[Federal Register Volume 61, Number 114 (Wednesday, June 12, 1996)]
[Rules and Regulations]
[Pages 29679-29695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14138]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 15, 22, 24, and 101

[WT Docket No. 95-157; RM-8643; FCC 96-196]


Microwave Facilities Operating in 1850-1990 MHz (2GHz) Band; 
Relocation Costs Sharing

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: By this First Report and Order, the Commission changes and 
clarifies certain aspects of the microwave relocation rules adopted in 
our Emerging Technologies proceeding, ET Docket No. 92-9. The 
Commission also adopts a plan for sharing the costs of relocating 
microwave facilities currently operating in the 1850 to 1990 MHz (``2 
GHz'') band, which has been allocated for use by broadband Personal 
Communications Services (``PCS''). The Commission's plan establishes a 
mechanism whereby PCS licensees that incur costs to relocate microwave 
links receive reimbursement for a portion of those costs from other PCS 
licensees that also benefit from the resulting spectrum clearance. The 
Commission conditions the cost-sharing plan, however, on selection of 
one or more entities or organizations to administer the plan.

EFFECTIVE DATES: Sections 15.307 and 22.602 are effective August 12, 
1996.

[[Page 29680]]

Sections 24.5, 24.237, 24.238, 24.239, 24.241, 24.243, 24.245, 24.247, 
24.249, 24.251 and 24.253 will become effective August 12, 1996, and 
will become applicable on the date that the Wireless Telecommunications 
Bureau selects a clearinghouse to administer the cost-sharing plan. The 
Commission will publish a document announcing the selection of the 
clearinghouse at a later date. Sections 101.3, 101.69, 101.71, 101.73, 
101.75, 101.77, 101.79, 101.81, and 101.147 will become effective 
August 1, 1996.

FOR FURTHER INFORMATION CONTACT: Michael Hamra (202) 418-0620, Wireless 
Telecommunications Bureau.

SUPPLEMENTARY INFORMATION: This is a synopsis of the First Report and 
Order, adopted April 24, 1996 and released April 30, 1996. For 
information regarding the proposed plan for sharing the costs of 
microwave relocation, see Amendment to the Commission's Rules Regarding 
a Plan for Sharing the Costs of Microwave Relocation, Notice of 
Proposed Rule Making, WT Docket No. 95-157, 60 FR 55529 (November 1, 
1995) (``Cost-Sharing Notice''). Part 101 will become effective August 
1, 1996. See 61 FR 26670 (May 28, 1996). The complete text of this 
First Report and Order is available for inspection and copying during 
normal business hours in the FCC Reference Center, Room 230, 1919 M 
Street, N.W., Washington, D.C., and also may be purchased from the 
Commission's copy contractor, International Transcription Service, at 
(202) 857-3800, 2100 M Street, N.W., Suite 140, Washington, D.C. 20037.

I. Background

    1. 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) 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 relocated to available 
frequencies in higher bands or to other media, by encouraging 
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 First Report and Order stated that, should negotiations 
fail, the emerging technology licensee could request involuntary 
relocation of the incumbent, provided that the emerging technology 
service provider pays the cost of relocating the incumbent to a 
comparable facility. In the Commission's Third Report and Order in ET 
Docket No. 92-9, 58 FR 46547 (September 2, 1993) as modified on 
reconsideration by the Memorandum Opinion and Order, 59 FR 19642 (April 
25, 1994) the Commission established additional details of the 
transition plan to enable emerging technology providers to relocate 
incumbent facilities. The relocation process consists of two 
negotiation periods that must expire before an emerging technology 
licensee may 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--commencing with 
the Commission's acceptance of applications for emerging technology 
services, during which the emerging technology providers and microwave 
licensees may negotiate any mutually acceptable relocation agreement. 
Negotiations are strictly voluntary. If no agreement is reached, 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.
    2. 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. Involuntary 
relocation requires that the emerging technology provider (1) guarantee 
payment of all costs of relocating the incumbent to a comparable 
facility; (2) complete all activities necessary for placing the new 
facilities into operation, including engineering and frequency 
coordination; and (3) build and test the new microwave (or alternative) 
system. Once comparable facilities are made available to the incumbent 
microwave operator, the Commission will amend the 2 GHz license of the 
incumbent to secondary status. After relocation, the microwave 
incumbent is entitled to a one-year trial period to determine whether 
the facilities are indeed comparable, and if they are not, the emerging 
technology licensee must remedy the defects or pay to relocate the 
incumbent back to its former or an equivalent 2 GHz frequency.
    3. Under these procedures, it is possible for a relocation 
agreement between a PCS licensee and a microwave incumbent to have 
spectrum-clearing benefits for other PCS licensees as well. First, some 
microwave spectrum blocks overlap with one or more PCS blocks, because 
the spectrum in the 1850-1990 MHz band was assigned differently in the 
two services. Second, incumbents' receivers may be susceptible to 
adjacent or co-channel interference from PCS licensees in more than one 
PCS spectrum block. For example, a microwave link located partially in 
Block A, partially in Block D, and adjacent to Block B, may cause 
interference to or receive interference from PCS licensees that are 
licensed in each of those blocks. Third, because most 2 GHz microwave 
licensees operate multi-link systems, PCS licensees may be asked to 
relocate links that do not directly encumber their own spectrum or 
service area in order to obtain the microwave incumbent's voluntary 
consent to relocate. Finally, the Unlicensed PCS Ad Hoc Committee for 2 
GHz Microwave Transition and Management Inc. (``UTAM''), the frequency 
coordinator for the PCS spectrum designated for unlicensed devices, 
expects that some licensed PCS providers will have to relocate links in 
the unlicensed band that are paired with links in licensed PCS 
spectrum. The Commission has designated UTAM to coordinate relocation 
in the 1910-1930 MHz band, which has been reallocated for unlicensed 
PCS devices. Once the 1910-1930 MHz band is clear, or there is little 
risk of interference to the remaining incumbents, and UTAM has 
recovered its relocation costs, UTAM's role will end and it will be 
dissolved.
    4. Because the Commission is licensing PCS providers at different 
times and multiple PCS licensees may benefit from the relocation of a 
microwave system or even a single link, the first PCS licensee in the 
market potentially bears a disproportionate share of relocation costs. 
Subsequent PCS licensees to enter the market may therefore obtain a 
windfall. As a result of this potential ``free rider'' problem, the 
first PCS licensee in the market might not relocate a link or might 
delay its deployment of PCS if it believes that another PCS licensee 
will relocate the link first, thus paying for some or all of the 
relocation costs. In addition, unless cost-sharing is adopted, PCS 
licensees might not engage in relocation that is cost-effective if 
viewed from an industry-wide perspective. For example, a link that 
encumbers two PCS blocks might not be moved if the cost is greater than 
the benefit to any single licensee, even though the joint benefit 
received by two or more licensees exceeds the cost of relocating the 
link.
    5. In 1994, PCIA proposed a cost-sharing plan to alleviate the free 
rider problem, which the Commission found to be attractive in theory 
but dismissed

[[Page 29681]]

as underdeveloped. On May 5, 1995, Pacific Bell (``PacBell'') filed a 
Petition for Rulemaking. In its petition, PacBell 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 comment on PacBell's 
proposal. Most parties that commented on PacBell's Petition for 
Rulemaking supported the cost-sharing concept, although the comments 
reflected some differences regarding the details of the proposal. On 
October 12, 1995, the Commission adopted a Notice of Proposed Rule 
Making, 60 FR 55529 (November 1, 1995) which sought comment on a 
modified version of the plan proposed by PacBell.
    6. The Commission released and adopted, with this First Report and 
Order, a Further Notice of Proposed Rule Making, 61 FR 24470 (May 15, 
1996).

II. First Report and Order

    7. In the Cost-Sharing Notice, the Commission proposed a number of 
changes and clarifications to the microwave relocation rules adopted in 
the Emerging Technologies docket. The Commission suggested that 
additional guidance with respect to certain aspects of its rules would 
facilitate negotiations, reduce disputes, and expedite deployment of 
PCS. As explained below, the Commission adopts many of the changes and 
clarifications the Commission proposed, along with some suggestions 
made by commenters. By adopting these rule changes and clarifications, 
as well as the cost-sharing plan discussed in Section B, infra, the 
Commission intends to expedite the clearing of the 2 GHz band and the 
introduction of PCS to the public, while protecting the rights of 
incumbents. The Commission seeks to promote an efficient and equitable 
relocation process, which minimizes transaction costs and maximizes 
benefits for all parties, including incumbents, PCS licensees, and the 
public.

A. Microwave Relocation Rules

1. Voluntary Negotiations
    8. The Commission agrees with commenters who argue that the public 
interest would not be served by changing the rules regarding the 
voluntary period for the A and B blocks at this time. First, the A and 
B block licensees who are now negotiating with incumbents were on 
notice of the voluntary period when they bid for their licenses, and 
they presumably have factored the length of the period and the 
potential cost of relocation into their bids. They have offered no 
persuasive justification to shorten the period now. Second, the 
Commission notes that many voluntary agreements have already been 
reached or are now being negotiated between A and B block licensees and 
incumbents. The Commission is concerned that altering the voluntary 
period could inadvertently delay the deployment of PCS, because 
negotiations are likely to be interrupted while parties reassess their 
bargaining positions. Nevertheless, the Commission agrees with PCS 
licensees that changing the negotiation period for blocks other than 
the A and B blocks may not raise the same concerns, because 
negotiations in these blocks have not commenced.
    9. Whether or not the negotiation periods are changed, the 
Commission also agrees with PCS licensees that additional information 
about the value of an incumbent's system, the estimated amount of time 
it would take to relocate the incumbent, and the anticipated cost of 
relocation may help facilitate negotiations during the voluntary 
period, as the Commission suggested in the Cost-Sharing Notice. 
Therefore, the Commission will require that, if the parties have not 
reached an agreement within one year after the commencement of the 
voluntary period, the incumbent must allow the PCS licensee, if the PCS 
licensee so chooses, to gain access to the microwave facilities to be 
relocated so that an independent third party can examine the 
incumbent's 2 GHz system and prepare an estimate of the cost and the 
time needed to relocate the incumbent to comparable facilities. The PCS 
licensee must pay for any such cost estimate. Because the one-year 
anniversary of the commencement of the voluntary period for A and B 
block licensees has already passed, this requirement shall become 
effective for the A and B block on the effective date of the rules 
adopted in this proceeding. The Commission disagrees with incumbents 
that a cost estimate paid for by the PCS licensee changes the nature of 
the voluntary period, because participation in negotiations remains 
voluntary.
    10. Finally, although the Commission is not altering the basic 
structure or length of the voluntary period for A and B block PCS 
licensees, the Commission emphasizes that its rules provide incentives 
for voluntary agreements. The Commission has stated in the past that 
PCS licensees may choose to offer incumbents premiums to relocate 
quickly. ``Premiums'' could include: replacing the analog facilities 
with digital facilities, paying all of the incumbent's transactions 
costs, or relocating an entire system as opposed to just the 
interfering links. These incentives are available only to microwave 
incumbents who consent to relocation by negotiation. By contrast, PCS 
licensees are not obligated to pay for such premiums during an 
involuntary relocation, which is discussed in Section IV(A)(3), infra.
2. Mandatory Negotiations
    11. As the comments on this issue demonstrate, the question of 
whether parties are negotiating in good faith typically requires 
consideration of all the facts and circumstances underlying the 
negotiations, and thus is likely to depend on the specific facts in 
each case. The Commission is concerned that creating a presumption that 
a party is acting in good or bad faith, as proposed in the Cost-Sharing 
Notice, may slow down resolution of disputes by prompting parties to 
bring claims of bad faith to the Commission prematurely rather than 
focusing on resolving the underlying disputes through the negotiation 
process. For these reasons, the Commission declines to adopt its 
proposal creating a presumption that a party who declines an offer of 
comparable facilities is acting in bad faith. Instead, the Commission 
concludes that good faith should be evaluated on a case-by-case basis 
under basic principles of contract law. Nevertheless, the Commission 
agrees with those commenters who suggest that guidance with respect to 
the factors the Commission will consider if a dispute arises over good 
faith would be helpful.
    12. First, the Commission believes that good faith requires each 
party to provide information to the other that is reasonably necessary 
to facilitate the relocation process. For example, upon request by a 
PCS licensee, the Commission expects incumbents to allow inspection of 
their facilities by the PCS licensee and to provide any other 
information that the PCS licensee needs in order to evaluate the cost 
of relocating the incumbent to comparable facilities. Second, when 
evaluating claims that a party has not negotiated in good faith, the 
Commission will consider, inter alia, the following factors: (1) 
whether the PCS licensee has made a bona fide offer to relocate the 
incumbent to comparable facilities; (2) if the microwave incumbent has 
demanded a premium, the type of premium requested (e.g., whether the 
premium is directly related to relocation, such as system-wide 
relocations and analog-to-digital conversions, versus other types of

