[Federal Register Volume 62, Number 52 (Tuesday, March 18, 1997)]
[Rules and Regulations]
[Pages 12752-12759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-6751]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 24 and 101

[WT Docket No. 95-157; FCC 97-48]


Plan for Sharing the Costs of Microwave Relocation

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: By this Second Report and Order, the Commission amends certain 
aspects of the microwave relocation rules, which were first established 
in the Emerging Technologies proceeding and were modified and clarified 
in the First Report and Order and Further Notice of Proposed Rule 
Making in this docket. Specifically, the Commission adjusts the 
relocation timetables for the broadband PCS C, D, E, and F blocks by 
shortening the voluntary negotiation period applicable to each block 
for non-public safety incumbents by one year. This change will 
facilitate the relocation process for the most recently licensed PCS 
blocks and will create incentives for all parties to enter into early 
negotiations. The Commission does not alter the timetable for public 
safety incumbents in the broadband PCS C, D, E, and F blocks. In 
addition, the Commission permits microwave incumbents to participate in 
the cost-sharing program adopted in the First Report and Order. The 
cost-sharing program currently allows PCS licensees who relocate 
microwave incumbents to obtain reimbursement rights and collect 
reimbursement under the cost-sharing plan from later-entrant PCS 
licensees that benefit from the relocation.

EFFECTIVE DATE: May 19, 1997.

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

SUPPLEMENTARY INFORMATION: This is a synopsis of the Second Report and 
Order, adopted February 13, 1997 and released February 27, 1997. The 
complete text of this Second Report and Order is available for 
inspection and copying during normal business hours in the FCC 
Reference Center, Room 230, 1919 M Street, NW., Washington, DC, and 
also may be purchased from the Commission's copy contractor, 
International Transcription Service, at (202) 857-3800, 2100 M Street, 
NW., Suite 140, Washington, DC 20037.

I. Background

    1. In the Emerging Technologies proceeding, 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. In that 
proceeding the Commission established the procedures for relocating 2 
GHz microwave incumbents to available frequencies in higher bands or to 
other media. These procedures are intended to encourage incumbents to 
negotiate relocation agreements with emerging technology licensees or 
manufacturers of unlicensed devices to accelerate the deployment of 
emerging technologies.
    2. The relocation process established in that proceeding provided 
two negotiation periods that must expire before an emerging technology 
licensee may request involuntary relocation of the incumbent. The first 
is a fixed two-year period for voluntary negotiations--three years for 
public safety incumbents, e.g., police, fire, and emergency medical 
licensees--commencing with the Commission's acceptance of long form 
(Form 600) applications for emerging technology services. During that 
time period, the emerging technology providers and microwave licensees 
may negotiate any mutually acceptable relocation agreement. Such 
negotiations are strictly voluntary. At any time following the 
conclusion of the voluntary negotiation period, the emerging technology 
licensee may initiate a one-year mandatory negotiation period--two 
years for public safety licensees. During this period the parties are 
required to negotiate in good faith. If the parties fail to reach an 
agreement during these periods, the emerging technology provider may 
request involuntary relocation of the existing facility. As a condition 
of relocation, however, the emerging technology licensee is required to 
pay the cost of relocating the incumbent to a comparable facility.
    3. In the Commission's First Report and Order in WT Docket 95-157, 
61 FR 29679 (June 12, 1996) the Commission adopted a cost-sharing 
formula that allows a PCS licensee who relocates an incumbent microwave 
system to obtain reimbursement rights and collect reimbursement from 
later-entrant PCS licensees that benefit from the relocation under a 
cost-sharing plan administered by the industry. The Commission also 
addressed concerns

