800 MHz Report and Order Released

On August 6, the Federal Communications Commission (FCC) released the text of the 800 MHz Report and Order. After reading through the 64 pages of text plus about 100 pages of appendices, we finally have some answers. Unfortunately questions from many band incumbents may remain unanswered, but now we do have a better understanding.

Nextel will receive its 10 MHZ nationwide 1.9 GHz license. The will give up all their 800 MHz spectrum below 862 MHz, some channels in the new “ESMR” band from 862-869 MHz, and its 700 MHz guard band spectrum. Nextel will also need to secure a $2.5 billion Letter of Credit to fund the relocation costs and meet the Commission’s aggressive re-banding schedule.

With the addition of Nextel’s spectrum, the plan for the band between 851-862 is as follows:

• 851-854 MHz will be the new NPSPAC spectrum
• 854-854.7375 MHz and the remainder of the General Category band will be cleared for non-NPSPAC Public Safety (PS)
• 854.7625-860 MHz will remain the interleaved band of B/ILT/SMR/PS license and will eventually exclude Nextel. This will include those relocated by Nextel from the 851-854 MHz band and possibly PS systems currently between 860-861 MHz
• 860-861 MHz is designated the “Expansion Band”
• 861-862 MHz is the designated “Guard Band” and will function like the guard band between CMRS and PS in the 700 MHz band

This new band plan will not be applied to border areas, which will be left as is until the FCC can reach new agreements with Canada and Mexico.

Any spectrum between 854.7625-862 MHz vacated by Nextel and not filled by those relocated will be reserved for public safety (PS) for 3 years and PS and CII for an additional 2 years. Also, the FCC will not permit “cellular architecture” systems below 862 MHz.

During the re-banding process, the 800 MHz Business and Industrial (B/ILT) channel pools will be consolidated. The 900 MHz B/ILT channels will also be allowed to convert to commercial status without a holding period.

While the entire re-banding process must be completed within 36 months, the first 20 NPSPAC regions must be completed within 18 months. The last NPSPAC region’s retuning must begin within 30 months of the Public Notice in the Federal Register.

The entire re-banding will be overseen by a Transition Administrator (TA), who will be selected by a committee comprised of Nextel, APCA, ITA, Southern LINC, and UTC. The committee will have 45 days from the release of the Public Notice or September 20th, at the latest to choose the TA. The TA will be responsible for making the process run quickly and efficiently.

The FCC’s expectation of relocation steps is as follows:

1. TA will notify licensee that its system needs to be relocated and identifies replacement channels.
2. Licensee provides cost estimates to TA, to include a certification that funds requested are the minimum needed for comparable facilities.
3. TA will review estimates and notify the licensee if additional information is needed.
4. TA submits the estimate to Nextel for review and Nextel can dispute if they deem it necessary.
5. TA will “facilitate resolution of any disputes” between the licensee and Nextel.
6. When Nextel agrees, the TA will issue a certificate to the Letter of Credit Trustee, who will distribute the funds to company doing the relocation (i.e. equipment manufacturer, local dealer, etc.)
7. Once reconfiguration is complete the TA will audit the monies spent and issue another Draw Certificate to cover the remaining costs or require reimbursement of excess payments made.

The Report & Order provides no details on how the TA is to identify the replacement channels or how the frequency coordination or FCC licensing processes will be integrated into the process. The Order did reference that coordinators must process these applications quickly, so it is clear that coordination will be required.

Nextel is obligated to pay relocation costs for incumbents that are forced to move. Certain non-Nextel commercial licensees will also be permitted to move to the cellular band above 862 MHz with costs paid by Nextel. The Order designates these systems as ESMRs and provides them with the opportunity to exchange their EA channels for unencumbered channels above 862 MHz and will do the same for site specific frequencies, if:

• the licensee holds an EA license in the market, and
• Is using the site-specific frequencies in a “cellular architecture” system in the market on the date the Order is published in the Federal register.

The cost of the re-banding process and the value of Nextel’s surrendered spectrum will be credited against the $4.8 billion price of the 1.9 GHz spectrum received by Nextel. If the re-banding and spectrum does not value $4.8 billion, Nextel will make an “anti-windfall” payment to the Treasury.

The FCC’s decision will now be reviewed by the U.S Comptroller General. If an adverse decision is rendered, the FCC could be required to modify or stay a portion of the Order.