[[Page 29682]]

premiums) and whether the value of the premium as compared to the cost 
of providing comparable facilities is disproportionate (i.e., whether 
there is a lack of proportion or relation between the two); (3) what 
steps the parties have taken to determine the actual cost of relocation 
to comparable facilities; and (4) whether either party has withheld 
information requested by the other party that is necessary to estimate 
relocation costs or to facilitate the relocation process.
    13. To ensure that parties do not bring frivolous bad faith claims, 
the Commission will also require any party alleging a violation of the 
Commission's good faith requirement to provide an independent estimate 
of the relocation costs of the facilities in question. Independent 
estimates must include a specification for the comparable facility and 
a statement of the costs associated with providing that facility to the 
incumbent licensee. These cost estimates are similar to the cost 
estimates that the Commission requires if a dispute arises over 
comparable facilities during the involuntary relocation period. The 
Commission believes that requiring such estimates will assist them in 
determining whether the parties are negotiating in good faith. Finally, 
the Commission agrees with those commenters who argue that penalties 
for failure to negotiate in good faith should be imposed on a case-by-
case basis. The Commission emphasizes, however, that they intend to use 
the full realm of enforcement mechanisms available to them in order to 
ensure that licensees bargain in good faith.
3. Involuntary Relocation
    14. If no agreement is reached during either the voluntary or 
mandatory negotiation period, a PCS licensee may initiate involuntary 
relocation procedures. Under involuntary relocation, the incumbent is 
required to relocate, provided that the PCS licensee meets the 
conditions under the Commission's rules for making the incumbent whole, 
such as providing the incumbent with comparable facilities.

a. Comparable Facilities

    15. The Commission concludes that the factors they have 
identified--communications throughput, system reliability, and 
operating costs--will be the three factors used to determine when a 
facility is comparable. As the Commission stated in the Cost-Sharing 
Notice, the Commission believes that providing guidance with respect to 
the term comparable facilities will facilitate negotiations and reduce 
disputes. The record in this proceeding also supports adoption of the 
factors the Commission has identified. Each factor is discussed in more 
detail below.
    16. Communication Throughput. The Commission defines communications 
throughput as the amount of information transferred within the system 
in a given amount of time. For analog systems the throughput is 
measured by the number of voice channels, and for digital systems it is 
measured in bits per second (``bps''). Therefore, if analog facilities 
are being replaced by analog facilities, the PCS licensee will be 
required to provide the incumbent with an equivalent number of 4 kHz 
voice channels. If an existing digital system is being replaced by 
digital facilities, the PCS licensee will be required to provide the 
incumbent with equivalent data loading bps in order for the system to 
be considered comparable. The Commission agrees with commenters that 
the more difficult issue will be determining equivalent throughput when 
analog equipment is being replaced with digital equipment, which can be 
like comparing ``apples with oranges.'' If disputes arise, the 
Commission will determine on a case-by-case basis whether comparable 
throughput has been achieved. For guidance, the Commission plans to 
refer to other parts of its rules where analog-digital comparisons have 
been made, such as the minimum channel loading requirements for fixed 
point-to-point microwave systems in Section 21.710(d).
    17. The Commission also concludes that, during involuntary 
relocation, PCS licensees will only be required to provide incumbents 
with enough throughput to satisfy their needs at the time of 
relocation, rather than to match the overall capacity of the system, as 
some microwave incumbents suggest. For example, the Commission will not 
require that a 2 GHz incumbent with 5 MHz of bandwidth be relocated to 
a 5 MHz bandwidth, 6 GHz location when its current needs only justify a 
1.25 MHz bandwidth system. If a dispute arises, the Commission will 
determine what an incumbent's needs are by looking at actual system use 
rather than total capacity at the time of relocation. The Commission 
expressly adopted channelization plans for the 6 GHz band with 
bandwidth requirements ranging from 400 kHz to 30 MHz to increase the 
efficiency of use by point-to-point microwave operations. Although the 
Commission recognizes that this policy may affect an incumbent's 
ability to increase its capacity over time, the Commission agrees with 
PCS licensees that the public interest would not be served if spectrum 
is automatically held in reserve for all incumbents with the 
expectation that some may require additional capacity in the future. 
The Commission's goal is to foster efficient use of the spectrum, which 
would be thwarted if all incumbents are relocated to systems with 
capacity that exceeds their current needs. Also, limiting spectrum to 
current needs serves the public interest, because the Commission 
believes that it will promote the development of spectrum-efficient 
technology capable of increasing capacity without increasing bandwidth.
    18. Reliability. The Commission defines system reliability as the 
degree to which information is transferred accurately within the 
system. As stated in the Cost-Sharing Notice, 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. The Commission defines 
comparable reliability as that equal to the overall reliability of the 
incumbent system, and the Commission will not require the system 
designer to build the radio link portion of the system to a higher 
reliability than that of the other components of the system. For 
example, if an incumbent system had a radio link reliability of 99.9999 
percent, but an overall reliability of only 99.999 percent because of 
limited battery back-up power, the Commission requires that the new 
system have a radio link reliability of 99.999 percent to be considered 
comparable. For digital data systems this would be measured by the 
percent of time the bit error rate (``BER'') exceeds a desired value, 
and for analog or digital voice transmissions this would be measured by 
the percent of time that audio signal quality met an established 
threshold. Under this approach, for a replacement digital system to be 
comparable, the data rate throughput must be equal to or greater than 
that of the incumbent system with an equal or greater reliability. If 
an analog voice system is replaced with a digital voice system the 
resulting frequency response, harmonic distortion, signal-to-noise 
ratio, and reliability would be the factors considered. The Commission 
declines to adopt AUE's request that the Commission include a ``system 
age'' component that takes into account how the age of a given system 
can affect system reliability, because the

[[Page 29683]]

Commission does not have enough information to determine how age will 
affect a given system. Moreover, the Commission believes that older 
equipment of high quality may be as reliable as newer equipment of low 
quality.
    19. Operating Costs. The Commission defines operating costs as the 
cost to operate and maintain the microwave system. These costs fall 
into several categories. First, the incumbent must be compensated for 
any increased recurring costs associated with the replacement 
facilities (e.g., additional rental payments, increased utility fees). 
Although the Commission originally proposed that recurring costs should 
be limited to a ten-year license term, the Commission is persuaded by 
PCS licensees that a five-year time period--which is the length of a 
microwave license in the 1850-1990 MHz band--is a more appropriate time 
frame, because it strikes an appropriate balance between the burden 
placed on PCS licensees who must relocate many incumbents, and the 
burden placed on incumbents that are being forced to relocate. 
Furthermore, the Commission believes that the five-year time period is 
not unfair to incumbents because, by five years from now, many 
incumbents would have been forced to bear some of these costs 
themselves--such as increased rents--if they had not already been 
relocated by PCS licensees. Moreover, the Commission is also persuaded 
that a five-year time period provides incumbents with sufficient time 
for budget planning and resource allocation to meet such expenses once 
the five-year period expires. Finally, the Commission concludes that a 
PCS licensee is permitted but not required to satisfy its obligation by 
making a lump-sum payment based on present value using current interest 
rates, as suggested by some incumbents.
    20. Second, increased maintenance costs must be taken into 
consideration when determining whether operating costs are comparable. 
As several commenters point out, maintenance costs associated with 
analog systems are frequently higher than the costs for equivalent 
digital systems, because manufacturers are producing mostly digital 
equipment and analog replacement parts can be difficult to find. The 
Commission declines to adopt API's suggestion that ``serviceability''-- 
which would require that access to those elements essential to 
restoration of service be equal to or greater than the original 
system--should be adopted as a fourth element, however, because the 
Commission believes that the ease of servicing the equipment will 
affect repair costs, which will be factored into operating costs. 
Furthermore, the Commission agrees with incumbents that, in some 
instances, the operating costs of 6 GHz analog equipment might be so 
high that analog replacement facilities would not qualify as 
comparable. On the other hand, if an available analog replacement 
system would provide equivalent technical capability without increasing 
the incumbent's operating costs or sacrificing any of the other factors 
the Commission has identified, the Commission agrees with PCS licensees 
that such an analog system would be acceptable. In sum, the 
Commission's goal is to ensure that incumbents are no worse off than 
they would be if relocation were not required, not to guarantee 
incumbents superior systems at the expense of PCS licensees.
    21. Trade Offs. The Commission also concludes that comparable 
replacement facilities may not be provided by trading off any of the 
system parameters discussed above. Thus, the Commission agrees with 
incumbents that PCS licensees should not be permitted to compromise on 
one aspect of comparability, such as system reliability, by 
compensating with another factor, such as increased throughput. Based 
on the record in this proceeding, the Commission believes that the 
factors the Commission has identified are central to the concept of 
comparability, and therefore the replacement system provided to an 
incumbent during an involuntary relocation must be at least equivalent 
to the incumbent's existing system with respect to system reliability, 
throughput, and operating costs. However, other aspects of the system 
(e.g., bandwidth) do not have to be equivalent to the incumbent's 
original 2 GHz system. As PCS licensees point out, it might be possible 
to achieve comparability with respect to the three main factors, even 
though all of the features on the replacement equipment are not 
identical to those of the original system. Other media, such as land 
lines, would also be acceptable, provided that comparability is 
achieved.
    22. Depreciation. In the Cost-Sharing Notice, the Commission also 
sought comment on whether and how depreciation of equipment and 
facilities should be taken into account, and whether it would be 
appropriate for a PCS licensee to compensate an incumbent only for the 
depreciated value of the old equipment. Some PCS licensees contend that 
depreciation should be taken into account during the mandatory period 
as a means of encouraging incumbents to accept offers during the 
voluntary period. The Commission is persuaded by incumbents, however, 
that compensation for the depreciated value of old equipment would not 
enable them to construct a comparable replacement system without 
imposing costs on the incumbent, which would be inconsistent with the 
Commission's relocation rules. The Commission therefore concludes that 
the depreciated value of old equipment should not be a factor when 
determining comparability.

