Plan for Sharing the Costs of Relocation

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Chapter I

[WT Docket No. 95-157; RM-8643; FCC 95-426]

Plan for Sharing the Costs of Relocation

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission adopted a Notice of Proposed Rule Making

(``Notice''), proposing a plan for sharing the costs of relocating

microwave facilities operating in the 1850 to 1990 MHz (``2 GHz'')

band. The Commission's proposal would establish a system whereby

Personal Communications Services (``PCS'') licensees that incur costs

to relocate microwave links outside of their assigned licensing areas

or spectrum blocks would receive reimbursement for a portion of those

costs from other PCS licensees that benefit from the resulting

clearance of the spectrum. In addition to cost-sharing issues, the

Commission asks for comment on whether to clarify certain other aspects

of the Commission's microwave relocation rules. Specifically, the

Commission seeks comment on whether to clarify the definition of ``good

faith'' negotiations, which are required during the mandatory

negotiation period; whether to clarify the definition of ``comparable''

facilities, which must be provided to microwave incumbents by PCS

licensees who seek involuntary relocation; whether to clarify the rules

that allow relocated microwave licensees a 12-month trial period to

ensure their new facilities are comparable; whether to continue to

grant microwave applications for primary status in the 2 GHz band; and

whether to place a time limit on a PCS licensee's obligation to provide

comparable facilities. Also, the Commission stated that, as of the date

the Notice was adopted, it would grant primary status applications only

for minor modifications that would not add to the relocation costs of

PCS licensees.

DATES: Comments must be filed on or before November 30, 1995, and reply

comments must be filed on or before December 21, 1995.

ADDRESSES: Federal Communications Commission, 1919 M Street NW.,

Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT:

Linda I. Kinney, (202) 418-0620, Wireless Telecommunications Bureau.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Notice, adopted on

October 12, 1995, and released on October 13, 1995. The complete text

of this Notice is available for inspection and copying during normal

business hours in the FCC Dockets Branch, Room 239, 1919 M Street NW.,

Washington, D.C., and also may be purchased from the Commission's copy

contractor, International Transcription Service, at (202) 857-3800,

2100 M Street NW., Suite 140, Washington, D.C. 20037.

I. Background

In the First Report and Order and Third Notice of Proposed Rule

Making in ET Docket No. 92-9, 57 FR 49020 (October 29, 1992) (``ET

First Report and Order''), the Commission reallocated the 1850-1990,

2110-2150, and 2160-2200 MHz bands from private and common carrier

fixed microwave services to emerging technology services. The

Commission also established procedures for 2 GHz microwave incumbents

to be cleared off of emerging technology spectrum and relocated to

available frequencies in higher bands. The ET First Report and Order

set forth a regulatory framework that encourages incumbents to

negotiate voluntary relocation agreements with emerging technology

licensees or manufacturers of unlicensed devices when frequencies used

by the incumbent are needed to implement the emerging technology. The

ET First Report and Order also stated that, should voluntary relocation

negotiations fail, the emerging technology licensee could request

mandatory relocation of the existing facility, provided that the

emerging technology service provider pays the cost of relocating the

incumbent to a comparable facility.

In the Commission's 1993 Third Report and Order and Memorandum

Opinion and Order in ET Docket No. 92-9, 58 FR 46547 (September 2,

1993) (``ET Third Report and Order''), as

[[Page 55530]]

modified on reconsideration by the Commission's 1994 Memorandum Opinion

and Order, 59 FR 19642 (April 25, 1994) (``ET Memorandum Opinion and

Order''), the Commission established additional details of the

transition plan to enable emerging technology providers to relocate

incumbent facilities to other spectrum. The relocation process now in

effect consists of two periods that must expire before an emerging

technology licensee may proceed to request involuntary relocation. The

first is a fixed two year period for voluntary negotiations (three

years for public safety incumbents, e.g., police, fire, and emergency

medical), during which the emerging technology providers and microwave

licensees may negotiate any mutually acceptable relocation agreement.

If no agreement is reached during the voluntary negotiation period, the

emerging technology licensee may initiate a one-year mandatory

negotiation period--or two-year mandatory period if the incumbent is a

public safety licensee--during which the parties are required to

negotiate in good faith. Should the parties fail to reach an agreement

during the mandatory negotiation period, the emerging technology

provider may request involuntary relocation of the existing facility.

After relocation, the microwave incumbent is entitled to a one-year

trial period to determine whether the facilities are comparable. If the

relocated incumbent can demonstrate that the new facilities are not

comparable to the former facilities, the emerging technology licensee

must remedy the defects or pay to relocate the microwave licensee back

to its former or an equivalent 2 GHz frequency.

Because of the pattern of use of the 1850-1990 MHz band by

microwave incumbents, the relocation burden on each PCS licensee is not

necessarily limited to microwave links within its spectrum block and

licensing area. Some spectrum blocks assigned to microwave incumbents

overlap with one or more PCS blocks. Also, incumbents' receivers may be

susceptible to adjacent or co-channel interference from PCS licensees

in more than one PCS spectrum block. In order to clear a particular

spectrum block for unrestricted PCS use, a PCS licensee may be required

to relocate links in other licensing areas or on other spectrum blocks

that would otherwise cause or receive interference.

On May 5, 1995, Pacific Bell Mobile Services filed a Petition for

Rulemaking (``PacBell Petition'') that proposed a detailed cost-sharing

plan in which PCS licensees on all blocks, licensed and unlicensed,

would share in the cost of relocating microwave stations. On May 16,

1995, the Commission requested comments on PacBell's proposal. Initial

comments were due on June 15, 1995 and replies were due June 30, 1995.

The Commission's cost-sharing proposal is based on PacBell's Petition,

as modified by the Personal Communications Industry Association

(hereinafter referred to as the ``PCIA consensus proposal'').

