American Wireless amasses valuable territory

JACKSON - Jackson-based American Wireless License Group made national news last month when a Fulton County, Ga., superior court jury ruled in a dispute over a broadband communications license two days before Christmas.

On Dec. 23, the jury found that American Wireless must abide by a disputed

"The whole thing didn't smell right," said Wirt Yerger III, founder, chairman and CEO of American Wireless. American Wireless disputed that it ever entered a binding contract.

In April 1999, American Wireless acquired the 30-MHz license for mobilephone use in Honolulu at an auction for an undisclosed sum. That fall, the company rejected offers from two communication firms to purchase the 10-MHz license for $7.4 million.

But several months later, American Wireless received a bid of $13.5 million from Pacific for the entire 30-MHz license, which was acceptable, with two conditions: that Pacific make a non-refundable 10% deposit and complete the agreement within 30 days. Pacific added two more conditions, including a 60-day "no shop" period, and a 60-day completion date. American Wireless officials say they never inked the revised contract.

Pacific filed suit in Georgia, and under a rarely used statute, which requires a speedy trial, the trial started during the busy holiday season at a time when jurors presumably were anxious to get home.

"I was disappointed we had the trial in Georgia when we didn't do any business in Georgia," Yerger said. "It was a huge distraction to me and my family as well as the other families involved, and has been a distraction from other American Wireless business."

American Wireless objected to the jurisdiction of the Georgia court, and thought the case should have been tried in Mississippi, said E. Clifton Hodge Jr. of Phelps Dunbar in Jackson, attorney for American Wireless.

"We have pending cases here in Mississippi related to the same events, which we expect that American Wireless will pursue," Hodge said. "We have several strong issues that American Wireless intends to pursue in an appeal in Georgia.

Also, American Wireless intends to pursue the cases it has filed in Mississippi, including one in Rankin County and a lawsuit in Hinds County against some of the principals on the other side."

What is American Wireless?

Yerger, 43, began investing in the wireless business in the mid- 1980s when he was vice president of Ross & Yerger Insurance in Jackson. During that time, he developed an insurance product called Insure Cell, which insured cellular providers against service interruption, and sold Insure Cell to clients in the U.S. until the cellular industry began consolidating.

"At that time, I was a passive investor," he said. "My primary business dealt with insurance at Ross & Yerger. However, in 1987 or 1988, I was elected president of a cellular company that owned a license up in Muskegon, Mich."

Even though Yerger won and purchased cellular markets throughout the South, the best investment opportunities came at the re-auction of the PCS spectrum. (PCS, or personal communications services, is a two-way 1900-MHz digital voice messaging and data service designed as the second generation of cellular.)

In December 1998, Yerger heard about a re-auction of the PCS spectrum. At the

original auction, the government provided bidders, who had not been financially qualified, with 10-year financing. A flurry of interest resulted in exceedingly high bids. However, once payments were missed, and a grace period was allowed, many bidders defaulted, and the result was a re-auction.

"We were also participants in the original auction, but we had enough discipline not to buy many markets," he said. "We only bought what we could pay for. When several companies defaulted, it presented us with an opportunity. By this time, enough pressure had been placed on Congress, the FCC and industry insiders to disallow FCC financing. This meant that high bidders had to pay in full within 30 days, so we raised $4.8 million to go to the bidding block."

In February 1999, American Wireless was established, and was financed in part by many investors who had invested with Yerger since the late 1980s.

Soon after, the re-auction took place over the Internet in a simultaneous multiround auction that lasted approximately 40 days, Yerger said.

"The money was our bidding power and allowed us to bid on approximately 4.8 million POPS," he said. (POP is industry lingo for the number of potential

subscribers within the licensed area of a cellular or PCS system.)

"Because there was not a lot of competition for some markets, we ended up being the high bidder on several, such as Honolulu, Birmingham, Tuscaloosa, Daytona Beach, Fla., and Eugene, Ore.," Yerger said.

"Ultimately, we ended up buying Jackson, Meridian, Laurel, Hattiesburg and Vicksburg markets, which adjoined the Birmingham/Tuscaloosa market and gave us a cluster of several million POPs, where we could operate with one switch. That's pretty much where we are right now."

The status of ValuePage

Established by Yerger and Richard J. Copponex in 1994, ValuePage is the 18th largest paging company in the U.S. with approximately 110,000 subscribers in Mississippi, Alabama, Florida, Georgia, Kentucky and Tennessee. The privately held company, with its largest markets in Birmingham, Chattanooga, Mobile and Jackson, is a regional paging carrier, reseller and cellular phone agent operating under the trade names ValuePage, CellularPage, CellPage and American Mobilphone Paging.

ValuePage is the exclusive reseller of Jackson-based SkyTel Communication's local advanced two-way messaging system in the metro Jackson market. The company is BellSouth Mobility's largest agent in Mississippi and one of the leading agents in BellSouth's entire service area.

The paging industry has seen its market size decline as more advanced telecommunications systems have entered the marketplace, Yerger said.

"The paging industry is flat, if not shrinking, due to competition from other wireless devices such as PCS phones that have paging capabilities," Yerger said. "ValuePage is streamlining its operations and looking to offer other products and services to our customers other than pagers and cell phones, such as local wireline phone service (CLEC), and Internet service."

A glass half full

In addition to interests in ValuePage and American Wireless, Yerger also heads Crown Communications, LLC, an investment group with cellular interests throughout the U.S.

"Even with this whole ordeal in Georgia, there have been some positives," Yerger said. "Since the 1980s, the wireless business has grown in an unprecedented fashion. There's been a total revolution in the wireless technology, and a lot has to do with computers and processors reaching greater speeds to process wireless signals. It's a great time to be in the communications industry and it's exciting to see what develops next."