[[Page 12753]]

raised by PCS licensees that negotiations during the voluntary period 
for the A and B blocks were not progressing as fast as they should and 
were potentially delaying the deployment of PCS service to the public. 
The Commission decided that altering the timetable for A and B block 
negotiation periods at that time would not be in the public interest 
because ongoing negotiations were likely to be interrupted, while 
parties re-assessed their positions to the detriment of the process and 
ultimately, the public interest. In the Further Notice of Proposed Rule 
Making (Further NPRM) 61 FR 24470 (May 15, 1996) accompanying the First 
Report and Order, however, the Commission sought comment on a proposal 
to shorten the voluntary negotiation period and lengthen the mandatory 
negotiation period for the D, E, and F blocks and on whether these same 
changes should apply to the C block.
    4. In the Further NPRM, the Commission also considered whether to 
allow microwave incumbents who pay their own relocation expenses to 
participate in the cost-sharing plan adopted in the First Report and 
Order under certain conditions. To further expedite clearing of the 
band, the Commission tentatively concluded that incumbents should be 
permitted to relocate their own links and obtain reimbursement rights 
pursuant to the cost-sharing plan.

II. Discussion

A. Voluntary and Mandatory Negotiation Periods for D, E, and F Blocks

    5. The comments of both PCS licensees and microwave incumbents have 
confirmed that most incumbents are willing to negotiate reasonable 
relocation agreements during the voluntary negotiation period. As many 
PCS licensees argue, however, the current length of the voluntary 
period unnecessarily provides opportunities for some incumbents to 
demand excessive premiums from PCS licensees after they have invested 
substantial amounts at auction and face competitive pressure to 
construct their systems and enter the market, particularly on 10 MHz 
blocks where PCS licensees have limited flexibility to build around 
incumbents. In addition, because of the staggered timing of PCS 
licensing, D, E, and F block licensees who are unable to negotiate 
voluntary agreements cannot initiate mandatory negotiations for more 
than a year after their A and B block competitors have begun such 
negotiations. Thus, the current rules give the A and B block licensees 
a significant ``head start'' in the relocation process.
    6. The Commission agrees that shortening the voluntary period for 
non-public safety incumbents in the D, E, and F blocks by one year will 
spur voluntary negotiations and speed the deployment of PCS services to 
the public. This modification will also enhance competitive parity by 
reducing the A and B block licensees' head start in the relocation 
process. The voluntary period for the A and B block licensees expires 
on April 5, 1997 (with respect to non-public safety incumbents), at 
which point A and B block licensees may begin mandatory negotiations. 
Shortening the voluntary period for D, E, and F blocks will help 
licensees in those blocks to initiate mandatory negotiations a year 
earlier than under the current rules, providing some compensation for 
the fact that the D, E, and F block voluntary negotiation period 
commenced approximately twenty-one months after the A and B block 
voluntary negotiation period. The A and B block voluntary negotiation 
period commenced April 5, 1995. The D, E, and F block voluntary 
negotiation period will commence January 30, 1997, when long forms are 
filed. The Commission therefore amends the rules and shortens the 
voluntary negotiation period for the D, E, and F blocks by one year for 
non-public safety incumbents.
    7. The Commission concludes that shortening the voluntary 
negotiation period for non-public safety incumbents in the D, E, and F 
blocks at this juncture will not adversely affect such incumbents. The 
Commission notes that microwave incumbents have been on notice since 
October 1992 that they will be required to relocate to alternative 
spectrum. Moreover, the Commission's experience with voluntary 
negotiations in the A and B blocks indicates that most incumbents who 
are motivated to enter into voluntary agreements are willing to do so 
early in the voluntary period and do not require prolonged negotiations 
to reach an agreement. Under the timetables adopted here, D, E, and F 
block incumbents will continue to have a reasonable window for 
voluntary negotiations and may continue to negotiate in the mandatory 
negotiation period. Moreover, if parties are successfully negotiating 
an agreement during the voluntary negotiation period and believe that 
more time is needed, they may agree to postpone commencement of the 
mandatory period. Finally, shortening of the voluntary period does not 
alter the Commission's fundamental policy that incumbents must be made 
whole for the reasonable expense of being relocated to comparable 
facilities, regardless of whether relocation occurs in the voluntary 
period, the mandatory period, or as a result of involuntary relocation.
    8. While the Commission adopts it's proposal to shorten the 
voluntary negotiation period for non-public safety incumbents in the D, 
E, and F blocks, the Commission concludes it is unnecessary to lengthen 
the one-year mandatory negotiation period. Because the D, E, and F 
blocks are 10 MHz blocks, there are fewer links to relocate than in the 
30 MHz A, B, and C blocks. In addition, no additional time should be 
required for mandatory negotiation in the D, E, and F blocks because 
many of the links will have been relocated by A, B, and C block 
licensees by the time the D, E, and F block licensees commence 
negotiations. The Commission is encouraged, from our discussions with 
industry, by the speed with which relocation agreements are being 
negotiated and believe that a total of two years, (one year voluntary 
and one year mandatory) is sufficient to accommodate negotiations 
between non-public safety incumbents and D, E, and F block licensees. 
Lengthening the mandatory negotiation period by one year, on the other 
hand, will do little to accomplish the Commission's objective of 
speeding the deployment of PCS services to the public. The Commission 
also do not believe that non-public safety incumbents will be harmed by 
a shorter combined negotiation period because in conjunction with these 
changes, the Commission is providing microwave incumbents more 
flexibility to self-relocate by permitting them to participate in the 
Commission's cost-sharing plan (see, infra, para. 22). Consequently, 
the Commission declines to increase the amount of time in the mandatory 
period needed to complete the relocation process for these blocks.
    9. The Commission declines to alter the voluntary or mandatory 
negotiation periods for public safety incumbents in the D, E, and F 
blocks. Under the Commission's current rules, public safety incumbents 
in the 2 GHz band are distinguished from non-public safety 2 GHz 
incumbents in that they have a three-year voluntary and a two-year 
mandatory negotiation period. The Commission has given public safety 
incumbents more time to negotiate and relocate because of the 
importance of ensuring a seamless transition for facilities that 
support vital emergency services such as police, fire, and emergency 
medical treatment. In addition, the longer negotiation timetable 
reflects the fact that public safety agencies typically operate under