II. Notice of Proposed Rule Making

A. Cost-Sharing Proposal

The Commission tentatively concludes that the public interest is

served by requiring PCS licensees that benefit from the relocation of a

microwave link to contribute to the costs of that relocation. Under the

Commission's current rules, the PCS licensee that relocates microwave

links (hereinafter referred to as the ``PCS relocator'') has no right

to reimbursement if a PCS licensee relocates a microwave link that

encumbers another PCS licensee's authorized frequencies or is located

in another licensee's territory. Any form of cost-sharing that occurs

must be by private, voluntary negotiation. Although affected PCS

entities may be able to identify each other and negotiate a joint

relocation agreement, parties benefitting from a relocation may not be

in a position to reach such an agreement before one of the parties must

move the link of its own business reasons. In addition, prior to the

licensing of the C, D, E, and F blocks, informal cost sharing of

relocation expenses that benefit these blocks in impossible because the

licensees for these blocks are unknown. As a result, existing PCS

licensees may be hesitant to move links unilaterally without some

assurance that future competitors who benefit from the relocation will

pay a share of the cost.

The Commission believes that adoption of a mandatory cost-sharing

plan would significantly enhance the speed of relocation by reducing

the ``free rider'' problem and creating incentives for PCS licensees to

negotiate system-wide relocation agreements with microwave incumbents.

This would in turn result in faster deployment of PCS and delivery of

service to the public. The Commission also tentatively concludes that

the PCIA consensus proposals, with a few modifications, offers a

practical and equitable approach to allocating the costs of relocation.

The mechanics of the plan are set forth in more detail below. The

Commission seeks comment on the advantages and disadvantages of

adopting mandatory cost-sharing and on the specifics of this proposal.

1. Mechanics of the Cost-Sharing Plan

The Cost-Sharing Formula. Under PCIA's consensus proposal, PCS

licensees would be entitled to reimbursement based on a cost-sharing

formula. The formula is derived by amortizing the cost of relocating a

particular microwave link over a ten-year period. As PCS licensees

enter the market, their share of relocation costs is adjusted to

reflect the total number of PCS licensees that benefit and the relative

time of market entry. The proposed formula is:

[GRAPHIC][TIFF OMITTED]TP01NO95.002

R equals the amount of reimbursement.

C equals the amount paid to relocate the link.

N equals the next PCS licensee that would interfere with the link. (The

PCS relocator is denominated as N=1. After the link is relocated, the

next PCS provider that would interfere would be 2, as so on.)

TN equals T1 plus the number of months that have passed since

the relocator obtained its reimbursement rights.

T1 equals the month that the first PCS licensee obtained rights to

reimbursement (as denoted by the numerical abbreviation for each month,

i.e., March=3).

The Commission tentatively concludes that the above formula

provides an effective and straightforward means of determining a

subsequent licensee's reimbursement obligation. The Commission also

tentatively agrees with PCIA that a PCS relocator should be entitled to

full reimbursement for relocating links with both endpoints outside of

its licensed service area, subject to the reimbursement cap (discussed

in further detail below). Such links are unlikely to interfere with the

relocator's system, and are easy to identify for purposes of

administering the cost-sharing plan. The Commission requests comment on

its proposal and any alternatives.

Expenses Already Incurred. The Commission tentatively concludes

that PCS licensees should be permitted to seek reimbursement for any

relocation costs incurred after the voluntary negotiation period began

for A and B block broadband PCS licensees on April 5, 1995. Once the

new rules are effective, a clearinghouse would be established (as

discussed in further detail below), and receipts from

[[Page 55531]]

expenses already incurred would be submitted to the clearinghouse for

accounting purposes. This would allow those PCS licensees, which have

already relocated or are in the process of relocating microwave

systems, to receive the same reimbursement benefit as other PCS

licensees that relocate microwave systems after any rule change. The

Commission seeks comment on this proposal.

Compensable Costs. Relocation costs can be divided roughly into the

following two categories: the actual cost of relocating a microwave

incumbent to comparable facilities, and payments above the cost of

providing comparable facilities, referred to as ``premium payments.''

The Commission tentatively concludes that premium payments should not

be reimbursable, because such payments are likely to be paid by PCS

licensees to accelerate relocation so that they can be the first

licensee in the market area to offer PCS services. The Commission does

not believe later that market entrants should be required to contribute

to premium payments, because they have not received the corresponding

advantage of being first to market. The Commission therefore proposes

to limit the calculation of reimbursable costs under the formula to

actual relocation costs. Actual relocation costs would include such

items as: radio terminal equipment (TX and/or RX--antenna, necessary

feed lines, MUX/Modems); towers and/or modifications; back-up power

equipment; monitoring or control equipment; engineering costs (design/

path survey); installation; systems testing; FCC filing costs; site

acquisition and civil works; zoning costs; training; disposal of old

equipment; test equipment (vendor required); spare equipment; project

management; prior coordination notification under Section 21.100(d) of

the Commission's rules, 47 CFR 21.100(d); site lease renegotiation;

required antenna upgrades for interference control; power plant upgrade

(if required); electrical grounding systems; Heating Ventilation and

Air Conditioning (HVAC) (if required); alternate transport equipment;

and leased facilities. The Commission requests comment on this

proposal, and on any additional types of costs that commenters believe

should be eligible for reimbursement.

Length of Obligation. The Commission tentatively concludes that the

cost-sharing plan should sunset for all PCS licensees ten years after

the date that voluntary negotiations commenced for A and B block

licensees, which means that cost-sharing would cease on April 4, 2005.

The Commission believes that it is important to set a date certain on

which the clearinghouse will be dissolved, and adopt a cost-sharing

plan with the fewest possible variables so that it will be easy to

administer. The Commission also believes that this time period is

sufficient for all licensees (including those in the C, D, E, and F

blocks, which will be licensed in the near future) to complete most

relocation agreements. This ten-year period also roughly coincides with

the initial PCS license terms and the ten-year depreciation period

under the proposed formula. To the extent that some obligations would

have extended beyond this date under the formula, the Commission

believes that the limited benefit that licensees would receive is

outweighed by the cost of maintaining a clearinghouse beyond the ten-

year period. The Commission seeks comment on this proposal.