b. Relocating Individual Links

    23. The Commission affirms its decision in the 1994 Memorandum 
Opinion and Order that PCS licensees are obligated to pay to relocate 
incumbents to comparable facilities only with respect to the specific 
microwave links for which their systems pose an interference problem. 
Thus, the Commission clarifies that PCS licensees are not under an 
obligation to move an incumbent's entire system at once, unless all of 
the links in the incumbent's system would be subject to interference by 
the PCS licensee. Although system-wide relocations may be preferable 
and less disruptive to the incumbent, the Commission concludes that it 
would be inappropriate to increase a PCS licensee's monetary 
obligation, e.g., by requiring it to pay to relocate links that it 
never intended to move, after the licenses have already been auctioned. 
In fact, several commenters--particularly those bidding in the C block 
auction--have stated in their comments that they are intentionally 
designing their systems in such a way that existing links will not have 
to be relocated. Moreover, incumbents are not harmed by this policy 
because, as PCS licensees point out, many incumbents already operate 
networks that consist of both 2 GHz and 6 GHz links or a combination of 
digital and analog technology. Furthermore, the Commission's rules 
protect microwave operations by requiring PCS licensees to provide 
incumbents with a seamless transition from their old facilities to the 
replacement facilities. Thus, if providing a seamless transition 
requires it, PCS licensees must relocate additional links or pay for 
additional costs associated with integrating the new links into the old 
system, such as employing a different modulation technique to preserve 
the system's overall integrity. If problems arise, the PCS licensee is 
required under the Commission's rules to remedy the situation.
    24. To ease the burden on incumbents, the Commission has adopted a 
cost-sharing plan to promote

[[Page 29684]]

the relocation of all links in a system at the same time. By enabling 
PCS licensees to collect reimbursement from subsequent licensees that 
benefit from the relocation, the Commission believes that its cost-
sharing plan will promote a larger number of system-wide relocations.

c. Transaction Expenses

    25. The Commission concludes that incumbents should be reimbursed 
only for legitimate and prudent transaction expenses that are directly 
attributable to an involuntary relocation, subject to a cap of two 
percent of the ``hard'' costs involved (e.g., equipment, new towers, 
site acquisition). Although the Commission proposed in the Cost-Sharing 
Notice that PCS licensees should not be required to reimburse 
incumbents for any ``extraneous'' expenses, such as fees for attorneys 
and consultants, the Commission is persuaded by commenters that some 
reimbursement for outside assistance is necessary, because not all 
incumbents have expertise in these fields within their organizations. 
The Commission concludes that PCS licensees are not required to pay 
incumbents for internal resources devoted to the relocation process, 
however, because such expenses are difficult to determine and would be 
too hard for a PCS licensee to verify. Moreover, the benefits 
incumbents receive as a result of relocation, such as superior 
equipment, are likely to outweigh any internal costs they incur.
    26. To prevent abuses, PCS licensees will not be required to 
reimburse incumbents for transaction costs that exceed two percent of 
the hard costs associated with an involuntary relocation. Rather than 
adopt a cap on the dollar amount that can be spent on transaction 
expenses, the Commission believes that a percentage of the total hard 
costs, as suggested by Cox & Smith, is more appropriate. Therefore, if 
complicated and costly actions, such as land acquisition, are required 
to accomplish relocation, the permissible amount of reimbursement for 
transaction costs would be higher. The Commission also believes that a 
two-percent cap is reasonable and strikes a fair balance between the 
concerns of PCS licensees and microwave incumbents. The Commission 
derived two percent from CIPCO's suggested cap of $5,000 per link, 
which is two-percent of $250,000--the amount the Commission has 
determined to be the average cost of relocating a link. Furthermore, 
PCS licensees will not be required to pay for transaction costs 
incurred by incumbents during the voluntary or mandatory negotiation 
periods once an involuntary relocation is initiated, nor will they be 
required to pay for fees that cannot be legitimately tied to the 
provision of comparable facilities, such as consultant fees for 
determining how much of a premium payment PCS licensees would be 
willing to pay. The Commission agrees with PCS licensees that they 
should not have to reimburse incumbents for such fees, because it would 
encourage incumbents to view the relocation process as a business 
opportunity. Furthermore, requiring PCS licensees to pay such fees does 
not serve the public interest, because added expenses are likely to be 
passed on to the public in the form of increased PCS subscriber fees.

d. Twelve-Month Trial Period

    27. As a preliminary matter, the Commission clarifies that the 
twelve-month trial period is only automatic if an involuntary 
relocation occurs. Therefore, if the parties decide that a trial period 
should be established for relocations that occur during the voluntary 
and mandatory period, they must provide for such a period in the 
relocation contract.
    28. Because our proposed clarifications to the twelve-month trial 
period received broad record support, the Commission adopts the 
following clarifications to Section 94.59(e) of our rules:
    (1) The trial period will commence on the date that the incumbent 
begins full operation (as opposed to testing) on the replacement link; 
and
    (2) An incumbent's right to a twelve-month trial period resides 
with the incumbent as a function of the Commission's relocation rules, 
regardless of whether the incumbent has previously surrendered its 
license. If, however, a microwave licensee has retained its 2 GHz 
authorization during the trial period, it is required to return the 
license to the Commission at the conclusion of that period.
    In Commission's initial rule, 47 CFR Sec. 94.59(c), the Commission 
stated that they would convert the microwave incumbent to secondary 
status after the replacement system is built and the microwave 
incumbent has been provided with a reasonable amount of time to 
determine comparability. The Commission sees no reason, however, for 
the incumbent to retain its 2 GHz license once it has been relocated. 
The Commission declines to adopt the suggestion that the Commission's 
twelve-month trial period should be extended or begin again if a 
problem arises. The Commission concludes that incumbents are adequately 
protected without such an extension because, by the end of the twelve-
month period, the Commission's rules require that they be operating on 
facilities that are comparable. If at the end of the twelve months the 
PCS licensee has still failed to meet this requirement, it must 
relocate the incumbent back to its former or equivalent 2 GHz 
frequencies. Thus, the expiration of the twelve-month period does not 
leave the incumbent without further recourse.
    29. As a related matter, the Commission clarifies that, even after 
the PCS licensee has initiated the involuntary relocation process, a 
mutually acceptable agreement will still be permissible. If the parties 
do sign an agreement specifying their own terms, the Commission will 
treat the agreement in the same manner as the Commission treats 
agreements that are consummated during the voluntary and mandatory 
periods, and the parties will be bound by contract rather than our 
rules. The Commission agrees with commenters that neither incumbents 
nor PCS licensees are harmed by such a policy, because neither party is 
obligated to enter into such an agreement. If the agreement falls 
through, however, the incumbent will be subject to involuntary 
relocation.
    30. Finally, the Commission declines to reduce the trial period to 
one month as suggested by PCS licensees. The Commission agrees with 
incumbents that twelve months is an appropriate time period, because it 
gives the incumbent the opportunity to ensure that the facilities 
function properly during changes in climate and vegetation. The 
Commission also takes this opportunity to clarify that PCS licensees 
are not required to leave the incumbent's former 2 GHz spectrum vacant 
during the twelve-month trial period. The Commission agrees with PCIA 
that requiring PCS licensees to hold this spectrum in reserve would 
delay the deployment of PCS for at least one year, which does not serve 
the public interest. The Commission also clarifies that, if the 
microwave incumbent demonstrates that the new facilities are not 
comparable to the former facilities, the PCS licensee must remedy the 
defects or pay to relocate the microwave licensee to one of the 
following: its former or equivalent 2 GHz channels, another comparable 
frequency band, a land-line system, or any other facility that 
qualifies as comparable.

[[Page 29685]]

e. Request for Clarification of Involuntary Relocation Procedures

    31. The Commission believes that AT&T Wireless, et al., have raised 
legitimate issues regarding the procedures for implementing involuntary 
relocation at the conclusion of the mandatory negotiation period. The 
issues raised in their letter, however, were not included in the Cost-
Sharing Notice, nor were they raised in any of the regularly filed 
comments or reply comments in this proceeding. Because of the relative 
lateness of the parties' ex parte filing and the lack of opportunity 
for other parties to comment, the Commission declines to address these 
issues at this time. Nevertheless, the Commission encourages the 
parties to the April 15 letter or any other interested parties to file 
a petition for rulemaking on the issues raised in the letter.
4. Public Safety Certification
    32. The Commission agrees with PCS licensees that certification is 
necessary to ensure that only those public safety incumbents meriting 
special status are allowed the advantages of extended negotiation 
periods. The Commission also agrees with incumbents, however, that 
self-certification is appropriate, because self-certification will not 
burden public agencies with time-consuming reporting requirements. The 
Commission declines to adopt the suggestion made by AT&T that all 
public safety incumbents should be required to apply to the Commission 
for certification, because such a requirement would be administratively 
burdensome for the Commission and could delay negotiations. 
Furthermore, the Commission believes that PacBell's concerns about 
biased public agencies are overstated, because the Commission does not 
believe public agencies will be inclined to falsify the certification.
    33. The Commission concludes that, in order for a public safety 
licensee to qualify for extended negotiation periods under the 
Commission's rules, the department head responsible for system 
oversight must certify to the PCS licensee requesting relocation that:
    (1) The agency is a licensee in the Police Radio, Fire Radio, 
Emergency Medical, Special Emergency Radio Services, or that it is a 
licensee of other Part 94 facilities licensed on a primary basis under 
the eligibility requirements of Part 90, Subparts B and C; and
    (2) the majority of communications carried on the facilities at 
issue involve safety of life and property.
    A public safety licensee must provide certification within 30 days 
of a request from a PCS licensee or the PCS licensee may presume that 
special treatment is inapplicable to the incumbent. If an incumbent 
falsely certifies to a PCS licensee that it qualifies for the extended 
time periods, the incumbent will be in violation of the Commission's 
rules and subject to appropriate penalties. Such an incumbent would 
also immediately become subject to the non-public safety time periods.
5. Dispute Resolution
    34. Because relocations that occur pursuant to agreements arrived 
at during the voluntary and mandatory period are relocations pursuant 
to private contracts, the Commission anticipates that parties will 
pursue common law contract remedies if a dispute arises. Thus, if 
parties do not agree to use alternative dispute resolution techniques, 
the Commission expects that they will file suit in a court of competent 
jurisdiction.
    35. To the extent that disputes arise over violation of the 
Commission's rules (e.g., the good faith requirement, involuntary 
relocation procedures), the Commission has stated that parties are 
encouraged to use ADR techniques. Commenters agree that resolution of 
such disputes entirely by the Commission's adjudication processes would 
be time consuming and costly to all parties. Therefore, the Commission 
continues to encourage parties to employ ADR techniques when disputes 
arise.
6. Ten Year Sunset
    36. As the Commission stated in the Cost-Sharing Notice, the 
Commission continues to believe that an emerging technology licensee's 
obligation to relocate 2 GHz microwave incumbents should not continue 
indefinitely; however, the Commission is also persuaded by incumbents 
that immediate conversion to secondary status in the year 2005 may not 
be necessary, especially with respect to rural links that would not 
interfere with any PCS systems. To strike a fair balance between these 
competing interests, the Commission concludes that 2 GHz microwave 
incumbents will retain primary status unless and until an emerging 
technology licensee requires use of the spectrum, but that the emerging 
technology licensee will not be obligated to pay relocation costs after 
the relocation rules sunset, i.e., ten years after the voluntary period 
begins for the first emerging technology licensees in the service 
(which is April 4, 2005, for PCS licensees and unlicensed PCS). Once 
the relocation rules sunset, an emerging technology licensee may 
require the incumbent to either cease operations or pay to relocate 
itself to alternate facilities, provided that the emerging technology 
licensee intends to turn on a system within interference range of the 
incumbent, as determined by TIA Bulletin 10-F or any standard successor 
thereto. Notification must be in writing, and the emerging technology 
licensee must provide the incumbent with no less than six months to 
vacate the spectrum. Emerging technology licensees may provide notice 
prior to the date that the relocation rules sunset, but may not turn on 
their systems until after that date. After the six-month notice period 
has expired, the incumbent will be required to turn its 2 GHz license 
back into the Commission, unless the parties have entered into an 
agreement which allows the incumbent to continue to operate on a 
mutually agreed upon basis. The Commission concludes that their 
decision promotes spectrum efficiency, because it allows microwave 
incumbents to continue to operate in the 2 GHz band until their 
spectrum is needed by an emerging technology licensee.
    37. The Commission believes that a sunset date for the Commission's 
microwave relocation rules serves the public interest, because it 
provides certainty to the process and prevents the emerging technology 
licensee from being required to pay for relocation expenses 
indefinitely. Moreover, the Commission agrees with commenters that ten 
years provides incumbents with sufficient time (1) to negotiate a 
relocation agreement or (2) to plan for relocation themselves. In fact, 
well over ten years will have passed since the Commission first 
announced our intention to reallocate 2 GHz spectrum to foster the 
introduction of emerging technologies services in 1992. In other 
services, the Commission has provided incumbents with even less time to 
complete relocation. For example, private operational fixed microwave 
stations in the 12 GHz band received only five years to relocate their 
facilities before they became secondary to the Direct Broadcast 
Satellite (``DBS'') Service.
    38. The Commission also believes that adopting a sunset date is 
important, because it will provide 2 GHz microwave incumbents with an 
incentive to relocate to other bands when it comes time to change or 
replace their equipment. At the current time, the Commission's 
licensing records indicate that most 2 GHz microwave incumbents use 
analog equipment. APCO contends that operating 2 GHz analog microwave 
systems is becoming infeasible, because analog systems are