[[Page 12754]]

greater budgetary constraints and longer planning cycles than non-
public safety entities. For example, the LA Sheriff's Department notes 
that replacing its 2 GHz simulcast mobile network entails a lengthy 
review and approval process in which numerous county personnel must 
participate at all stages. APCO contends that for public safety 
agencies, the relocation process requires significant commitment of 
scarce agency time and resources to ensure that vital emergency 
communications will not be compromised or disrupted. The Commission 
agrees that these continue to be significant concerns that distinguish 
public safety incumbents from other incumbents. The Commission further 
concludes that there is insufficient support in the record for 
modifying the negotiation timetable for public safety incumbents at 
this time. Even prior to the commencement of negotiations, many public 
safety agencies have begun to plan for relocation in reliance on the 
existing rules. Because changing the rules could disrupt this process, 
and because of the vital importance of providing the public with 
reliable emergency communications, the Commission concludes that the 
current relocation timetable for public safety agencies in the D, E, 
and F blocks should be retained.
    10. The Commission does not believe that retaining the current 
relocation rules for public safety incumbents will adversely affect PCS 
licensees in the D, E, and F blocks. Because public safety incumbents 
account for fewer than 20 percent of the microwave facilities in all 
PCS blocks, PCS licensees will be able to clear most of their spectrum 
under the shorter timetable applicable to non-public safety licensees. 
In addition, the Commission's experience after twenty-one months of 
voluntary negotiations in the A and B blocks indicates that most public 
safety incumbents in those blocks have entered into voluntary 
negotiations with PCS licensees and are cooperating in the relocation 
process. Based on this experience, the Commission anticipates that 
public safety agencies in the D, E, and F blocks will not wait until 
the conclusion of the voluntary period to begin negotiations requested 
by D, E, and F block licensees and will make good-faith efforts to 
complete the relocation process in a reasonable time. Because the 
Commission believes that the current rules fairly balance the interests 
of PCS licensees and public safety incumbents, the Commission concludes 
that further alteration to the voluntary or mandatory negotiation 
periods for public safety incumbents is unnecessary.