Reimbursement Cap. The Commission tentatively concludes that a cap

on the amount subject to reimbursement under the cost-sharing formula

is appropriate, because it protects future PCS licensees--who have no

opportunity to participate in the negotiations--from being required to

contribute to excessive relocation expenses. The Commission also

tentatively concludes that a cap will not force microwave licensees to

contribute to the cost of their own relocation, because a cap on the

amount subject to reimbursement does not limit payments to microwave

incumbents. If a cap is imposed, the Commission believes that the

amount should be sufficient to cover the average cost of relocating a

link. While this may require the initial PCS relocator to bear more of

the cost in cases where relocation expenses are unusually high, setting

the cap at a higher level could shift the burden unfairly to subsequent

licensees in many more cases. Therefore, the Commission tentatively

concludes that a $250,000 per link cap (plus $150,000 if a tower is

required) is appropriate. This amount has the consensus support of PCS

commenters as an accurate approximation of the likely cost of

relocating most microwave stations. In addition, UTAM has estimated

that relocation costs will average $200,000 per link to cover the same

distance as an existing single microwave link. The Commission requests

comment on this proposal.

2. Cost-Sharing Obligation

Creation of Reimbursement Rights. The Commission tentatively

concludes that the PCS relocator should obtain some form of rights for

which it would be entitled to reimbursement. The Commission proposes

that, once a PCS licensee and a microwave incumbent have signed an

agreement that provides for the relocation of a specified number of

microwave links, the parties would submit the relocation agreement to a

clearinghouse. On the date that the relocation agreement is submitted,

the clearinghouse would replace the name of the microwave incumbent

with the name of the PCS relocator in a database maintained for the

purpose of determining reimbursement. As of that date, the PCS

relocator would become the holder of ``reimbursement rights'' for all

links covered by the relocation agreement. When a subsequent PCS

licensee begins the prior coordination notice (``PCN'') process

required by Section 21.100(d) of the Commission's rules, 47 CFR

21.100(d), that licensee would also contact the clearinghouse to

determine whether any PCS relocators hold reimbursement rights for the

channel over which it intends to transmit.

The Commission tentatively concludes that the creation of

reimbursement rights--which are separate, distinct, and unaffiliated

with the underlying microwave license--are preferable to the concept of

transferring the microwave incumbent's ``interference'' rights as

proposed by PCIA. First, the Commission believes that it is important

for the microwave incumbent to retain all of its rights under its

original authorization until its new system is in place. Second, any

transfer of rights relating to a license (even if only partial rights

are being transferred) would require Commission approval under Section

310(d) of the Communications Act, as amended. Thus, under PCIA's

proposal, the microwave incumbent would be required to request

permission from the Commission to transfer its interference rights to a

PCS licensee. The PCS licensee could not obtain the interference rights

until the Commission has acted. The Commission believes that such a

procedure would be time consuming and administratively cumbersome.

Third, the interference rights would have to exist independently from

the microwave license, so that they would not be cancelled at the same

time the microwave incumbent returns its 2 GHz license to the

Commission. The Commission seeks comment on the creation of

reimbursement rights.

Another alternative would be for the microwave licensee to assign

its microwave license to the PCS licensee under Section 94.47 of the

Commission's rules, 47 CFR 94.47, as part of a relocation agreement.

The assignment would require Commission

[[Page 55532]]

approval, but would effectively transfer the incumbent's entire license

to the PCS licensee. The difficulty with this approach is that under

Section 94.53 of the Commission's rules, 47 CFR 94.53, the microwave

license must be cancelled if the facility has been non-operational for

a year. Because the PCS licensee would not operate a microwave system,

a mechanism would be required that enables the PCS licensee to exercise

its rights after the microwave facility has become non-operational. The

Commission seeks comment on the above options and any alternatives.

Definition of Interference. To ascertain whether subsequent

licensees are obligated to make a payment under the proposed plan, the

Commission must decide what standard will be used to determine

interference, and what type of interference (e.g., co-channel, adjacent

channel) triggers a cost-sharing obligation. The Commission tentatively

concludes that the Telecommunications Industry Association (``TIA'')

Bulletin 10-F is an appropriate standard for determining interference

for purposes of the cost-sharing plan. TIA Bulletin 10-F is already the

standard used to determine PCS-to-microwave interference.

The Commission also notes, however, that the procedures set forth

in TIA Bulletin 10-F permit the use of different propagation models and

allow alternative technical parameters to be employed. Therefore, TIA

Bulletin 10-F may not provide a clear standard for determining

interference in some situations. Thus, the Commission seeks comment on

whether the application of Bulletin 10-F should be limited in scope for

reimbursement purposes to the minimum coordination distance equations.

Under this approach, reimbursement would be required for all facilities

within the calculated coordination zone from the PCS base station,

rather than basing the requirement on the more complex and variable

computations of potential interference. The Commission tentatively

concludes that use of these minimum coordination distance equations

would simplify administration of the test for determining whether a

cost-sharing obligation exists, and would reduce the number of disputes

that may otherwise arise over whether interference would have occurred

if the link were still operational. The Commission requests comment on

whether any of the other standard equations of TIA Bulletin 10-F may be

applied more easily for purposes of cost-sharing. The Commission also

seeks comment on whether there is a more appropriate industry-accepted

standard for determining interference.

