800 MHz Frequency Reconfiguration
- A Hiccup Or A Hurricane?
Liz Sachs - Partner, Lucas Nace Gutierrez & Sachs and Regulatory Counsel, EWA
Well, no one said it was going to be easy. It took the FCC and the industry almost three years and about two thousand record filings to thrash out an approach for addressing interference problems in the 800 MHz band. The Order adopted by the FCC was daunting. It required the relocation of more than a thousand incumbents in an orchestrated fashion under strict financial limits and with an aggressive timetable – three years from start to finish. It then took almost another year to select a Transition Administrator (TA) responsible for overseeing the process and, in turn, for the TA to develop a plan defining how, when and where the reconfiguration process would be implemented.
The plan adopted by the TA and approved by the FCC divides the country into four “Waves” with staggered start dates. In each case, incumbents on Channels 1-120 (851-854 MHz) first need to be relocated to the 854-860 MHz band to create a clean 3 MHz allocation to which NPSPAC licensees currently operating on 866-869 MHz can be moved. As specified in the rules, there is a 90-day voluntary negotiation period followed by a 90-day mandatory negotiation period for each Wave. If the incumbent and Nextel do not reach an agreement by the end of the mandatory period, the rules provide that they will be sent to Alternative Dispute Resolution (ADR) and then on to the Wireless Telecommunications Bureau if their issues are not resolved in ADR. The same voluntary and mandatory time periods are scheduled to begin for NPSPAC incumbents roughly simultaneous with the end of the Channels 1-120 mandatory negotiation period in each Wave.
The industry is just about six months into the process. Wave 1 began on June 27th and is scheduled to end on December 26th. A number of Frequency Reconfiguration Agreements (FRAs) have been struck, and the TA has worked feverishly to produce materials and engage in industry outreach efforts intended to help incumbents understand how to work their way through the process. But two recent filings, one by the TA and one by Nextel, raise cautionary flags about whether the FCC’s ambitious three-year timeline is on track.
The TA filed its Second Quarterly Report in mid-November, detailing the progress that had been made during the quarter ending September 30, 2005. A number of eyebrows shot up upon reading that the TA had received approximately $20M in fees through that date and Nextel had spent about $325M reconfiguring its own system, while less than $2M had been approved by the TA for incumbent relocation costs. However, since most business owners appreciate the issue of start-up costs, perhaps the more surprising figure was the TA’s calculation that as of September 30, 2005, the end of the Wave 1 three-month voluntary negotiation period, only some twenty percent of Wave 1 licensees and twelve percent of all licensees had reached agreements with Nextel. Although not specified in the Report, it is generally understood that the majority of executed FRAs are with Business, Industrial/Land Transportation, and SMR incumbents, not public safety licensees. The Report noted that “the TA believes that there will be a substantial number of incomplete Wave 1 [FRAs] at the close of mandatory negotiation period on December 26, 2005” and described several initiatives it was undertaking to reduce the number of situations that might require ADR at the end of that period. It carefully avoided any editorial comments about why the process was not moving more quickly or the implication of having to conduct a significant number of ADRs simultaneously, particularly those involving public safety entities.
Nextel’s December 1st comments on the TA’s Report were not quite as politic. As far as Nextel is concerned, there are a number of reasons the process has been delayed and the parties sharing responsibility for the holdup include the TA, Motorola, many incumbents, and the FCC itself. In fact, Nextel’s frustration has prompted it to suggest that “vigilant oversight and involvement by the Commission is necessary to ensure that this vital national initiative be performed as smoothly and as cost effectively as possible.” When private industry asks the government to step in and facilitate a process, it is fair to assume they see a potential train wreck coming down the track.
Of course, it cannot be a tremendous surprise that the first Wave would be the toughest and might take longer than the others. The TA recommended and the FCC approved a process that tackled the largest, most complicated areas of the country first, rather than doing a test run in smaller, less complex markets. The good news would have been that if the populated East and West Coasts could be relocated within the specified period, the rest of the country should be a breeze. The bad news is that it looks like the Wave 1 regions may need some additional time, as all of the parties work through some of the tough issues that make this rebanding effort unique.
One major hurdle has been trying to get incumbents to focus on their responsibilities in this somewhat confusing process. Although there have been a number of band relocations in recent years, typically the party trying to clear the spectrum was free to sweeten the pot or use other measures that might motivate incumbents to negotiate. In this band, the Federal Treasury is entitled to the difference between the $4.86B Nextel has committed to pay for the 1.9 GHz spectrum it is getting and the total cost of reconfiguring the 800 MHz band. Each incumbent must certify that its expenses are the minimum needed to accomplish the job. Since most incumbents have not experienced interference and have businesses or municipalities to run, spending the time needed to negotiate an FRA that has no financial upside and will cause at least some disruption of their day-to-day lives is a tough sell. As stated with delicacy by Nextel: “The reality is, however, that not all 800 MHz incumbents feel the same pressure as Sprint Nextel does to get band reconfiguration completed quickly.” Sure, it’s a federal government mandate, but so are half the things that businesses deal with on a daily basis. From the incumbent’s perspective, this one is no more compelling than lots of others.
The Nextel filing also highlights several other factors they believe have contributed to the delay. It is apparent they think the TA is indulging in too much detailed oversight of individual FRAs that have been negotiated by Nextel and the incumbent. They also suggest that the stream of materials released by the TA describing an evolving concept of FRA negotiation policies and procedures has confused some incumbents and creates an environment in which parties resist acting, for fear that the policies may change again. Even the FCC is not immune from being identified as part of the problem. Nextel complains that the October 2005 MO&O in this proceeding changed the ground rules for EA and ESMR licensees, thereby impacting Nextel’s negotiations with each and every incumbent in those categories. The delay in getting that Order published in the Federal Register also is on Nextel’s list of contributory factors.
Finally, Nextel aims its guns at Motorola. It fingers Motorola specifically for submitting vague and economically unjustifiable Requests for Planning Funding (RFPFs) for entities, primarily public safety, that need funds to gather the information that will permit them to negotiate an FRA with Nextel. Nextel claims that the requests “appeared to be well outside the anticipated range of planning costs for the systems involved.” It acknowledges that Nextel, Motorola and the TA very recently agreed on a template for these requests that now has been made available on the TA website, but there’s no indication that an agreement has been reached in respect to the costs associated with the covered activities.
The original Order in this proceeding required Nextel to complete retuning Channels 1-120 in at least twenty NPSPAC regions within eighteen months of the Public Notice announcing the start date of reconfiguration – June 27, 2005. A failure to do so without good, unavoidable cause could expose Nextel to monetary fines or even license revocations. For all the reasons detailed in its filing, Nextel now has asked the FCC to redefine the start date as sixty days after publication of the recent MO&O in the Federal Register which would buy it at least eight additional months. Yet it has not requested that the FCC extend the rapidly approaching December 26th deadline after which the remaining Wave 1 incumbents will be directed to ADR. Whether the TA will do so, or even the FCC itself, is anyone’s guess.
So it isn’t easy. Anyone who thought that Nextel, the TA and Motorola, or even just Nextel and the TA, would move in lockstep toward a happy conclusion (and drag the incumbents along with them) underestimated the scope, complexity and economic implications of the project. But with five years invested and interference to at least some public safety users unresolved, it is time for everyone involved to get a grip, get past their frustrations, and find the common ground that will make this process work – sooner rather than later. Hiccups should have been expected. It would be a disgrace if differences among key participants reach hurricane-force disagreements that leave this band in its current chaotic state for years to come.
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