

A small satellite telecommunications firm is coming at odds with some of the industry's telecom giants as a battle over airwaves underscores the challenges facing entrepreneurs in the post-telecom reform era.

At issue is TelQuest's plan to broadcast over airwaves from Canada. According to Barbara Sparks, executive vice president of TelQuest, there simply wasn't enough spectrum left in the United States designated for that use.

But big companies such as AT&ampT and MCI Communications Corp., both of which are launching direct broadcast satellite products, are protesting the application, saying TelQuest is shorting the U.S. Treasury.

"It would be unfair to U.S. companies to permit a Canadian satellite free access to U.S. customers while Canada imposes strict content restrictions on the transmission of programming from the United States into Canada," said Preston Padden, chairman of American Sky Broadcasting, a subsidiary of MCI and News Corp.

TelQuest said the protesting companies are only trying to get rid of competition. "The claims against us are all smoke screens," said Sparks.

Many other small companies have written to the FCC on behalf of TelQuest, saying a denial would strike a blow to entrepreneurs everywhere. "Grant of TelQuest's application would further serve the public interest by advancing the [FCC's] statutory mandate to foster small business participation in the communications industry," wrote Robert L. Schmidt, president of the Wireless Cable Association International Inc., in a letter to the agency.

"More competitors are almost always a good thing for consumers," wrote Gary Frink, president of Television Viewers of America. "There is a limited amount of spectrum available for use.... The more companies that occupy that spectrum the better."

Based on that opinion, TelQuest says that not letting such companies in the market would go against the goals of the Telecommunications Act of 1996. "I see TelQuest's application as test case No. 1 for the implementation of the Telecommunications Act," said Jerry Abbruzzese, chairman of TelQuest.

Sparks said the TelQuest offering will bring people more channels and better programming at a lower cost than cable. The offering would allow local operators to combine national and local programs and advertising.

If the FCC denies the application, admits Sparks, TelQuest will probably cease to exist. So far, she said, small companies are not impressed with what the telecom act has done for them. "The intent was to spawn entrepreneurship of the little guy," said Sparks. "Instead there have been a heck of a lot of mergers."

However, if TelQuest wins, it will mean another big market shift. Other satellite companies will look to foreign countries for spectrum. "Once we get involved it's a total commodities market," said Sparks.