The Commission also notes that incumbent microwave licensees

generally employ receivers with ``receiving bandwidths'' that

significantly exceed the authorized bandwidth of the associated

transmitter. Accordingly, microwave receivers generally require

protection over a frequency range twice as large as the transmission

bandwidth (i.e., a microwave station with a 5 MHz transmit bandwidth

would require protection within a 10 MHz band to protect its

corresponding receive station). For purposes of determining a

reimbursement obligation, however, the Commission proposes to consider

only interference that occurs co-channel to the transmit and receive

bandwidth of the incumbent microwave licensee. For reimbursement and

cost-sharing purposes only, the Commission proposes that a 5 MHz

bandwidth transmit microwave station would receive only 5 MHz

protection for its receive stations (rather than the 10 MHz adjacent

channel protection it would typically require to protect its receive

station). Excluding adjacent channel interference for purposes of cost-

sharing will serve to simplify administration of the cost-sharing plan

by providing more certainty in determining when a reimbursement

obligation exists. Also, it would reduce the number of receive stations

that would be calculated to receive interference, thereby limiting the

number of situations under which reimbursement is required. The

Commission seeks comment on this proposal and any alternatives. The

Commission also requests comment on whether adjacent channel

interference (i.e., 5 MHz transmit and 10 MHz receive protection)

should be included for purposes of determining a reimbursement

obligation.

With respect to the type of interference that should trigger a

cost-sharing obligation, the Commission tentatively concludes that a

two-part test should be adopted for determining whether reimbursement

is required. Thus, a subsequent licensee would be required to reimburse

the PCS relocator only if (1) The subsequent PCS licensee's system

would have caused co-channel interference to the link that was

relocated, and (2) at least one endpoint of the former link was located

within the subsequent PCS licensee's authorized market area. The

Commission requests comment on whether reimbursement should also be

required if the link that is relocated would have caused adjacent-

channel interference to the subsequent licensee, and whether it would

be difficult to determine if adjacent-channel interference would have

occurred.

Payment Issues. The Commission tentatively concludes that a PCS

licensee should be required to pay under the cost-sharing formula at

the time that its operations would have caused interference with the

relocated link. The Commission also tentatively concludes that a PCS

licensee's reimbursement obligation should be determined at the time

frequency coordination is required. Thus, the Commission proposes that

PCS licensees contact the clearinghouse to determine reimbursement

obligations prior to initiating service, although payment would not be

due in full until the date that the PCS licensee commences commercial

operations. The Commission seeks comment on these proposals.

In addition, the Commission tentatively concludes that PCS

licensees that are allowed to pay for their licenses in installments

under the Commission's designated entity rules should have the same

option available to them with respect to payments under the cost-

sharing formula. The Commission also tentatively concludes that the

installment payment option should be extended to the Unlicensed PCS Ad

Hoc Committee for 2 GHz Microwave Transition and Management (``UTAM'').

Allowing cost-sharing payments to be made in installments will

significantly ease the burden of cost-sharing for these entities. The

Commission further proposes that the specific terms of the installment

payment mechanism, including the treatment of principal and interest,

would be the same as those applicable to the licensee's auction

payments described above. Thus, if a licensee is entitled to pay its

winning bid in quarterly installments over ten years, with interest-

only payments for the first year, it would pay relocation costs under

the same formula. Because UTAM receives its funding in small increments

over an extended period of time, the Commission tentatively concludes

that UTAM should qualify for the most favorable installment payment

plan available to small businesses with gross revenues of $40 million

or less. UTAM would therefore be permitted to make its payments on the

same terms as the C Block small businesses (i.e., using installments,

at a rate equal to ten-year U.S. Treasury obligations applicable on the

date the license is granted, and requiring that payments include

interest only for the first six years with payments of principal and

interest amortized over the remaining four years of the license term).

The Commission

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seeks comment on whether the repayment schedules and interest rates

that it adopted for repaying auction bids are appropriate for cost-

sharing purposes.

3. Role of Clearinghouse

The Commission tentatively concludes that if the proposed cost-

sharing plan is adopted, it should be administered by an industry-

supported clearinghouse. The Commission believes an industry-supported

clearinghouse is preferable to having the cost-sharing plan

administered by the Commission for several reasons. First,

administration of the plan by the Commission would be a significant

drain on the Commission's administrative resources. Second, the

Commission believes that the PCS industry has the capability and the

incentive to support an industry clearinghouse. The Commission does not

propose at this time to designate any particular organization as the

clearinghouse, but seeks comment on the criteria it should use for

designating a clearinghouse, and on whether it should be an existing

organization or a new entity created for this purpose. The Commission

also seeks comment on how the clearinghouse would be funded. One

possibility would be for PCS licensees who seek reimbursement under the

cost-sharing plan to pay an administrative fee to the clearinghouse for

each relocated link that is potentially compensable under the plan. The

Commission believes that any fees assessed should be tied to the actual

administrative costs of operating the clearinghouse. The Commission

seeks comment on the appropriate fee level, as well as on any possible

alternative approaches to funding the clearinghouse.

PCS licensees that seek reimbursement under the formula would be

required to submit all applicable data, including contracts, to the

clearinghouse, which would open a file for each relocation. The

clearinghouse would then determine whether operation by the new PCS

licensee would have caused interference to a relocated microwave

facility, based on TIA Bulletin 10-F. If interference would have

occurred, the clearinghouse would notify the new licensee of its

reimbursement share under the formula. The Commission seeks comment

regarding potential confidentiality issues with respect to information

submitted to the clearinghouse. The Commission believes that specific

information regarding relocation costs will need to be available to

parties that wish to verify the accuracy of the clearinghouse's

reimbursement calculations. The Commission also believes that an open

flow of information is important to the smooth administration of the

cost-sharing plan, which in turn is likely to facilitate productive

negotiations between PCS licensees and microwave incumbents. Finally,

the Commission believes that confidentiality issues should be resolved

by PCS and microwave licensees rather than by the Commission. The

Commission therefore seeks comment on the extent to which the cost-

sharing proposal can accommodate the confidentiality concerns of the

parties.