B. Voluntary and Mandatory Negotiation Periods for C Block

    11. The C block winners are potentially at a greater disadvantage 
compared to A and B block winners under the current voluntary 
negotiation timetable. Currently the voluntary negotiation period for 
non-public safety incumbents and A and B block licensees will expire 
April 5, 1997, whereas the equivalent voluntary negotiation period for 
C block will expire May 22, 1998. The C block winners are small 
businesses that do not have financial resources similar to their A and 
B block competitors. The C block is an entrepreneurs block that 
restricted eligibility to applicants with gross revenues of less than 
$125 million in each of the last two years and total assets of less 
than $500 million at the time the applicants' short-form application 
(Form 175) was filed. It is not as feasible for a small business to pay 
premiums to accelerate negotiations. The purpose of the special C block 
bidding rules is to encourage small business participation in PCS. The 
Commission believes an extended voluntary negotiation period could 
hinder or deter small businesses from effectively participating in the 
PCS business because it increases the likelihood that they will incur 
start-up business expenses such as relocation premiums and related 
costs due to extended negotiations. The Communications Act requires the 
Commission to eliminate market entry barriers for entrepreneurs and 
small businesses. The Commission believes that modifying the 
negotiation periods will eliminate market entry barriers pursuant to 
Section 257 of the Communications Act and will assist small businesses 
in C block to deploy service to the consumer faster. The Commission 
concludes that these factors are sufficiently compelling to justify 
modification of the voluntary negotiation period for non-public safety 
incumbents, even though negotiations have commenced. The Commission 
therefore shortens the voluntary negotiation period for C block to one 
year for non-public safety incumbents, which will cause it to terminate 
on May 22, 1997.
    12. Similar to the Commission's decision not to extend the 
mandatory negotiation period in the D, E, and F blocks, the Commission 
also conclude that it is unnecessary to extend the mandatory 
negotiation period for non-public safety incumbents in the C block. As 
in the case of the D, E, and F blocks, the Commission believe that no 
additional time is required for mandatory negotiations in the C block 
because many C block links will have been relocated by A and B block 
licensees by the time C block licensees commence mandatory 
negotiations. The Commission also believes that a combined two-year 
negotiation period will be sufficient for negotiations between C block 
licensees and non-public safety incumbents, whereas lengthening the 
mandatory period by one year could delay the deployment of PCS services 
to the public. Also, microwave incumbents will have greater flexibility 
in the relocation process because the Commission is permitting them to 
participate in the Commission's cost-sharing plan (see, infra, para. 
22). In addition, by retaining the one-year mandatory negotiation 
period for C block, the Commission achieves greater symmetry with the 
negotiations period for A and B blocks: the earliest that the mandatory 
negotiation period for C block will expire is now May 22, 1998 for non-
public safety incumbents--approximately the same time as the A and B 
block mandatory negotiation periods, which in most cases should expire 
April 5, 1998. This will create greater parity between C block 
entrepreneurs and their A and B block competitors in terms of clearing 
the band and offering service to the public.
    13. The Commission declines to alter the voluntary or mandatory 
negotiation periods for public safety incumbents in the C block for the 
same reasons the Commission has articulated for the D, E, and F blocks. 
As modified, the voluntary negotiation period for the C block will 
expire on May 22, 1997 for non-public safety incumbents--approximately 
the same time as the A and B block voluntary negotiation periods, which 
end April 5, 1997. The voluntary negotiation period for public safety 
incumbents in the C block will remain unchanged and will end May 22, 
1999--approximately one year after the voluntary negotiation period for 
public safety incumbents in the A and B block voluntary negotiation 
periods end, which is April 5, 1998.