[[Page 29686]]

now outdated and replacement parts will soon be difficult, if not 
impossible, to find. APCO also states that most incumbents have long-
term plans to replace their analog systems with digital systems once 
the useful life of current equipment has expired and/or adequate 
funding has been found. As BellSouth points out, by the time the sunset 
date arrives, much of the microwave equipment operating today at 2 GHz 
is likely to be either fully amortized or in need of replacement. The 
Commission believes that informing 2 GHz incumbents that they will have 
to cover their own relocation expenses after ten years will encourage 
incumbents to relocate to another band when they replace existing 
equipment. By contrast, if emerging technology licensees are required 
to pay to relocate incumbents regardless of when the relocation occurs, 
incumbents will have little incentive to make such a transition to an 
alternate band voluntarily. For similar reasons, the Commission rejects 
the argument by incumbents that PCS licensees should be required to 
make relocation offers prior to the sunset date to all incumbents 
located within their market area. Again, incumbents would have no 
incentive to change out their own systems voluntarily if they knew that 
PCS licensees would be required to cover the expenses for them at a 
later date. Furthermore, even if the Commission had not reallocated the 
spectrum, these incumbents would have had to plan ahead for repair 
costs, replacement equipment, and infrastructure improvement. Given 
that most incumbents will incur significant expenses in any event when 
they replace their analog system with digital equipment, the Commission 
believes that providing an incentive to incumbents to relocate 
voluntarily at the same time they purchase new equipment serves the 
public interest. In sum, the Commission believes that the benefits of 
imposing a sunset date outweigh the burdens, if any, that such a date 
may impose.
    39. Finally, the Commission believes that six months is a 
reasonable amount of time for most incumbents to relocate their 
facilities, especially because they will have been on notice for ten 
years that they might be requested to move. Nevertheless, the 
Commission acknowledges that special circumstances might warrant an 
extension of the six-month period in some instances to enable the 
incumbent to complete relocation activities. If the incumbent is unable 
to move or cannot complete relocation in time, the Commission 
encourages the parties to negotiate a mutually acceptable solution. In 
the event that the parties cannot agree on a schedule or an alternative 
arrangement, the Commission will entertain extension requests on a 
case-by-case basis. However, the Commission intends to grant such 
extensions only if the incumbent can demonstrate that: (1) it cannot 
relocate within the six-month period (e.g., because no alternative 
spectrum or other reasonable option is available), and (2) the public 
interest would be harmed if the incumbent is forced to terminate 
operations (e.g., if public safety communications services would be 
disrupted).

B. Cost-Sharing Plan

1. Overview
    40. The Commission adopts its proposed plan with a few 
modifications suggested by commenters. The Commission believes that 
cost-sharing serves the public interest because (1) it will distribute 
relocation costs more equitably among PCS licensees, and (2) it will 
promote the relocation of entire microwave systems at once, which will 
benefit microwave incumbents. The Commission also believes that cost-
sharing will accelerate the relocation process for the PCS band as a 
whole, thus promoting more rapid deployment of service to the public. 
Furthermore, the Commission concludes that the benefits of cost-sharing 
outweigh the costs that may be incurred by licensees who become subject 
to reimbursement obligations. Under the plan, these licensees will be 
required to pay reimbursement obligations only when they have 
benefitted from the spectrum-clearing efforts of another party. 
Moreover, as discussed in greater detail below, the Commission is 
adopting limits on reimbursement to ensure that licensees subject to 
the plan do not bear a disproportionate cost. The Commission concludes 
that these provisions amply protect the interests of such licensees.
    41. Under the Commission's cost-sharing plan, a PCS licensee 
obtains reimbursement rights for a particular link on the date that it 
signs a relocation agreement with the microwave incumbent operating on 
the link at issue. Within ten business days of the date the agreement 
is signed, the PCS licensee submits documentation of the agreement to a 
non-profit clearinghouse, which will be selected by the Wireless 
Telecommunications Bureau (``Bureau''). If the clearinghouse has not 
yet been selected, the PCS relocator will be responsible for submitting 
documentation of a relocation agreement within ten business days of the 
date that the Bureau announces that the clearinghouse has been 
established and has begun operation.
    42. Prior to commencing commercial operation, each PCS licensee is 
required to send a prior coordination notification (``PCN'') to all 
existing users in the area. At the same time, each PCS licensee shall 
file a copy of the PCN with the clearinghouse. The clearinghouse will 
then apply an objective test to determine whether the proposed base 
station would have posed an interference problem to the relocated link. 
If the test shows that the proposed base station is close enough to 
have posed an interference problem, the clearinghouse will notify the 
subsequent licensee that it is required to reimburse the PCS relocator 
under the cost-sharing formula for a portion of the expenses the 
relocator incurred to move the link. UTAM will be required to reimburse 
PCS relocators who relocate microwave links that were operating in the 
unlicensed PCS band.
    43. The clearinghouse will determine the amount that the subsequent 
PCS licensee must pay the relocator through the use of a cost-sharing 
formula. The formula takes into consideration such factors as the 
actual amount paid to relocate the link and the number of PCS licensees 
that would have interfered with the link. All calculations will be done 
on a per-link basis. The reimbursement amount also decreases over time 
to reflect the fact that the initial PCS relocator has received the 
benefit of being first to market, and to ensure that the PCS relocator 
pays the largest amount, which the Commission believes will provide an 
incentive to the relocator to limit relocation expenses. As an 
additional protection for later-entrants, the Commission has imposed a 
cap of $250,000 per link, with an additional $150,000 if a new or 
modified tower is required, on the amount that a PCS relocator may 
recoup for the relocation of each individual microwave link. PCS 
relocators are entitled to full reimbursement, up to the cap, for 
relocating non-interfering links fully outside their market area or 
licensed frequency band. Also, costs that are incurred prior to the 
selection of a clearinghouse will be reimbursable after a clearinghouse 
is established.
    44. Once a PCS licensee receives written notification from the 
clearinghouse of its reimbursement obligation, it must pay the entire 
amount owed within thirty calendar days, with the exception of those 
small businesses that qualify for installment payments under the 
Commission's auction rules. UTAM will be required to

[[Page 29687]]

reimburse a PCS relocator once a county is cleared of enough microwave 
links to enable unlicensed PCS devices to operate. Because UTAM 
receives its funding in small increments over an extended period of 
time, UTAM will be permitted to satisfy its reimbursement obligation by 
making quarterly installment payments to the PCS relocator over a 
period of five years, at an interest rate of prime plus three percent.
    45. The cost-sharing plan will sunset for all PCS licensees ten 
years after the date that voluntary negotiations commenced for A and B 
block licensees, on April 4, 2005. However, the sunset date will not 
eliminate the existing obligations of PCS licensees that are paying 
their portion of relocation costs on an installment basis. Those 
licensees must continue their payments until the obligation is 
satisfied. Finally, while the Commission concludes that the cost-
sharing plan is in the public interest, the Commission is conditioning 
its adoption of these rules on approval of an entity or organization to 
administer the plan. Once an administrator is selected, the cost-
sharing rules will take effect.
    46. Participation in Cost-Sharing Plan. By this Report and Order, 
the Commission mandates that all PCS licensees benefitting from 
spectrum clearance by other PCS licensees must contribute to such 
relocation costs. As the Commission emphasized in the Cost-Sharing 
Notice, however, PCS licensees remain free to negotiate alternative 
cost-sharing terms. The Commission also agrees with commenters that 
allowing PCS licensees to enter into such private agreements serves the 
public interest, because it adds flexibility to the cost-sharing 
process and may enable such parties to save both time and the 
administrative expense of seeking reimbursement from a clearinghouse. 
The Commission therefore concludes that licensees are not required to 
participate in the Commission's cost-sharing plan if they enter into 
alternative cost-sharing agreements. The Commission also agrees with 
commenters that all parties to a separate agreement will still be 
liable under the cost-sharing plan to other PCS licensees that incur 
relocation expenses. Finally, the Commission concludes that parties to 
a private cost-sharing agreement may also seek reimbursement through 
the clearinghouse from PCS licensees that are not parties to the 
agreement.
2. Dispute Resolution Under the Cost-Sharing Plan
    47. The Commission agrees with those commenters who argue that 
disputes arising out of the cost-sharing plan, such as disputes over 
the amount of reimbursement required, should be brought to the 
clearinghouse first for resolution. At the time the dispute is brought 
to the clearinghouse, the parties will be required to submit 
appropriate documentation, e.g., an independent appraisal of the 
equipment expenses at issue, to support their position. To the extent 
that disputes cannot be resolved by the clearinghouse, the Commission 
encourages parties to use expedited ADR procedures, such as binding 
arbitration, mediation, or other ADR techniques. At this time, the 
Commission does not designate a specific penalty for failure to comply 
with cost-sharing requirements; however, the Commission emphasizes that 
they intend to use the full realm of enforcement mechanisms available 
to them in order to ensure that reimbursement obligations are 
satisfied.
3. Administration of the Cost-Sharing Plan
    48. The Commission agrees with those commenters who suggest that 
the clearinghouse administrator should be selected through an open 
process. The Commission also believes it is essential for the plan to 
be administered by industry to the fullest extent possible. Therefore, 
before the Commission implements the plan, the Commission will seek 
specific proposals from parties who wish to act as administrator and 
will request public comment on any such proposals.
    49. The Commission delegates to the Wireless Bureau the authority 
to select one or more entities to create and administer a neutral, not-
for-profit clearinghouse. Selection shall be based on criteria 
established by the Bureau. The Bureau shall publicly announce the 
criteria and solicit proposals from qualified parties. Once such 
proposals have been received, and an opportunity has elapsed for public 
comment on them, the Bureau shall make its selection. When the Bureau 
selects an administrator, it shall announce the effective date of the 
cost-sharing rules.