4. Dispute Resolution Under the Cost-Sharing Plan

The Commission tentatively concludes that disputes arising out of

the cost-sharing plan (i.e., disputes over the amount of reimbursement

required, etc.) should be brought, in the first instance, to the

clearinghouse for resolution. To the extent that disputes cannot be

resolved by the clearinghouse, the Commission encourages parties to use

expedited alternative dispute resolution procedures (``ADR''), such as

binding arbitration, mediation, or other ADR techniques. The Commission

seeks comment on this proposal and on any other mechanisms that would

expedite resolution of these disputes, should they arise. The

Commission also seeks comment on whether parties should be required to

submit independent appraisals of valuations to the clearinghouse at the

time such disputes are brought to the clearinghouse for resolution. In

addition, the Commission seeks comment on whether failure to comply

with cost-sharing obligations should be taken into consideration by the

Commission when deciding on renewal and/or transfer of control or

assignment applications.

B. Relocation Guidelines

1. Good Faith Requirement During Mandatory Negotiations

If a relocation agreement is not reached during the voluntary

negotiation period, the Commission stated in the ET Third Report and

Order that the PCS licensee may initiate a mandatory negotiation

period, during which the parties are required to negotiate in good

faith. The Commission believes that clarification of the term ``good

faith'' will facilitate negotiations and help reduce the number of

disputes that may arise over varying interpretations of what

constitutes good faith. The Commission tentatively concludes that, for

purposes of the mandatory period, an offer by a PCS licensee to replace

a microwave incumbent's system with comparable facilities (defined in

further detail below) constitutes a ``good faith'' offer. Likewise, an

incumbent that accepts such an offer presumably would be acting in good

faith; whereas, failure to accept an offer of comparable facilities

would create a rebuttable presumption that the incumbent is not acting

in good faith. Comparable facilities, as explained below, would be

limited to the actual costs associated with providing a replacement

system, and would exclude any expenses (e.g., consultant fees)

incurred by the incumbent without securing the approval in advance from

the PCS relocator. The Commission seeks comment on this proposal. The

Commission also seeks comment on the appropriate penalty to impose on a

licensee that does not act in good faith.

2. Comparable Facilities

The Commission continues to believe that the current negotiation

process is the most appropriate means for determining comparability of

the existing and replacement facilities. The Commission believes that,

in the vast majority of cases, this procedure provides parties with the

necessary flexibility to negotiate terms for determining comparability

that are mutually agreeable to all parties without the need for

government intervention or mandate. Nonetheless, the Commission

recognizes that because comparability is such a key concept of the

Commission's rules, some clarification of the responsibilities and

obligations of the parties with regard to comparability would be

helpful. Accordingly, the Commission proposes to clarify the factors

that it will use to determine when a facility is comparable, i.e.,

equal to or superior to the fixed microwave facility it is replacing.

The Commission previously stated in the ET Third Report and Order

that to determine comparability it will consider, inter alia, system

reliability, capability, speed, bandwidth, throughput, overall

efficiency, bands authorized for such services, and interference

protection. The Commission notes, however, that many of these factors

are inter-related and that equivalency in each and every one of these

factors is not necessary for comparability. The Commission therefore

now proposes to clarify that the three main factors it will use to

determine when a facility is comparable are: communications throughput,

system reliability, and operating cost. A replacement facility will be

presumed

[[Page 55534]]

comparable if the new system's communications throughput and

reliability are equal to or greater than that of the system to be

replaced, and the operating costs of the replacement system are equal

to or less than those of the existing system. This will ensure that

incumbent users will perceive no qualitative difference between the

original and replacement facilities.

For the purpose of determining comparability, the Commission

proposes to define communications throughput as the amount of

information transferred within the system for a given amount of time.

For digital systems this is measured in bits per second (``bps''), and

for analog systems the throughput is measured by the number of voice

and or data channels. The Commission proposes to define system

reliability as the amount of time information is accurately transferred

within the system. The reliability of a system is a function of

equipment failures (e.g., transmitters, feed lines, antennas,

receivers, battery back-up power, etc.), the availability of the

frequency channel due to propagation characteristic (e.g., frequency,

terrain, atmospheric conditions, radio-frequency noise, etc.), and

equipment sensitivity. For digital systems this would be measured by

the percent of time the bit error rate (``ber'') exceeds a desired

value, and for analog transmissions this would be measured by the

percent of time that the received carrier-to-noise ratio exceeds the

receiver threshold. The Commission proposes to define operating cost as

the cost to operate and maintain the microwave system. For the purpose

of defining comparable systems, the Commission proposes to assume that

the operating cost of all microwave systems are the same provided that

they contain the same number of links. The Commission also proposes to

consider facilities comparable in cases where the specific increased

costs associated with the replacement facilities (e.g., additional

tower and associated radio equipment requirements, additional rents, or

land acquisition costs) are paid by the party relocating the facility,

or the existing microwave operator is fully compensated for those

increased costs. The Commission proposes that any recurring costs be

limited to a single ten-year license term. The Commission seeks comment

on these definitions.

The Commission recognizes that comparable replacement facilities

can be provided by ``trading-off'' system parameters. For example,

communications throughput may be increased by using equipment with a

more efficient modulation technique, and system reliability may be

improved by using better equipment, by adding redundancy in system

design (e.g., multiple receive antennas) or by providing additional

coding, such as forward error correction. Therefore, a system designer

may take advantage of these system ``trade-offs'' to provide comparable

facilities.

The Commission also proposes to clarify that the obligation to

provide comparable facilities under involuntary relocation requires a

PCS licensee to pay the cost of relocating only the specific microwave

links in the incumbent's system that must be moved to prevent harmful

interference by the PCS licensee's system. While the Commission expects

that PCS licensees may voluntarily undertake to relocate entire

microwave systems that include non-interfering links outside the PCS

licensee's particular service area, it does not regard this as a

requirement under involuntary relocation. With respect to those links

that do cause interference, however, PCS licensees must provide

incumbents with a seamless transition from the old facilities to the

replacement facilities. Thus, it may be both more efficient and more

cost-effective in many instances for the parties to move all of the

links in a system at once rather than to relocate them piecemeal. The

Commission seeks comment on this analysis. The Commission also

tentatively concludes that comparable facilities would be limited to

the actual costs associated with providing a replacement system (e.g.,

equipment, engineering expenses). The Commission proposes to exclude

extraneous expenses, such as fees for attorneys and consultants that

are hired by the incumbent without the advance approval of the PCS

relocator. The Commission considers such extraneous expenses to be

``premium payments'' that are not reimbursable after the voluntary

negotiation period has concluded. The Commission seeks comment on its

proposal and any alternatives.

