[Federal Register Volume 60, Number 211 (Wednesday, November 1, 1995)]
[Proposed Rules]
[Pages 55529-55537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27040]



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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 

[[Page 55533]]
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]
BILLING CODE 6712-01-M