The next contest involved Chicago. Ljunggren recounts: “Here too there were only two candidates for the license, MetroMedia and Graphic Scanning. At the end of March 1982, we had already visited the dominant RCC, Rogers Radio, with the charismatic Bud Kahn as its head. When Åke Persson and I arrived there together with Chan Rypinski and Jan Jubon, we had prepared a thorough presentation for Bud Kahn and his immediate staff. But Bud interrupted us and said that, if we had been able to persuade Chan and Jan to go there with us, that was enough for him. ‘We will be using Ericsson in our application.’ We were speechless, but managed to blurt out: ‘At least we can write a letter of intent’. He replied: ‘Of course, and then I will sign it’.”

Then, before the application had been submitted, the situation changed when John Kluge bought several RCCs in some of America’s largest cities through his company MetroMedia. One of them was Rogers Radio in Chicago.

MetroMedia opted not to reach an agreement with Graphic Scanning, choosing a comparative hearing instead. Even though there were only two applications, the hearing lasted for two whole days. After the hearing, MetroMedia was granted the Chicago license. Ljunggren says: “The fact that our system was nominated in the application thanks to Bud Kahn certainly helped when we were later able to meet John Kluge, who confirmed the order by shaking hands with Åke Lundqvist. Months later he and Leif Holm were finally able to sign the contract.”

The deal was announced by MetroMedia’s tough contract negotiator Larry Harris in connection with the annual CTIA (Cellular Telecommunications Industry Association) Fair in 1984. This was held in Newport News, Virginia and this time the principal speaker was Åke Lundqvist. Larry Harris introduced Lundqvist by saying: “Åke is head of Ericsson’s mobile telephone system, which is the best in the world. That’s why we have bought it for Chicago.”

Ljunggren recounts: “That must have been one of Åke’s finest moments. Now we were famous throughout the industry”.

LOTTERY

The next round of licenses involved the MSAs that came after the top 30 in size. Interest in the licenses was growing. Now there were on average 20 candidates for each market. The number of applications was more than the FCC could handle, so it decided that licenses would now be awarded by lottery.

On the day before the draw, Carl Aaron and Dick Shervin, both candidates themselves in many of the markets, convened a meeting at a law firm in New York in order to preempt the lottery.

“Each city (market) was assigned a value of say, USD 10 per inhabitant. If a city had a population of 500,000 it was then worth USD 5 million. If there were five applicants competing for licenses in this city, each was given a card worth USD 1 million for the city. In this way all the applicants were dealt a ‘hand’ that corresponded to their applications.

“The participants were then told to form groups and try to exchange cards. In some cases a participant could offer more money to strengthen a hand, and cards for different cities could also be exchanged. As soon as somebody managed to get a full hand for a certain city, he told Carl Aaron. If they could not finish before morning, the risk was that licenses would be awarded by lottery!” (Meurling & Jeans)

The FCC encouraged these voluntary agreements and gradually refined its selection process. But with the help of market forces, “chaos was replaced by systematic orderliness,” as Meurling & Jeans put it.

Author: Svenolof Karlsson & Anders Lugn

BATHROOM INTERIOR

Bathroom interior

© Telefonaktiebolaget LM Ericsson and Centre for Business History

Contact info/About the site