C. Licensing Issues

    50. As of the effective date of the new rules, the Commission will 
grant pending and newly filed applications for all major modifications 
and all extensions to existing 2 GHz microwave systems on a secondary 
basis. The Commission will grant primary status for the following 
limited number of technical changes: decreases in power, minor changes 
in antenna height, minor location changes (up to two seconds), any data 
correction which does not involve a change in the location of an 
existing facility, reductions in authorized bandwidths, minor changes 
in structure heights, changes in ground elevation (but preserving 
centerline height), and changes in equipment. All other modifications 
will be permitted on a secondary basis, unless (1) the incumbent 
affirmatively justifies primary status, and (2) the incumbent 
establishes that the modification would not add to the relocation costs 
of PCS licensees. The Commission declines to adopt the suggestion made 
by PCS licensees that no modifications should be allowed even on a 
secondary basis, because some incumbents might not need to relocate for 
several years, and they should be permitted to make modifications to 
their systems during that time period. The Commission also disagrees 
with incumbents that the Commission's licensing policy should be 
expanded, because the Commission believes that limiting primary site 
grants is necessary to protect the interests of PCS licensees. In sum, 
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.
    51. Furthermore, the Commission clarifies that secondary operations 
may not cause interference to operations authorized on a primary basis, 
and they are not protected from interference from primary operations. 
Thus, an incumbent operating under a secondary authorization must cease 
operations if it poses an interference problem to a PCS licensee. 
However, prior to commencing operations, PCS licensees are obligated to 
provide all incumbents that are operating within interference range, 
regardless of whether an incumbent is operating under a primary or a 
secondary site authorization, with thirty days notice that they will be 
commencing operations in the vicinity. Finally, PCS licensees are under 
no obligation to pay to relocate secondary links that exist within 
their market area and frequency block.

D. Application to Other Emerging Technology Licensees

    52. The Commission agrees with AT&T that the cost-sharing plan and 
rule clarifications adopted in this proceeding should apply to all 
emerging technology services, including those

[[Page 29688]]

services in the 2110-2150 and 2160-2200 GHz band that have not yet been 
licensed, because the microwave relocation rules already apply to all 
emerging technology services. For the same reasons that these changes 
will facilitate the deployment of PCS, the Commission believes these 
changes will also facilitate the deployment of other emerging 
technology services. For example, these changes and clarifications will 
provide additional guidance and help to accelerate negotiations between 
the parties. However, as new services develop, the Commission may 
review its relocation rules and make modifications to these rules where 
appropriate. In addition, while the Commission concludes that cost-
sharing should apply to all emerging technology services, the 
Commission does not adopt specific cost-sharing rules for new services 
at this time, but will develop such rules in future proceedings.

III. Conclusion

    53. The Commission believes that the rules adopted in this Report 
and Order will promote the public policy goals set forth by Congress. 
The cost-sharing formula adopted herein will facilitate the rapid 
relocation of microwave facilities operating in the 2 GHz band, and 
will allow PCS licensees to offer service to the public in an 
expeditious manner.

IV. Procedural Matters

A. Regulatory Flexibility Act

    As required by Section 603 of the Regulatory Flexibility Act, an 
Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the 
Notice of Proposed Rule Making in WT Docket No. 95-157, RM-8643. The 
Commission has prepared a Regulatory Flexibility Analysis of the 
expected impact on small entities of the proposals suggested in this 
document. Written comments were requested. The Commission's final 
analysis is as follows:
    Need for and purpose of the action: This rulemaking proceeding has 
implemented Congress' goal of encouraging emerging technologies and 
bringing innovative commercial wireless services to the public in an 
efficient manner. The cost-sharing plan will promote the efficient 
relocation of microwave licensees by encouraging PCS licensees to 
relocate entire microwave systems rather than individual microwave 
links. 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 will result in faster deployment of PCS and delivery of service 
to the public. The Commission has also clarified some terminology 
regarding certain aspects of the Commission's rules for microwave 
relocation contained in the Commission's Emerging Technologies 
proceeding, Docket No. 92-9.
    Issues raised in response to the IRFA: The American Public Power 
Association (``APPA'') states that conversion of 2 GHz microwave 
systems to secondary status in the year 2005 would have a particularly 
severe impact on the limited budgets of small, non-profit public 
utility systems.
    Significant alternatives considered and rejected: Although the 
Commission has decided not to convert microwave incumbents to secondary 
status automatically as the Commission proposed in the Cost-Sharing 
Notice, microwave incumbents will be required to pay for their own 
relocation costs after the sunset date. The Commission has considered 
the impact of the ten year sunset date, and the Commission has 
determined that the benefits of imposing a sunset date outweigh the 
burdens such a date may impose on these incumbents. For further 
discussion, see Section IV(A)(6), supra.

B. Paperwork Reduction Act

    This First Report and Order contains either a proposed or modified 
information collection. The Commission, as part of its continuing 
effort to reduce paperwork burdens, invites the general public and the 
Office of Management and Budget (OMB) to comment on the information 
collections contained in this First Report and Order, as required by 
the Paperwork Reduction Act of 1995, Public Law 104-13. Comments should 
address: (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.
    Further Information. For additional information concerning the 
information collections contained in this Report and Order, contact 
Dorothy Conway at (202) 418-0217, or via the Internet at 
[email protected].
    Supplementary Information:
    Title: Amendment of the Commission's Rules Regarding a Plan for 
Sharing the Costs of Microwave Relocation, First Report and Order.
    Type of Review: Revision to existing collection.
    Respondents: Personal Communications Service licensees that 
relocate existing microwave operators, subsequent Personal 
Communications Service applicants potentially benefitted by such 
relocation, and incumbent microwave operators.
    Number of Respondents: Approximately 2,000.
    Estimated Time Per Response: One hour to compose, type and mail the 
information to the requesting party.
    Total Annual Burden: Approximately 2,000 hours.
    Estimated Costs Per Respondent: Assuming that respondent uses one 
attorney at $200/hour to compose, type and mail the information to the 
requesting party, respondents' costs are estimated at approximately 
$200 per one-time response.
    Needs and Uses. The Commission recently adopted a First Report and 
Order regarding a plan for sharing the costs of relocating microwave 
facilities currently operating in the 1850 to 1990 MHz (2 GHz) band, 
which has been allocated for use by broadband Personal Communications 
Services (PCS). Amendment of the Commission's Rules Regarding a Plan 
for Sharing the Costs of Microwave Relocation, First Report and Order, 
adopted April 25, 1996. The First Report and Order establishes 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 First Report and Order concludes, inter alia, that in order for 
a public safety licensee to qualify for extended negotiation periods 
under the Commission's Rules, the department head responsible for 
system oversight must certify to the PCS licensee requesting relocation 
that:
    (1) the agency is a licensee in the Police Radio, Fire Radio, 
Emergency Medical, Special Emergency Radio Services, or that it is a 
licensee of other Part 94 facilities licensed on a primary basis under 
the eligibility requirements of Part 90, Subparts B and C; and
    (2) the majority of communications carried on the facilities at 
issue involve safety of life and property.
    A public safety licensee must provide certification within 30 days 
of a request from a PCS licensee, or the PCS licensee may presume that 
special treatment is inapplicable to the incumbent.

[[Page 29689]]

    In addition, the First Report and Order concludes that good faith 
negotiation between parties involved in microwave relocation requires 
each party to provide information to the other that is reasonably 
necessary to facilitate the relocation process. For example, upon 
request by a PCS licensee, the Commission expects incumbents to provide 
any information that the PCS licensee needs in order to evaluate the 
cost of relocating the incumbent to comparable facilities.
    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 public 
safety licensees seeking to qualify for an extended negotiation period 
by requiring such a licensee to self-certify to the PCS licensee 
requesting relocation that it is indeed a public safety licensee, and 
by requiring that licensees share information in good faith.

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.

D. Authority

    Authority for issuance of this Report and Order is contained in the 
Communications Act, Sections 4(i), 7, 303(c), 303(f), 303(g), 303(r), 
and 332, 47 U.S.C. Secs. 154(i), 157, 303(c), 303(f), 303(g), 303(r), 
332, as amended.

E. Ordering Clauses

    Accordingly, it is ordered that Section 15.307 is amended as set 
forth below and will become effective August 12, 1996.
    It is further ordered that Section 22.602 is amended as set forth 
below and will become effective August 12, 1996.
    It is further ordered that Sections 24.5, 24.237, 24.239. 24.241, 
24.243, 24.245, 24.247, 24.249, 24.251, 24.251 and 24.253 are amended 
as set forth below.
    It is further ordered that the cost-sharing plan is conditioned on 
approval by the Wireless Telecommunications Bureau of an entity (or 
entities) to administer the plan, as described in Section IV(B)(3), 
supra.
    It is further ordered that Part 24 rule changes will become 
applicable on the date that the Wireless Telecommunications Bureau 
selects a clearinghouse to administer the cost-sharing plan. The 
Commission will issue a public announcement after the selection has 
been made.
    It is further ordered that Sections 101.3, 101.67, 101.69, 101.71, 
101.73, 101.75, 101.77, 101.79, 101.81 and 101.147, the new Part 101 
(effective August 1, 1996) of the Commission's rules are amended as set 
forth below and will become effective August 1, 1996.
    It is further ordered that rules requiring Paperwork Reduction Act 
approval shall become effective upon approval by the Office of 
Management and Budget pursuant to the Paperwork Reduction Act of 1995, 
Public Law No. 104-13;
    It is further ordered that, as of the effective dates of the rules 
listed herein, the Commission will only grant primary status to 
applications for minor modifications that would not add to the 
relocation costs of PCS licensees, as described in Section IV(C) supra.
    It is further ordered that, as of the effective dates of the rules 
listed herein, the Commission will grant applications for major 
modifications and extensions to existing 2 GHz microwave systems only 
on a secondary basis, as described in Section IV(C) supra.
    It is further ordered that the Regulatory Flexibility Analysis, as 
required by Section 604 of the Regulatory Flexibility Act, and as set 
forth in Section VII(A) is adopted.
    It is further ordered that the Secretary shall send a copy of this 
First Report and Order to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 15

    Radio.

47 CFR Part 22

    Radio.

47 CFR Part 24

    Personal communications services.

47 CFR Part 101

    Fixed microwave services.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Parts 15, 22, 24 and 101 of Chapter I of Title 47 of the Code of 
Federal Regulations are amended as follows:

PART 15--RADIO FREQUENCY DEVICES

    1. The authority citation for Part 15 is revised to read as 
follows:

    Authority: 47 U.S.C. 154, 302, 303, 304, 307 and 544A.

    2. Section 15.307 is amended by revising paragraphs (a), (f) and 
(g) to read as follows:


Sec. 15.307   Coordination with fixed microwave service.