In assessing comparability, the Commission also seeks comment on

how to account for technological disparities between old and new

microwave equipment. In many cases, microwave incumbents may seek to

replace old 2 GHz analog technology with new digital technology on the

relocated channel. The Commission encourages such agreements, but it

does not regard PCS licensees as being required to replace existing

analog with digital equipment when an acceptable analog solution

exists. Thus, the cost obligation of the PCS licensee would be the

minimum cost the incumbent would incur if it sought to replace but not

upgrade its system. The Commission seeks comment on this proposal and

on any alternatives.

The Commission also seeks comment on whether and how depreciation

of equipment and facilities should be taken into account.

Furthermore, the Commission seeks comment on whether additional

information about the value of an incumbent's current system and the

anticipated costs of relocation would also help to facilitate

negotiations. For example, the Commission could require that two

independent cost estimates--prepared by third parties not associated or

otherwise affiliated with either the incumbent licensee or the PCS

provider--be filed with the Commission by parties that have not reached

an agreement within one year after the commencement of the voluntary

negotiation period (April 4, 1996 for A and B block licensees). The

Commission seeks comment on whether it should require the parties to

submit such cost estimates during the voluntary negotiation period. The

Commission also seeks comment on what procedures should be used if the

microwave incumbent and the PCS licensee cannot agree on a third party

to prepare the independent cost estimate.

3. Public Safety Certification

In the ET Third Report and Order, the Commission identified the

select group of public service licensees that warrant special

protection (e.g., an extended voluntary negotiation period). The

Commission tentatively concludes the PCS licensees should have a

readily available means of confirming a microwave licensee's public

safety status. Thus, the Commission proposes that a public safety

licensee should be required to establish: (1) that it is eligible in

the Police Radio, Fire Radio, or Emergency Medical, or Special

Emergency Radio Services, (2) that it is a licensee in one or more of

these services, and (3) that the majority of communications carried on

the facilities involve safety of life and property.

Under the Commission's proposal, if the incumbent fails to provide the

PCS licensee with the requisite documentation, the PCS licensee may

presume that special treatment is inapplicable to the incumbent. The

Commission seeks comment on this proposal.

C. Twelve-Month Trial Period

Section 94.59(e) of the Commission's rules, 47 CFR 94.59(e),

provides a twelve-month period for relocated microwave incumbents to

test their new

[[Page 55535]]

facilities. The purpose of the twelve-month trial period is to ensure

that microwave incumbents have a full opportunity to test their new

systems under real-world operating conditions and to obtain redress

from the PCS licensee if the new system does not perform comparably to

the old system or pursuant to agreed-upon terms. The Commission

proposes that this period should commence at the time that the

microwave licensee begins operations on its new system. The Commission

also tentatively concludes that microwave licensees that have retained

their 2 GHz authorizations during the twelve-month trial period should

surrender them at the conclusion of that period.

Moreover, the Commission does not believe that microwave licensees

are required to retain their 2 GHz licenses through the trial period in

order to retain their rights to relocation and comparable facilities.

Section 94.59 of the Commission's rules, 47 CFR 94.59, provide that, if

the new facility is found not to be comparable during the trial period,

the PCS licensee must either cure the problem, restore the incumbent to

its original frequency, or pay to relocate it to an equivalent 2 GHz

frequency. In the Commission's view, all of these rights reside with

the incumbent as a function of the Commission's relocation rules,

regardless of whether the incumbent has previously surrendered its

license. The Commission therefore proposes to clarify its rules to

indicate that a microwave license may surrender its license as part of

a relocation agreement without prejudice to its rights under the

Commission's relocation rules. The Commission requests comment on this

proposal.

D. Licensing Issues

1. Interim Licensing

As a general matter, the Commission tentatively concludes that

allowing additional primary site grants in the 2 GHz band now that

relocation negotiations are ongoing will unnecessarily impede

negotiations and may add to the relocation obligations of PCS

licensees. Nevertheless, the Commission recognizes that some minor

technical changes to existing microwave facilities may be necessary for

incumbents' continued operations. The Commission does not believe,

however, that these minor technical modifications will significantly

increase the cost to a PCS licensee of relocating a particular link.

To the extent practicable the Commission proposes to continue

applying the current rules governing primary and secondary status to

modification and minor extension applications pending as of the

adoption date of the Notice. While the rulemaking proceeding is

pending, the Commission will continue to accept applications for

primary status, however it will process only minor modifications that

would not add to the relocation costs of PCS licensees. Thus, while the

rulemaking proceeding is pending, the Commission will grant primary

status applications for the following limited number of technical

changes: decreases in power, minor changes in antenna height, minor

coordinate corrections (up to two seconds), reductions in authorized

bandwidths, minor changes in structure heights, changes in ground

elevation (but preserving centerline height), and changes in equipment.

Any other modifications will be permitted only on a secondary basis,

unless a special showing of need justified primary status and the

incumbent is able to establish that the modification would not add to

the relocation costs of PCS licensees. In addition, the Commission will

carefully scrutinize any applications for transfer of control or

assignment to establish that its microwave relocation procedures are

not being abused, and that the public interest would be served by the

grant.

As of the adoption date of its new rules, the Commission proposes

to grant all other modifications and extensions solely on a secondary

basis (with the exception of the minor technical changes listed above).