C. Microwave Incumbent Participation in Cost-Sharing Plan

    14. The Commission adopts it's tentative conclusion from the 
Further Notice of Proposed Rule Making, to permit microwave incumbents 
that relocate themselves to obtain reimbursement rights and collect 
reimbursement under the Commission's cost-sharing plan from subsequent 
PCS licensees that would have interfered with the relocated link had it 
not been

[[Page 12755]]

moved. The Commission agrees with PCS licensees and microwave 
incumbents who argue that incumbent participation will accelerate the 
relocation process by promoting system-wide relocations. Incumbent 
participation will also give microwave incumbents the option of 
avoiding time-consuming negotiations, allowing for faster clearing of 
the 2 GHz band in some instances. The Commission believes that 
promoting system-wide relocation in this way may even reduce the 
overall cost of clearing the 2 GHz band.
    15. In concluding that microwave incumbents should be allowed to 
participate in cost-sharing, the Commission agrees with commenters that 
some safeguards are needed to ensure that voluntarily relocating 
microwave incumbents do not seek reimbursement for unreasonable 
expenses. The Commission therefore will impose the same restrictions on 
reimbursement of incumbents that apply to PCS licensees. These include 
the limitations under the cost-sharing plan on links for which 
reimbursement may be sought, and the monetary cap on the amount a 
relocator may be reimbursed for the relocation of each individual 
microwave link.
    16. The Commission also concludes that the cost-sharing formula, 
when applied to microwave incumbents, should include depreciation. 
First, a microwave incumbent who voluntarily relocates itself may 
obtain benefits it would not realize if it waited to be relocated by a 
PCS licensee. Early relocation by the incumbent on a voluntary basis 
provides more options for obtaining alternative spectrum, more control 
over the relocation process, and reduces uncertainty about further 
operations. Depreciation ensures that the self-relocation pays for 
these benefits rather than passing them on to a PCS licensee who 
otherwise would not have relocated the incumbent until later. Second, 
the Commission observed in the First Report and Order that depreciation 
creates an incentive for the relocator to minimize costs because its 
own share of the cost is not depreciated. The Commission concludes that 
this element of the cost-sharing plan applies equally to microwave 
incumbents who relocate themselves. Therefore, the Commission retains 
depreciation as an incentive for microwave incumbents who relocate 
themselves to minimize their relocation costs.
    17. Finally, the Commission concludes that microwave incumbents who 
self-relocate should be required to provide independent verification of 
their relocation costs. Although the cost-sharing plan already requires 
all relocators to keep documents of all expenses, the Commission 
believe this additional safeguard is appropriate in the case of 
incumbents seeking reimbursement. In the case of an incumbent who self-
relocates, it may be difficult for subsequent PCS licensees to verify 
the incumbent's costs to determine whether they are compensable under 
the cost-sharing plan. Therefore, any incumbent seeking reimbursement 
under the cost-sharing plan must submit to the clearinghouse an 
independent third party appraisal of its compensable relocation costs. 
The appraisal should be based on the actual cost of replacing the 
incumbent's system with comparable facilities, and should exclude the 
cost of any equipment upgrades that would not be reimbursable under the 
cost-sharing plan.

III. Conclusion

    18.The changes the Commission makes to the timetables for the 
voluntary and mandatory negotiation periods for the broadband PCS C, D, 
E, and F blocks will facilitate negotiations between microwave 
incumbents and PCS licensees. Allowing microwave incumbents to 
participate in the cost-sharing plan will also encourage more rapid 
system relocation and will reduce relocation costs. As a result of 
these changes, PCS licensees will be able to speed their deployment of 
service to the public.