    (a) UTAM, Inc. is designated to coordinate and manage the 
transition of the 1910-1930 MHz band from the Private Operational-Fixed 
Microwave Service (OFS) operating under Part 101 of this chapter to 
unlicensed PCS operations,
* * * * *
    (f) At such time as the Commission deems that the need for 
coordination between unlicensed PCS operations and existing Part 101 
Private Operational-Fixed Microwave Services ceases to exist, the 
disabling mechanism required by paragraph (e) of this section will no 
longer be required.
    (g) Operations under the provisions of this subpart are required to 
protect systems in the Private Operational-Fixed Microwave Service 
operating within the 1850-1990 MHz band until the dates and conditions 
specified in Secs. 101.69 through 101.73 of this chapter for 
termination of primary status. Interference protection is not required 
for Part 101 stations in this band licensed on a secondary basis.
* * * * *

PART 22--PUBLIC MOBILE SERVICES

    3. The authority citation for Part 22 is revised to read as 
follows:

    Authority: 47 U.S.C. 154, 303, unless otherwise noted.

    4. Section 22.602 is revised to read as follows:


Sec. 22.602   Transition of the 2110-2130 and 2160-2180 MHz channels to 
emerging technologies.

    The microwave channels listed in Sec. 22.591 have been allocated 
for use by emerging technologies (ET) services. No new systems will be 
authorized under this part. The rules in this section provide for a 
transition period during which existing Paging and Radiotelephone 
Service (PARS) licensees using these channels may relocate operations 
to other media or to other fixed channels, including those in other 
microwave bands. For PARS licensees relocating operations to other 
microwave bands, authorization must be obtained under Part 101 of this 
chapter.

[[Page 29690]]

    (a) Licensees proposing to implement ET services may negotiate with 
PARS licensees authorized to use these channels, for the purpose of 
agreeing to terms under which the PARS licensees would--
    (1) Relocate their operations to other fixed microwave bands or 
other media, or alternatively,
    (2) Accept a sharing arrangement with the ET licensee that may 
result in an otherwise impermissible level of interference to the PARS 
operations.
    (b) PARS operations on these channels will continue to be co-
primary with other users of this spectrum until two years after the FCC 
commences acceptance of applications for ET services, and until one 
year after an ET licensee initiates negotiations for relocation of the 
fixed microwave licensee's operations.
    (c) Voluntary Negotiations. During the two year voluntary 
negotiation period, negotiations are strictly voluntary and are not 
defined by any parameters. However, if the parties have not reached an 
agreement within one year after the commencement of the voluntary 
period, the PARS licensee must allow the ET licensee (if it so chooses) 
to gain access to the existing facilities to be relocated so that an 
independent third party can examine the PARS licensee's 2 GHz system 
and prepare an estimate of the cost and the time needed to relocate the 
PARS licensee to comparable facilities. The ET licensee must pay for 
any such estimate.
    (d) Mandatory Negotiations. If a relocation agreement is not 
reached during the two year voluntary period, the ET licensee may 
initiate a mandatory negotiation period. This mandatory period is 
triggered at the option of the ET licensee, but ET licensees may not 
invoke their right to mandatory negotiation until the voluntary 
negotiation period has expired. Once mandatory negotiations have begun, 
a PARS licensee may not refuse to negotiate and all parties are 
required to negotiate in good faith. Good faith requires each party to 
provide information to the other that is reasonably necessary to 
facilitate the relocation process. In evaluating claims that a party 
has not negotiated in good faith, the FCC will consider, inter alia, 
the following factors:
    (1) Whether the ET licensee has made a bona fide offer to relocate 
the PARS licensee to comparable facilities in accordance with Section 
101.75(b) of this chapter;
    (2) If the PARS licensee has demanded a premium, the type of 
premium requested (e.g., whether the premium is directly related to 
relocation, such as system-wide relocations and analog-to-digital 
conversions, versus other types of premiums), and whether the value of 
the premium as compared to the cost of providing comparable facilities 
is disproportionate (i.e., whether there is a lack of proportion or 
relation between the two);
    (3) What steps the parties have taken to determine the actual cost 
of relocation to comparable facilities;
    (4) Whether either party has withheld information requested by the 
other party that is necessary to estimate relocation costs or to 
facilitate the relocation process. Any party alleging a violation of 
our good faith requirement must attach an independent estimate of the 
relocation costs in question to any documentation filed with the 
Commission in support of its claim. An independent cost estimate must 
include a specification for the comparable facility and a statement of 
the costs associated with providing that facility to the incumbent 
licensee.
    (e) Involuntary period. After the periods specified in paragraph 
(b) of this section have expired, ET licensees may initiate involuntary 
relocation procedures under the Commission's rules. ET licensees are 
obligated to pay to relocate only the specific microwave links to which 
their systems pose an interference problem. Under involuntary 
relocation, a PARS licensee is required to relocate, provided that:
    (1) The ET applicant, provider, licensee or representative 
guarantees payment of relocation costs, including all engineering, 
equipment, site and FCC fees, as well as any legitimate and prudent 
transaction expenses incurred by the PARS licensee that are directly 
attributable to an involuntary relocation, subject to a cap of two 
percent of the hard costs involved. Hard costs are defined as the 
actual costs associated with providing a replacement system, such as 
equipment and engineering expenses. ET licensees are not required to 
pay PARS licensees for internal resources devoted to the relocation 
process. ET licensees are not required to pay for transaction costs 
incurred by PARS licensees during the voluntary or mandatory periods 
once the involuntary period is initiated or for fees that cannot be 
legitimately tied to the provision of comparable facilities;
    (2) The ET applicant, provider, licensee or representative 
completes all activities necessary for implementing the replacement 
facilities, including engineering and cost analysis of the relocation 
procedure and, if radio facilities are involved, identifying and 
obtaining, on the incumbents behalf, new channels and frequency 
coordination; and,
    (3) The ET applicant, provider, licensee or representative builds 
the replacement system and tests it for comparability with the existing 
2 GHz system.
    (f) Comparable Facilities. The replacement system provided to an 
incumbent during an involuntary relocation must be at least equivalent 
to the existing PARS system with respect to the following three 
factors:
    (1) Throughput. Communications throughput is the amount of 
information transferred within a system in a given amount of time. If 
analog facilities are being replaced with analog, the ET licensee is 
required to provide the PARS licensee with an equivalent number of 4 
kHz voice channels. If digital facilities are being replaced with 
digital, the ET licensee must provide the PARS licensee with equivalent 
data loading bits per second (bps). ET licensees must provide PARS 
licensees with enough throughput to satisfy the PARS licensee's system 
use at the time of relocation, not match the total capacity of the PARS 
system.
    (2) Reliability. System reliability is the degree to which 
information is transferred accurately within a system. ET licensees 
must provide PARS licensees with reliability equal to the overall 
reliability of their system. For digital data systems, reliability is 
measured by the percent of time the bit error rate (BER) exceeds a 
desired value, and for analog or digital voice transmissions, it is 
measured by the percent of time that audio signal quality meets an 
established threshold. If an analog voice system is replaced with a 
digital voice system, only the resulting frequency response, harmonic 
distortion, signal-to-noise ratio and its reliability will be 
considered in determining comparable reliability.
    (3) Operating Costs. Operating costs are the cost to operate and 
maintain the PARS system. ET licensees must compensate PARS licensees 
for any increased recurring costs associated with the replacement 
facilities (e.g. additional rental payments, increased utility fees) 
for five years after relocation. ET licensees may satisfy this 
obligation by making a lump-sum payment based on present value using 
current interest rates. Additionally, the maintenance costs to the PARS 
licensee must be equivalent to the 2 GHz system in order for the 
replacement system to be considered comparable.
    (g) The PARS licensee is not required to relocate until the 
alternative facilities are available to it for a reasonable time to 
make adjustments, determine

[[Page 29691]]

comparability, and ensure a seamless handoff.
    (h) The Commission's Twelve-Month Trial Period. If, within one year 
after the relocation to new facilities, the PARS licensee demonstrates 
that the new facilities are not comparable to the former facilities, 
the ET applicant, provider, licensee or representative must remedy the 
defects or pay to relocate the PARS licensee to one of the following: 
its former or equivalent 2 GHz channels, another comparable frequency 
band, a land-line system, or any other facility that satisfies the 
requirements specified in paragraph (f) of this section. This trial 
period commences on the date that the PARS licensee begins full 
operation of the replacement link. If the PARS licensee has retained 
its 2 GHz authorization during the trial period, it must return the 
license to the Commission at the end of the twelve months.
    (i) After April 25, 1996, all major modifications and extensions to 
existing PARS systems operating on channels in the 2110-2130 and 2160-
2180 MHz bands will be authorized on a secondary basis to future ET 
operations. All other modifications will render the modified PARS 
license secondary to future ET operations unless the incumbent 
affirmatively justifies primary status and the incumbent PARS licensee 
establishes that the modification would not add to the relocation costs 
of ET licensees. Incumbent PARS licensees will maintain primary status 
for the following technical changes:
    (1) Decreases in power;
    (2) Minor changes (increases or decreases) in antenna height;
    (3) Minor location changes (up to two seconds);
    (4) Any data correction which does not involve a change in the 
location of an existing facility;
    (5) Reductions in authorized bandwidth;
    (6) Minor changes (increases or decreases) in structure height;
    (7) Changes (increases or decreases) in ground elevation that do 
not affect centerline height;
    (8) Minor equipment changes.
    (j) Sunset. PARS licensees will maintain primary status in the 
2110-2130 and 2160-2180 MHz bands unless and until an ET licensee 
requires use of the spectrum. ET licensees are not required to pay 
relocation costs after the relocation rules sunset (i.e. ten years 
after the voluntary period begins for the first ET licensees in the 
service). Once the relocation rules sunset, an ET licensee may require 
the incumbent to cease operations, provided that the ET licensee 
intends to turn on a system within interference range of the incumbent, 
as determined by TIA Bulletin 10-F or any standard successor. ET 
licensee notification to the affected PARS licensee must be in writing 
and must provide the incumbent with no less than six months to vacate 
the spectrum. After the six-month notice period has expired, the PARS 
licensee must turn its license back into the Commission, unless the 
parties have entered into an agreement which allows the PARS licensee 
to continue to operate on a mutually agreed upon basis. If the parties 
cannot agree on a schedule or an alternative arrangement, requests for 
extension will be accepted and reviewed on a case-by-case basis. The 
Commission will grant such extensions only if the incumbent can 
demonstrate that:
    (1) It cannot relocate within the six-month period (e.g., because 
no alternative spectrum or other reasonable option is available), and;
    (2) The public interest would be harmed if the incumbent is forced 
to terminate operations (e.g., if public safety communications services 
would be disrupted).

PART 24--PERSONAL COMMUNICATIONS SERVICES

    5. The authority citation for Part 24 is revised to read as 
follows:

    Authority: 47 U.S.C. 154, 301, 302, 303, 309 and 332.

    6. Section 24.5 is amended by adding the definitions for ``PCS 
Relocator'' and ``UTAM'' in alphabetical order to read as follows:


Sec. 24.5  Definitions.

* * * * *
    PCS Relocator. A PCS entity that pays to relocate a fixed microwave 
link from its existing 2 GHz facility to other media or other fixed 
channels.
    UTAM. The Unlicensed PCS Ad Hoc Committee for 2 GHz Microwave 
Transition and Management, which coordinates relocation in the 1910-
1930 MHz band.
* * * * *
    7. Section 24.237 is amended by revising paragraph (c) to read as 
follows:


Sec. 24.237  Interference protection.

* * * * *
    (c) In all other respects, coordination procedures are to follow 
the requirements of Sec. 101.103(d) of this chapter to the extent that 
these requirements are not inconsistent with those specified in this 
part.
* * * * *
    8. Subpart E is amended by adding a new heading following Section 
24.238 to read as follows:

Policies Governing Microwave Relocation From the 1850-1990 MHz Band

    9. A new Section 24.239 is added to Subpart E to read as follows:


Sec. 24.239   Cost-sharing requirements for Broadband PCS.