Secondary operations may not cause interference to operations

authorized on a primary basis, and they are not protected from

interference form primary operations. The Commission believes that

granting secondary site authorizations serves the public interest,

because it balances existing licensees' need to expand their systems

with the goal of minimizing the number of microwave links that PCS

licensees must relocate. The Commission seeks comment on this proposal.

2. Secondary Status After Ten Years

Section 94.59(c) of the Commission's rules, 47 CFR 94.59(c), states

that the Commission will amend the operation license of the fixed

microwave operator to secondary status only if the emerging technology

service entity provides that 2 GHz incumbent with comparable

facilities. The Commission tentatively concludes that microwave

incumbents should not retain primary status indefinitely on spectrum

licensed for emerging technology services. Thus, the Commission

proposes that microwave incumbents that are still operating in the

1850-1990 MHz band on April 4, 2005, should be made secondary on that

date. This date coincides with the date that the clearinghouse would be

dissolved and provides adequate time for completion of microwave

relocation. The Commission seeks comments on whether there should be

some time limit placed on the emerging technology provider's obligation

to provide comparable facilities.

III. Procedural Matters and Ordering Clauses

A. Regulatory Flexibility Analysis

As required by Section 603 of the Regulatory Flexibility Act, the

Commission has prepared an Initial Regulatory Flexibility Analysis

(IRFA) of the expected impact on small entities of the policies and

rules proposed in this Notice. Written public comments are requested on

the IRFA.

Reason for Action: This rulemaking proceeding was initiated to

secure comment on a proposal for sharing costs among broadband PCS

licensees that will relocate 2 GHz point-to-point microwave licensees

currently operating on the spectrum blocks allocated for PCS. This

proposal would promote the efficient relocation of microwave licensees

by encouraging PCS licensees to relocate entire microwave systems,

rather than individual microwave links, thus bringing PCS services to

the public in an efficient manner. The Commission has also proposed to

clarify the terms ``comparable facilities'' and ``good faith''

negotiations, to clarify some aspects of the twelve-month trial period

after relocation, and has proposed to grant all microwave applications

for modifications and extensions solely on a secondary basis (with the

exception of the minor technical changes listed in the Notice).

Objectives: The Commission's objective is to require PCS licensees

that benefit from the relocation of a microwave link to contribute to

the costs of that relocation. A cost-sharing plan is necessary to

enhance the speed of relocation and provide an incentive to PCS

licensees to negotiate system-wide relocation agreements with microwave

incumbents. This action would result in faster deployment of PCS and

delivery of service to the public.

Legal Basis: The proposed action is authorized under the

Communications Act, Sections 4(i), 7, 303(c), 303(f), 303(g), 303(r),

and 332, 47 U.S.C. Secs. 154(i), 303(c), 303(f), 303(g), 303(r), 332,

as amended.

Reporting, Recordkeeping, and Other Compliance Requirements: Under

the proposal contained in the Notice, PCS

[[Page 55536]]

licensees that relocate microwave systems would be required to document

the relocation costs paid and report them to a central clearinghouse.

Later PCS market entrants would then be required to file Prior

Coordination Notices with the clearinghouse and, if necessary,

reimburse the initial relocating PCS licensee on a pro rata basis.

Federal Rules Which Overlap, Duplicate or Conflict With These

Rules: None.

Description, Potential Impact, and Number of Small Entities

Involved: This proposal would benefit small microwave incumbents by

encouraging PCS licensees to relocate entire microwave systems, rather

than individual links that interfere with the PCS licensee's

operations. Microwave licensees would therefore begin operations on

their new channels in an expedited fashion. The 2 GHz fixed microwave

bands support a number of industries that provide vital services to the

public. The Commission is committed to ensuring that the incumbents'

services are not disrupted and that the economic impact of this

proceeding on the incumbents is minimal. The Commission must further

take into consideration that not all of the incumbent licensees are

large businesses, particularly in the bands above 2 GHz, and that many

of the licensees are local government entities that are not funded

through rate regulation. The Commission believes that this proceeding

would further the Commission's policy of encouraging voluntary

agreements to relocate fixed microwave facilities to other bands during

the two-year period. After evaluating comments filed in response to the

Notice, the Commission will examine further the impact of all rule

changes on small entities and set forth its findings in the Final

Regulatory Flexibility Analysis.

Significant Alternatives Minimizing the Impact on Small Entities

Consistent with the Stated Objectives: The Commission has reduced

burdens wherever possible. The regulatory burdens the Commission has

retained are necessary in order to ensure that the public receives the

benefits of innovative new services in a prompt and efficient manner.

The Commission will continue to examine alternatives in the future with

the objectives of eliminating unnecessary regulations and minimizing

any significant economic impact on small entities.

IRFA Comments: The Commission requests written public comment on

the foregoing Initial Regulatory Flexibility Analysis. Comments must

have a separate and distinct heading designating them as responses to

the IRFA and must be filed by the comment deadlines set forth in the

Notice.

B. Paperwork Reduction Act

The Federal Communications Commission, as part of its continuing

effort to reduce paperwork burden, invites the general public and other

Federal agencies to take this opportunity to comment on the following

proposed and/or continuing information collections, as required by the

Paperwork Reduction Act of 1995, Public Law 104-13. Comments are

requested concerning (a) whether the proposed collection of information

is necessary for the proper performance of the functions of the

Commission, including whether the information shall have practical

utility; (b) the accuracy of the Commission's burden estimates; (c)

ways to enhance the quality, utility, and clarity of the information

collected; and (d) ways to minimize the burden of the collection of

information on the respondents, including the use of automated

collection techniques or other forms of information technology.

Dates. Written comments on information collection requirements

should be submitted on or before January 2, 1996. If you anticipate

that you will be submitting comments but find it difficult to do so

within the period of time allowed, you should advise the contact person

listed below as soon as possible.