IV. Procedural Matters

A. Regulatory Flexibility Act

    As required by Section 603 of the Regulatory Flexibility Act, 5 
U.S.C. 603 (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Notice of Proposed Rule Making in WT Docket No. 95-
157. The Commission sought written comments on the proposals in the 
NPRM, including the IRFA. The Commission's Final Regulatory Flexibility 
Analysis (FRFA) in this Order conforms to the RFA, as amended by the 
Contract With America Advancement Act of 1996.
    Need for and Purpose of the Action: This Second Report and Order 
(i) shortens the voluntary negotiation period for all non-public safety 
microwave incumbents in the C, D, E, and F blocks by one year, (ii) 
allows the microwave incumbents who self-relocate to obtain 
reimbursement rights and collect reimbursement under the cost-sharing 
formula. The changes adopted herein will facilitate the rapid 
relocation of microwave facilities in the 2 GHz band and will 
accelerate the deployment of PCS services to the public.
    Summary of Significant Issues Raised by the Public Comments in 
Response to the Initial Regulatory Flexibility Analysis: No comments 
were submitted in response to the IRFA. However, two commenters to the 
Further Notice of Proposed Rule Making, raised an issue that might 
affect small business entities. The commenters, American Petroleum 
Institute (API) and the American Public Power Association (APPA) argued 
that shortening the voluntary negotiation periods would disrupt and 
impose a significant burden on microwave incumbent businesses by 
forcing them to negotiate an agreement during a shorter voluntary 
negotiation period. Both commenters believe that without a two-year 
voluntary negotiation period, incumbents will be forced to negotiate 
during the mandatory negotiation period. The Commission does not 
believe that successful negotiations will be forced into the mandatory 
negotiation period. If successful negotiations are occurring, parties 
may agree not to commence with the mandatory negotiation period and may 
continue to negotiate successfully throughout a voluntary negotiation 
period.
    Description and Estimate of the Number of Small Entities To Which 
Rule Will Apply: For purposes of this Order, the Small Business 
Administration (SBA) has defined a small business for Standard 
Industrial Classification (SIC) category 4813 (Telephone Communications 
Except Radiotelephone) to be a small entity when it has fewer than 
1,500 employees.
    Estimates for Broadband PCS Services: The broadband PCS spectrum is 
divided into six frequency blocks designated A through F. As set forth 
in 47 CFR 24.720(b), the Commission has defined small businesses in the 
C and F block auctions to mean a firm that had average gross revenues 
of less than $40 million in the three previous calendar years. The 
Commission's definition of a small business has been approved by the 
SBA.
    The Commission has auctioned broadband PCS licenses in the A, B, C, 
D, E, and F blocks. The Commission does not have sufficient data to 
determine how many small businesses bid successfully for licenses in 
the A and B blocks. There are 81 non-defaulting winning bidders that 
qualify as small entities in the C block PCS auctions. Based on this 
information, the Commission conclude that the number of broadband PCS 
licensees affected by the decisions in this Order includes, at

[[Page 12756]]