    Frequencies in the 1850-1990 MHz band listed in Sec. 101.147(c) of 
this chapter have been allocated for use by PCS. In accordance with 
procedures specified in Secs. 101.69 through 101.81 of this chapter, 
PCS entities (both licensed and unlicensed) are required to relocate 
the existing Fixed Microwave Services (FMS) licensees in these bands if 
interference to the existing FMS operations would occur. All PCS 
entities who benefit from spectrum clearance by other PCS entities must 
contribute to such relocation costs. PCS entities may satisfy this 
requirement by entering into private cost-sharing agreements or 
agreeing to terms other than those specified in Sec. 24.243. However, 
PCS entities are required to reimburse other PCS entities that incur 
relocation costs and are not parties to the alternative agreement. In 
addition, parties to a private cost-sharing agreement may seek 
reimbursement through the clearinghouse (as discussed in Sec. 24.241) 
from PCS entities that are not parties to the agreement. The cost-
sharing plan is in effect during all phases of microwave relocation 
specified in Sec. 101.69 of this chapter.
    10. A new Section 24.241 is added to Subpart E to read as follows:


Sec. 24.241   Administration of the Cost-Sharing Plan.

    The Wireless Telecommunications Bureau, under delegated authority, 
will select an entity to operate as a neutral, not-for-profit 
clearinghouse. This clearinghouse will administer the cost-sharing plan 
by, inter alia, maintaining all of the cost and payment records related 
to the relocation of each link and determining the cost-sharing 
obligation of subsequent PCS entities. The cost-sharing rules will not 
take effect until an administrator is selected.
    11. A new Section 24.243 is added to Subpart E to read as follows:

[[Page 29692]]

Sec. 24.243   The Cost-Sharing Formula.

    A PCS relocator who relocates an interfering microwave link, i.e., 
one that is in all or part of its market area and in all or part of its 
frequency band, is entitled to pro rata reimbursement based on the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR12JN96.001

    (a) RN equals the amount of reimbursement.
    (b) C equals the actual cost of relocating the link. Actual 
relocation costs include, but are not limited to, 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 Sec. 101.103(d) of 
this chapter; 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. C also includes incumbent 
transaction expenses that are directly attributable to the relocation, 
subject to a cap of two percent of the ``hard'' costs involved. C may 
not exceed $250,000 per link, with an additional $150,000 permitted if 
a new or modified tower is required.
    (c) N equals the number of PCS entities that would have interfered 
with the link. For the PCS relocator, N = 1. For the next PCS entity 
that would have interfered with the link, N=2, and so on.
    (d) TM equals the number of months that have elapsed between 
the month the PCS relocator obtains reimbursement rights and the month 
that the clearinghouse notifies a later-entrant of its reimbursement 
obligation. A PCS relocator obtains reimbursement rights on the date 
that it signs a relocation agreement with a microwave incumbent.
    12. A new Section 24.245 is added to Subpart E to read as follows:
Sec. 24.245   Reimbursement under the Cost-Sharing Plan.

    (a) Registration of Reimbursement Rights. To obtain reimbursement, 
a PCS relocator must submit documentation of the relocation agreement 
to the clearinghouse within ten business days of the date a relocation 
agreement is signed with an incumbent. If the clearinghouse has not yet 
been selected, the PCS relocator will be responsible for submitting 
documentation of the relocation agreement within ten business days of 
the date that the Wireless Telecommunications Bureau issues a public 
notice announcing that the clearinghouse has been established and has 
begun operation.
    (b) Documentation of Expenses. Once relocation occurs, the PCS 
relocator must submit documentation itemizing the amount spent for 
items listed in Sec. 24.243(b). The PCS relocator must identify the 
particular link associated with appropriate expenses (i.e., costs may 
not be averaged over numerous links). If a PCS relocator pays a 
microwave incumbent a monetary sum to relocate its own facilities, the 
PCS relocator must estimate the costs associated with relocating the 
incumbent by itemizing the anticipated cost for items listed in 
Sec. 24.243(b). If the sum paid to the incumbent cannot be accounted 
for, the remaining amount is not eligible for reimbursement. A PCS 
relocator may submit receipts or other documentation to the 
clearinghouse for all relocation expenses incurred since April 5, 1995.
    (c) Full Reimbursement. A PCS relocator who relocates a microwave 
link that is either fully outside its market area or its licensed 
frequency band may seek full reimbursement through the clearinghouse of 
compensable costs, up to the reimbursement cap as defined in 
Sec. 24.243(b). Such reimbursement will not be subject to depreciation 
under the cost-sharing formula.
    13. A new Section 24.247 is added to Subpart E to read as follows:
Sec. 24.247   Triggering a Reimbursement Obligation.

    (a) Licensed PCS. The clearinghouse will apply the following test 
to determine if a PCS entity preparing to initiate operations must pay 
a PCS relocator in accordance with the formula detailed in Sec. 24.243:
    (1) All or part of the relocated microwave link was initially co-
channel with the licensed PCS band(s) of the subsequent PCS entity;
    (2) A PCS relocator has paid the relocation costs of the microwave 
incumbent; and
    (3) The subsequent PCS entity is preparing to turn on a fixed base 
station at commercial power and the fixed base station is located 
within a rectangle (Proximity Threshold) described as follows:
    (i) The length of the rectangle shall be x where x is a line 
extending through both nodes of the microwave link to a distance of 48 
kilometers (30 miles) beyond each node. The width of the rectangle 
shall be y where y is a line perpendicular to x and extending for a 
distance of 24 kilometers (15 miles) on both sides of x. Thus, the 
rectangle is represented as follows:

BILLING CODE 6712-01-P
[GRAPHIC] [TIFF OMITTED] TR12JN96.002

BILLING CODE 6712-01-C

[[Page 29693]]

    (ii) If the application of the Proximity Threshold test indicates 
that a reimbursement obligation exists, the clearinghouse will 
calculate the reimbursement amount in accordance with the cost-sharing 
formula and notify the subsequent PCS entity of the total amount of its 
reimbursement obligation.
    (b) Unlicensed PCS. UTAM's reimbursement obligation is triggered 
either:
    (1) When a county is cleared of microwave links in the unlicensed 
allocation, and UTAM invokes a Zone 1 power cap as a result of third 
party relocation activities; or
    (2) A county is cleared of microwave links in the unlicensed 
allocation and UTAM reclassifies a Zone 2 county to Zone 1 status.
    14. A new Section 24.249 is added to Subpart E to read as follows:


Sec. 24.249   Payment Issues.

    (a) Timing. On the day that a PCS entity files its prior 
coordination notice (PCN) in accordance with Sec. 101.103(d) of this 
chapter, it must file a copy of the PCN with the clearinghouse. The 
clearinghouse will determine if any reimbursement obligation exists and 
notify the PCS entity in writing of its repayment obligation, if any. 
When the PCS entity receives a written copy of such obligation, it must 
pay directly to the PCS relocator the amount owed within thirty days, 
with the exception of those businesses that qualify for installment 
payments. A business that qualifies for an installment payment plan 
must make its first installment payment within thirty days of notice 
from the clearinghouse. UTAM's first payment will be due thirty days 
after its reimbursement obligation is triggered as described in 
Sec. 24.247(b).
    (b) Eligibility for Installment Payments. PCS licensees that are 
allowed to pay for their licenses in installments under our designated 
entity rules will have identical payment options available to them with 
respect to payments under the cost-sharing plan. The specific terms of 
the installment payment mechanism, including the treatment of principal 
and interest, are the same as those applicable to the licensee's 
installment auction payments. If, for any reason, the entity eligible 
for installment payments is no longer eligible for such installment 
payments on its license, that entity is no longer eligible for 
installment payments under the cost-sharing plan. UTAM may make 
quarterly payments over a five-year period with an interest rate of 
prime plus 2.5 percent. UTAM may also negotiate separate repayment 
arrangements with other parties.
    15. A new Section 24.251 is added to Subpart E to read as follows:


Sec. 24.251   Dispute Resolution Under the Cost-Sharing Plan.

    Disputes arising out of the cost-sharing plan, such as disputes 
over the amount of reimbursement required, must be brought, in the 
first instance, to the clearinghouse for resolution. To the extent that 
disputes cannot be resolved by the clearinghouse, parties are 
encouraged to use expedited ADR procedures, such as binding 
arbitration, mediation, or other ADR techniques.
    16. A new Section 24.253 is added to Subpart E to read as follows:


Sec. 24.253  Termination of Cost-Sharing Obligations.

    The cost-sharing plan will sunset for all PCS entities on April 4, 
2005, which is ten years after the date that voluntary negotiations 
commenced for A and B block PCS entities. Those PCS entities that are 
paying their portion of relocation costs on an installment basis must 
continue the payments until the obligation is satisfied.

PART 101--FIXED MICROWAVE SERVICES

    17. The authority citation for Part 101 is revised to read as 
follows:

    Authority: 47 U.S.C. 154, 303.

    18. Section 101.3 is amended by adding the definition for 
``Secondary Operations'' in alphabetical order to read as follows:


Sec. 101.3  Definitions.

* * * * *
    Secondary Operations. Radio communications which may not cause 
interference to operations authorized on a primary basis and which are 
not protected from interference from these primary operations.
* * * * *
    19. Subpart B is amended by adding a new heading following Section 
101.67 to read as follows:

Policies Governing Microwave Relocation From the 1850-1990 and 
2110-2200 MHZ Bands

    20. Section 101.69 is revised to read as follows:


Sec. 101.69  Transition of the 1850-1990 and 2110-2200 MHz bands from 
the Fixed Microwave Services to Personal Communications Services and 
emerging technologies.

    Fixed Microwave Services (FMS) frequencies in the 1850-1990 and 
2110-2200 MHz bands listed in Secs. 101.147 (c), (d) and (e) have been 
allocated for use by emerging technology (ET) services, including 
Personal Communications Services (PCS). The rules in this section 
provide for a transition period during which ET licensees may relocate 
existing FMS licensees using these frequencies to other media or other 
fixed channels, including those in other microwave bands.
    (a) ET licensees may negotiate with FMS licensees authorized to use 
frequencies in the 1850-1990 and 2110-2200 MHz bands, for the purpose 
of agreeing to terms under which the FMS licensees would--
    (1) Relocate their operations to other fixed microwave bands or 
other media; or alternatively
    (2) Accept a sharing arrangement with the ET licensee that may 
result in an otherwise impermissible level of interference to the FMS 
operations.
    (b) FMS operations in the 1850-1990 and 2110-2200 MHz bands, with 
the exception of public safety facilities defined in Sec. 101.77, will 
continue to be co-primary with other users of this spectrum until two 
years after the FCC commences acceptance of applications for ET 
services (voluntary negotiation period), and until one year after an ET 
licensee initiates negotiations for relocation of the fixed microwave 
licensee's operations (mandatory negotiation period). In the 1910-1930 
MHz band allocated for unlicensed PCS, FMS operations will continue to 
be co-primary until one year after UTAM, Inc. initiates negotiations 
for relocation of the fixed microwave licensee's operations. Public 
safety facilities defined in Sec. 101.77 will continue to be co-primary 
in these bands until three years after the Commission commences 
acceptance of applications for an emerging technology service 
(voluntary negotiation period), and until two years after an emerging 
technology service licensee or an emerging technology unlicensed 
equipment supplier or representative initiates negotiations for 
relocation of the fixed microwave licensee's operations (mandatory 
negotiation period). If no agreement is reached during either the 
voluntary or mandatory negotiation periods, an ET licensee may initiate 
involuntary relocation procedures. Under involuntary relocation, the 
incumbent is required to relocate, provided that the ET licensee meets 
the conditions of Sec. 101.75.
    21. A new Section 101.71 is added to Subpart B to read as follows:

[[Page 29694]]

Sec. 101.71  Voluntary Negotiations.

