A Federal Communications Commission administrative law judge yesterday denied hundreds of applications for paging licenses filed by four firms after determining they were fronts for the largest U.S. paging company, Graphic Scanning Co.
If the FCC agrees with the judge's decision, it could jeopardize all of Graphic Scanning's applications for paging and other mobile service licenses -- as well as the licenses it currently holds.
"Every license that Graphic Scanning and its subsidiaries hold is at risk," said Michael Sullivan, chief of the FCC mobile services division.
"Graphic engaged the services of the other companies to act as fronts, to apply for frequencies Graphic Scanning itself could not apply for" because of ownership limits, Sullivan said.
"In the event that we have a finding the president of the company deliberately misinformed the commission, that sort of activity could well result in the loss of many or all their licenses," said an FCC official who declined to be identified. The FCC has taken away only two other common carrier licenses in the last five years.
Graphic Scanning Co., which had revenue of $96.7 million in its fiscal year 1983, serves more than 200,000 individual beepers in a number of cities and is a partner in other mobile phone, low-power television and satellite television companies. It also owns an international electronic documents carrier company.
Graphic Scanning holds a 20 percent share in Cellular One, the Washington-based cellular telephone and paging company.
FCC's Sullivan said the licenses of cellular companies in which Graphic Scanning holds an interest would not be in jeopardy, but Graphic Scanning could be forced to give up its share in them.
Graphic Scanning founder and Chairman Barry Yampol was not available late yesterday afternoon. The decision becomes effective in 50 days unless there is an appeal within 30 days or the commission moves for review within that time.
"There is no question the company is going to appeal this decision," said Graphic Scanning Vice President Edward R. Busch. "The company feels the decision is incorrect." Busch said that no clear definitions exist in the commission's rules "in terms of what a real party and interest is."
Administrative Law Judge Thomas B. Fitzpatrick denied about 700 applications filed in 40 markets for one-way paging by A. S. D. Answer Service Inc., B. W. Communications Inc., P. A. L. Communications Systems Inc. and Vineyard Communications Inc.
Fitzpatrick said the four companies and Graphic Scanning "were not candid and, on occasion, intentionally misrepresented material facts to the commission." As a result, Fitzpatrick said, granting "their applications would not serve the public interest."
Fitzpatrick found the four companies and Graphic Scanning never disclosed Graphic's role in the preparation of their applications. "What the applicants and Graphic failed to do was to truthfully and honestly inform the commission as to what their relationships were," he said.
The FCC withheld information on the decision until the stock market closed yesterday, but financial analysts said they had been advising clients not to purchase Graphic Scanning stock because of the FCC investigation. The company's stock had been volatile of late, and closed yesterday at 5 1/8, up 1/8.
"I've been avoiding their stock for the last two years because we felt there was substance to the claim that Graphic was the real party interest behind the four paging companies," said Anthony Pearce-Batten, a Legg Mason telecommunications analyst. "It's a very negative development and could affect its future."
Graphic Scanning had previously announced its intention to liquidate its operating and non-operating assets and distribute the proceeds to shareholders. The company will hold its annual stockholders meeting Feb. 25.