Address. Direct all comments to Dorothy Conway, Federal

Communications Commission, Room 234, 1919 M St., N.W., Washington, DC

20554, or via Internet to [email protected]; and Timothy Fain, OMB Desk

Officer, 10236 NEOB, 725 17th St., N.W., Washington, DC 20503, or via

Internet to [email protected].

Further Information. For further information contact Dorothy

Conway, (202) 418-0217, or via Internet at [email protected].

Supplementary Information:

Title: Amendment to the Commission's Rules Regarding a Plan for

Sharing the Costs of Microwave Relocation.

Type of Review: New collection.

Respondents: Personal Communications Service licensees that

relocate existing microwave operators, and subsequent Personal

Communications Service applicants potentially benefitted by such

relocation.

Number of Respondents: Approximately 2,000.

Estimated Time Per Response: 15 minutes for each of approximately

2,000 respondents to photocopy and mail information; 40 hours for an

existing or newly-created industry representative to establish and

operate clearinghouse.

Total Annual Burden: Approximately 540 hours.

Needs and Uses: The Commission recently initiated a proceeding

proposing a plan for sharing the costs of relocating microwave

facilities currently operating in the 1850 to 1990 MHz band, which has

been allocated for use by broadband Personal Communications Services.

Amendment of the Commission's Rules Regarding a Plan for Sharing the

Costs of Microwave Relocation, Notice of Proposed Rule Making, adopted

October 12, 1995. The Commission's Notice would establish a mechanism

whereby PCS licensees that incur costs to relocate microwave links

would receive reimbursement for a portion of those costs from other PCS

licensees that also benefit from the resulting clearance of the

spectrum.

The Notice proposes that once a PCS licensee and a microwave

incumbent have signed an agreement with respect to relocation of the

microwave licensee, the parties would submit the relocation agreement

to an industry-supported clearinghouse. The clearinghouse would

maintain a computer database for the purpose of determining the

appropriate amount of reimbursement owed to the relocator PCS licensees

by subsequent PCS licensees who are benefitted by the relocation. When

a subsequent PCS licensee begins the prior coordination notice process

already required by Section 21.100(d) of the Commission's rules (i.e.

proposed frequency usage must be prior coordinated with existing users

and previously filed applicants in the area), that licensee would also

contact the clearinghouse to determine whether any PCS relocators hold

reimbursement rights for the channel over which it intends to transmit.

The clearinghouse would then determine whether operation by the new PCS

licensee would have caused interference to a relocated microwave

facility. If so, the clearinghouse would notify the new licensee of its

reimbursement share under a predetermined formula.

Thus, the Notice tentatively concludes that if the proposed cost-

sharing plan is adopted, it should be administered by an industry-

supported clearinghouse rather than by the Commission. PCS licensees

that seek reimbursement would be required to submit all applicable

data, including contracts, to the clearinghouse. To the extent that

disputes cannot be resolved by the clearinghouse, the Notice proposes

to encourage parties to use expedited alternative dispute resolution

[[Page 55537]]

procedures such as binding arbitration, mediation or other techniques.

The Notice seeks comment on the criteria the Commission should use in

designating a clearinghouse, and on how the clearinghouse would be

funded. The Notice suggests that one funding possibility might be for

PCS licensees seeking reimbursement under the cost-sharing plan to pay

an administrative fee to the clearinghouse.

The legal authority for this proposed information collection

includes 47 U.S.C. Sections 154(i), 303(c), 303(f), 303(g), 303(r) and

332. The information collection would not affect any FCC Forms. The

proposed collection would increase minimally the burden on PCS

licensees that relocate existing microwave licensees and on future PCS

applicants that might have benefited from the relocation by requiring

them to file already-existing paperwork with an industry-supported

clearinghouse.

C. Ex Parte Rules--Non-Restricted Proceeding

This is a non-restricted notice and comment rulemaking proceeding.

Ex parte presentations are permitted except during the Sunshine Agenda

period, provided they are disclosed as provided in Commission rules, 47

CFR 1.1202, 1.1203, and 1.1206(a).

D. Comment Period

Pursuant to applicable procedures set forth in Sections 1.415 and

1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested

parties may file comments on or before November 30, 1995, and reply

comments on or before December 21, 1995. To file formally in this

proceeding, you must file an original and four copies of all comments,

reply comments, and supporting comments. If you want each Commissioner

to receive a personal copy of your comments, you must file an original

plus nine copies. You should send comments and reply comments to Office

of the Secretary, Federal Communications Commission, Washington, D.C.

20554. Comments and reply comments will be available for public

inspection during regular business hours in the Reference Center of the

Federal Communications Commission, Room 239, 1919 M Street, N.W.,

Washington, D.C. 20554. A copy of all comments should also be filed

with the Commission's copy contractor, ITS, Inc., 2100 M Street, N.W.,

Suite 140, (202) 857-3800.

E. Authority

The proposed action is authorized under the Communications Act,

Sections 4(i), 7, 303(c), 303(f), 303(g), 303(r), and 332, 47 U.S.C.

Secs. 154(i), 303(c), 303(f), 303(g), 303(r), 332, as amended.

F. Ordering Clause

It is ordered that, as of the adoption date of the Notice, the

Commission will continue to accept microwave applications for primary

status in the 2 GHz band, however the Commission will process only

minor modifications that would not add to the relocation costs of PCS

licensees, as described in this Notice. This constitutes a procedural

change which is not subject to the notice and comment and 30-day

effective date requirements of the Administrative Procedure Act. See

Neighborhood TV Co., Inc. v. FCC, 742 F.2d 629 (D.C. Cir. 1984);

Buckeye Cablevision Inc. v. United States, 438 F.2d 948 (6th Cir.

1971). In any event, good cause exists under 5 U.S.C. Section

553(b)(3)(B) and (d)(3), because additional primary site grants in the

2 GHz band will unnecessarily impede the purpose of the current

relocation rules and any new relocation rules adopted in this

proceeding.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 95-27040 Filed 10-31-95; 8:45 am]

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