a minimum, the 81 non-defaulting winning bidders that qualified as 
small entities in the C block broadband PCS auction.
    The D, E, and F block auction closed January 14, 1997, but 
presently there have been no licenses awarded for the D, E, and F block 
auctions. Therefore, there are no small businesses providing these 
services. However, there were 125 winning bidders and the Commission 
anticipates a total of 1,479 licenses will be awarded in the D, E, and 
F blocks. Participation in the F block was limited to entrepreneurs 
with under $125 million in average gross revenues over the past three 
years. More than 40 percent of the licenses in the D, E, and F blocks 
were won by 93 small businesses. The Commission estimate that most, if 
not all, of the small businesses will be awarded licenses.
    Estimates for Microwave Services: Due to the nature of this private 
service, the Commission does not have a definition for small business 
with respect to microwave services. Therefore, the Commission will 
utilize the SBA's definition applicable to radiotelephone companies--
i.e. an entity with less than 1,500 persons. The Census Bureau reports 
that there were 1,176 such companies in operation for at least one year 
at the end of 1992. Also, the Federal Communication Commission's Office 
of Engineering and Technology developed a study in 1992 that provides 
statistical data for all microwave incumbents in 1850 MHz to 1990 MHz 
bands. Specifically, the study finds that in the 1850 MHz to 1990 MHz, 
local governments, including public safety entities have 168 licensees; 
petroleum companies have 67 licenses; power companies have 164 
licenses; railroad companies have 18 licenses; and all other microwave 
incumbents in this band have 143 licenses. However, the Commission does 
not have specific statistics that determine how many of these companies 
are small businesses. In addition, this Second Report and Order only 
affects microwave incumbents in PCS blocks C, D, E, and F. Therefore, 
this Second Report and Order does not affect all microwave incumbents 
in the 1850 MHz to 1990 MHz band.
    However, the Commission recognizes that a number of microwave 
incumbents have already relocated due to the current negotiations of A, 
B, and C block PCS licensees. The Commission cannot determine at this 
time how many licensees have moved. The Commission therefore is unable 
to estimate the number of microwave service providers that qualify 
under the SBA's definition.
    Description, Projected Reporting, Record keeping and Other 
Compliance Requirements: In this Second Report and Order the Commission 
allows microwave incumbents who voluntarily relocate their links to 
obtain reimbursement from subsequent PCS licensees under the cost-
sharing plan. Microwave incumbents that participate in the cost-sharing 
plan will be required to submit documentation itemizing the amount 
spent for the actual cost of relocating the links. The voluntarily 
relocating microwave incumbent will also be required to submit an 
independent third party appraisal of its compensable costs. See, supra, 
IV., C, paragraph 27.
    Significant Alternatives and Steps Taken By Agency to Minimize 
Significant Economic Impact on a Substantial Number of Small Entities 
Consistent with Stated Objectives: In the Further Notice of Proposed 
Rule Making the Commission sought comment on adjusting the negotiation 
periods for the D, E, and F blocks by shortening the voluntary 
negotiation period and lengthening the mandatory negotiation period by 
the corresponding amount. The Commission also sought comment on whether 
the same adjustments should be made in the C block. This Second Report 
and Order shortens the voluntary negotiation period for the C, D, E, 
and F blocks by one year and lengthens the mandatory negotiation period 
for C block by one year. The Commission did not lengthen the mandatory 
negotiation period for the D, E, and F blocks because these are 10 MHz 
blocks and have fewer links to relocate than in the 30 MHz blocks that 
C block has. These alterations were made to diminish the opportunity of 
a few incumbents that were delaying negotiations by demanding excessive 
premiums from PCS licensees during the voluntary negotiation periods.
    Commenters to the Further NPRM generally indicated that microwave 
incumbents were negotiating successfully during the voluntary 
negotiation period and did not require prolonged negotiations to reach 
agreement. The Commission believes that these changes do not affect an 
incumbent's ability to negotiate an agreement during the voluntary 
negotiation period. If parties are successfully negotiating an 
agreement during the voluntary negotiation period, they may agree that 
more time is needed, thereby agreeing to postpone the commencement of 
the mandatory negotiation period. See, supra, IV., A, paragraph 13.
    These alterations will accelerate the deployment of PCS services to 
the consumer and still guarantee microwave incumbents full compensation 
for relocating.
    Report to Congress: The Commission shall send a copy of this Final 
Regulatory Flexibility Analysis with this Second Report and Order in a 
report to Congress pursuant to Section 251 of the Small Business 
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A). A 
copy of this Regulatory Flexibility Analysis will also be published in 
the Federal Register.

B. Authority

    Authority for issuance of this Second 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. 154(i), 157, 303(c), 303(f), 303(g), 303(r), 
332, as amended.

C. Ordering Clauses

    Accordingly, it is ordered That Parts 24 and 101 of the 
Commission's rules are amended as set forth below and will become 
effective May 19, 1997.
    It is further ordered That the Regulatory Flexibility Analysis, as 
required by Section 604 of the Regulatory Flexibility Act, and as set 
forth herein is Adopted.
    It is further ordered That the Secretary shall send a copy of this 
Second Report and Order to the Chief Counsel for Advocacy of the Small 
Business Administration.

D. Further Information

    For further information concerning this proceeding, contact Michael 
Hamra, Wireless Telecommunications Bureau, Commercial Wireless Division 
at (202) 418-0620.

List of Subjects

47 CFR Part 24

    Personal communications services, Radio.

47 CFR Part 101

    Fixed microwave services, Radio.

Federal Communications Commission
William F. Caton,
Acting Secretary.