    During the two or three year voluntary negotiation period, 
negotiations are strictly voluntary and are not defined by any 
parameters. However, if the parties have not reached an agreement 
within one year after the commencement of the voluntary period, the FMS 
licensee must allow the ET licensee (if it so chooses) to gain access 
to the existing facilities to be relocated so that an independent third 
party can examine the FMS licensee's 2 GHz system and prepare an 
estimate of the cost and the time needed to relocate the FMS licensee 
to comparable facilities. The ET licensee must pay for any such 
estimate.
    22. A new Section 101.73 is added to Subpart B to read as follows:


Sec. 101.73  Mandatory Negotiations.

    (a) If a relocation agreement is not reached during the two or 
three year voluntary period, the ET licensee may initiate a mandatory 
negotiation period. This mandatory period is triggered at the option of 
the ET licensee, but ET licensees may not invoke their right to 
mandatory negotiation until the voluntary negotiation period has 
expired.
    (b) Once mandatory negotiations have begun, an FMS licensee may not 
refuse to negotiate and all parties are required to negotiate in good 
faith. Good faith requires each party to provide information to the 
other that is reasonably necessary to facilitate the relocation 
process. In evaluating claims that a party has not negotiated in good 
faith, the FCC will consider, inter alia, the following factors:
    (1) Whether the ET licensee has made a bona fide offer to relocate 
the FMS licensee to comparable facilities in accordance with Section 
101.75(b);
    (2) If the FMS licensee has demanded a premium, the type of premium 
requested (e.g., whether the premium is directly related to relocation, 
such as system-wide relocations and analog-to-digital conversions, 
versus other types of premiums), and whether the value of the premium 
as compared to the cost of providing comparable facilities is 
disproportionate (i.e., whether there is a lack of proportion or 
relation between the two);
    (3) What steps the parties have taken to determine the actual cost 
of relocation to comparable facilities;
    (4) Whether either party has withheld information requested by the 
other party that is necessary to estimate relocation costs or to 
facilitate the relocation process.
    (c) Any party alleging a violation of our good faith requirement 
must attach an independent estimate of the relocation costs in question 
to any documentation filed with the Commission in support of its claim. 
An independent cost estimate must include a specification for the 
comparable facility and a statement of the costs associated with 
providing that facility to the incumbent licensee.
    23. A new Section 101.75 is added to Subpart B to read as follows:


Sec. 101.75  Involuntary Relocation Procedures.

    (a) If no agreement is reached during either the voluntary or 
mandatory negotiation period, an ET licensee may initiate involuntary 
relocation procedures under the Commission's rules. ET licensees are 
obligated to pay to relocate only the specific microwave links to which 
their systems pose an interference problem. Under involuntary 
relocation, the FMS licensee is required to relocate, provided that the 
ET licensee:
    (1) Guarantees payment of relocation costs, including all 
engineering, equipment, site and FCC fees, as well as any legitimate 
and prudent transaction expenses incurred by the FMS licensee that are 
directly attributable to an involuntary relocation, subject to a cap of 
two percent of the hard costs involved. Hard costs are defined as the 
actual costs associated with providing a replacement system, such as 
equipment and engineering expenses. ET licensees are not required to 
pay FMS licensees for internal resources devoted to the relocation 
process. ET licensees are not required to pay for transaction costs 
incurred by FMS licensees during the voluntary or mandatory periods 
once the involuntary period is initiated, or for fees that cannot be 
legitimately tied to the provision of comparable facilities;
    (2) Completes all activities necessary for implementing the 
replacement facilities, including engineering and cost analysis of the 
relocation procedure and, if radio facilities are used, identifying and 
obtaining, on the incumbents' behalf, new microwave frequencies and 
frequency coordination; and
    (3) Builds the replacement system and tests it for comparability 
with the existing 2 GHz system.
    (b) Comparable Facilities. The replacement system provided to an 
incumbent during an involuntary relocation must be at least equivalent 
to the existing FMS system with respect to the following three factors:
    (1) Throughput. Communications throughput is the amount of 
information transferred within a system in a given amount of time. If 
analog facilities are being replaced with analog, the ET licensee is 
required to provide the FMS licensee with an equivalent number of 4 kHz 
voice channels. If digital facilities are being replaced with digital, 
the ET licensee must provide the FMS licensee with equivalent data 
loading bits per second (bps). ET licensees must provide FMS licensees 
with enough throughput to satisfy the FMS licensee's system use at the 
time of relocation, not match the total capacity of the FMS system.
    (2) Reliability. System reliability is the degree to which 
information is transferred accurately within a system. ET licensees 
must provide FMS licensees with reliability equal to the overall 
reliability of their system. For digital data systems, reliability is 
measured by the percent of time the bit error rate (BER) exceeds a 
desired value, and for analog or digital voice transmissions, it is 
measured by the percent of time that audio signal quality meets an 
established threshold. If an analog voice system is replaced with a 
digital voice system, only the resulting frequency response, harmonic 
distortion, signal-to-noise ratio and its reliability will be 
considered in determining comparable reliability.
    (3) Operating Costs. Operating costs are the cost to operate and 
maintain the FMS system. ET licensees must compensate FMS licensees for 
any increased recurring costs associated with the replacement 
facilities (e.g., additional rental payments, increased utility fees) 
for five years after relocation. ET licensees may satisfy this 
obligation by making a lump-sum payment based on present value using 
current interest rates. Additionally, the maintenance costs to the FMS 
licensee must be equivalent to the 2 GHz system in order for the 
replacement system to be considered comparable.
    (c) The FMS licensee is not required to relocate until the 
alternative facilities are available to it for a reasonable time to 
make adjustments, determine comparability, and ensure a seamless 
handoff.
    (d) Twelve-Month Trial Period. If, within one year after the 
relocation to new facilities, the FMS licensee demonstrates that the 
new facilities are not comparable to the former facilities, the ET 
licensee must remedy the defects or pay to relocate the microwave 
licensee to one of the following: its former or equivalent 2 GHz 
channels, another comparable frequency band, a land-line system, or any 
other facility that satisfies the requirements specified in paragraph 
(b) of this section. This trial period commences on the date that the 
FMS licensee begins full operation of the replacement link. If the FMS 
licensee has retained its 2 GHz

[[Page 29695]]

authorization during the trial period, it must return the license to 
the Commission at the end of the twelve months.
    24. A new Section 101.77 is added to Subpart B to read as follows:


Sec. 101.77  Public Safety Licensees in the 1850-1990 and 2110-2200 MHz 
bands.

    (a) Public safety facilities are subject to the three-year 
voluntary and two-year mandatory negotiation period. In order for 
public safety licensees to qualify for extended negotiation periods, 
the department head responsible for system oversight must certify to 
the ET licensee requesting relocation that:
    (1) The agency is a licensee in the Police Radio, Fire Radio, 
Emergency Medical, Special Emergency Radio Services, or that it is a 
licensee of other Part 101 facilities licensed on a primary basis under 
the eligibility requirements of Part 90, Subparts B and C of this 
chapter; and
    (2) The majority of communications carried on the facilities at 
issue involve safety of life and property.
    (b) A public safety licensee must provide certification within 
thirty (30) days of a request from a ET licensee, or the ET licensee 
may presume that special treatment is inapplicable. If a public safety 
licensee falsely certifies to an ET licensee that it qualifies for the 
extended time periods, this licensee will be in violation of the 
Commission's rules and will subject to appropriate penalties, as well 
as immediately subject to the non-public safety time periods.
    25. A new Section 101.79 is added to Subpart B to read as follows:


Sec. 101.79  Sunset provisions for licensees in the 1850-1990 and 2110-
2200 MHz bands.

    (a) FMS licensees will maintain primary status in the 1850-1990 and 
2110-2200 MHz bands unless and until an ET licensee requires use of the 
spectrum. ET licensees are not required to pay relocation costs after 
the relocation rules sunset (i.e. ten years after the voluntary period 
begins for the first ET licensees in the service). Once the relocation 
rules sunset, an ET licensee may require the incumbent to cease 
operations, provided that the ET licensee intends to turn on a system 
within interference range of the incumbent, as determined by TIA 
Bulletin 10-F or any standard successor. ET licensee notification to 
the affected FMS licensee must be in writing and must provide the 
incumbent with no less than six months to vacate the spectrum. After 
the six-month notice period has expired, the FMS licensee must turn its 
license back into the Commission, unless the parties have entered into 
an agreement which allows the FMS licensee to continue to operate on a 
mutually agreed upon basis.
    (b) If the parties cannot agree on a schedule or an alternative 
arrangement, requests for extension will be accepted and reviewed on a 
case-by-case basis. The Commission will grant such extensions only if 
the incumbent can demonstrate that:
    (1) It cannot relocate within the six-month period (e.g., because 
no alternative spectrum or other reasonable option is available), and;
    (2) The public interest would be harmed if the incumbent is forced 
to terminate operations (e.g., if public safety communications services 
would be disrupted).
    26. A new Section 101.81 is added to Subpart B to read as follows:


Sec. 101.81  Future licensing in the 1850-1990 and 2110-2200 MHz bands.

    After April 25, 1996, all major modifications and extensions to 
existing FMS systems in the 1850-1990 and 2110-2200 MHz bands will be 
authorized on a secondary basis to ET systems. All other modifications 
will render the modified FMS license secondary to ET operations, unless 
the incumbent affirmatively justifies primary status and the incumbent 
FMS licensee establishes that the modification would not add to the 
relocation costs of ET licensees. Incumbent FMS licensees will maintain 
primary status for the following technical changes:
    (a) Decreases in power;
    (b) Minor changes (increases or decreases) in antenna height;
    (c) Minor location changes (up to two seconds);
    (d) Any data correction which does not involve a change in the 
location of an existing facility;
    (e) Reductions in authorized bandwidth;
    (f) Minor changes (increases or decreases) in structure height;
    (g) Changes (increases or decreases) in ground elevation that do 
not affect centerline height;
    (h) Minor equipment changes.
    27. Section 101.147 is amended by adding references to note 20 in 
the entries for frequency ranges 1,850-1,990, 2,130-2,150, 2,150-2,160 
and 2,180-2,200 MHz and revising note 20 to read as follows:


Sec. 101.147  Frequency assignments.

    (a) * * *
1,850-1,990 MHz (20)
* * * * *
2,130-2,150 MHz (20) (22)
2,150-2,160 MHz (20), (22)
* * * * *
2,180-2,200 MHz (20), (22)
* * * * *
Notes
* * * * *
    (20) New facilities in these bands will be licensed only on a 
secondary basis. Facilities licensed or applied for before January 
16, 1992, are permitted to make modifications and minor extensions 
in accordance with Sec. 101.77 and still retain primary status.
* * * * *
    (22) Frequencies in these bands are for the exclusive use of 
Private Operational Fixed Point-to-Point Microwave Service (Part 
101).

[FR Doc. 96-14138 Filed 6-11-96; 8:45 am]
BILLING CODE 6712-01-P