Rule Changes

    Parts 24 and 101 of Chapter I of Title 47 of the Code of Federal 
Regulations are amended as follows:
    Part 24 of Chapter 1 of Title 47 of the Code of Federal Regulations 
is amended as follows:

PART 24--PERSONAL COMMUNICATIONS SERVICES

    1. The authority citation for Part 24 continues to read as follows:


[[Page 12757]]


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

    2. Section 24.5 is amended by adding the definition for 
``Voluntarily Relocating Microwave Incumbent'' in alphabetical order to 
read as follows:


Sec. 24.5  Terms and definitions.

* * * * *
    Voluntarily Relocating Microwave Incumbent. A microwave incumbent 
that voluntarily relocates its licensed facilities to other media or 
fixed channels.
    3. Section 24.239 is revised 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 or a 
voluntarily relocating microwave incumbent, 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 or voluntarily relocating microwave 
incumbents 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.
    4. Section 24.243 is revised to read as follows:


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 or a voluntarily relocating microwave incumbent, is 
entitled to pro rata reimbursement based on the following formula:
[GRAPHIC] [TIFF OMITTED] TR18MR97.001

    (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; site lease renegotiation; required antenna upgrades for 
interference control; power plant upgrade (if required); electrical 
grounding systems; Heating Ventilation and Air Conditioning (HVAC) (if 
required); alternate transport equipment; and leased facilities. C also 
includes voluntarily relocating microwave incumbent's independent third 
party appraisal of its compensable relocation costs and 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.
    5. Section 24.245 is amended by revising paragraphs (a) and (b) to 
read as follows:


Sec. 24.245  Reimbursement under the cost-sharing plan.

    (a) Registration of reimbursement rights. (1) 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.
    (2) To obtain reimbursement, a voluntarily relocating microwave 
incumbent must submit documentation of the relocation to the 
clearinghouse within ten business days of the date that relocation 
occurs.
    (b) Documentation of expenses. Once relocation occurs, the PCS 
relocator or the voluntarily relocating microwave incumbent, must 
submit documentation itemizing the amount spent for items listed in 
Sec. 24.243(b). The voluntarily relocating microwave incumbent, must 
also submit an independent third party appraisal of its compensable 
relocation costs. The appraisal should be based on the actual cost of 
replacing the incumbent's system with comparable facilities and should 
exclude the cost of any equipment upgrades or items outside the scope 
of Sec. 24.243(b). The PCS relocator or the voluntarily relocating 
microwave incumbent, 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.
* * * * *
    6. Section 24.247 is amended by revising the introductory text of 
paragraph (a) to read as follow:


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 or a voluntarily relocating microwave incumbent in 
accordance with the formula detailed in Sec. 24.243:
* * * * *
    7. Section 24.249 is amended by revising paragraph (a) 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 or the voluntarily relocating 
microwave incumbent the

[[Page 12758]]

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).
* * * * *

PART 101--FIXED MICROWAVE SERVICES

    8. The authority citation for Part 101 continues to read as 
follows:

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

    9. Section 101.69 is revised to read as follows:


Sec. 101.69  Transition of the 1850-1990 MHz, 2110-2150 MHz, and 2160-
2200 MHz bands from the fixed microwave services to personal 
communications services and emerging technologies.

    Fixed Microwave Services (FMS) frequencies in the 1850-1990 MHz, 
2110-2150 MHz, and 2160-2200 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 MHz, 2110-2150 MHz, and 2160-2200 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) Except as provided in paragraph (c) of this section, FMS 
operations in the 1850-1990 MHz, 2110-2150 MHz, and 2160-2200 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. Except as provided in paragraph (c) of this 
section, 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.
    (c) Voluntary and mandatory negotiation periods for PCS C, D, E, 
and F blocks are defined as follows:
    (1) Non-public safety incumbents will have a one-year voluntary 
negotiation period and a one-year mandatory negotiation period; and
    (2) Public safety incumbents will have a three-year voluntary 
negotiation period and a two-year mandatory negotiation period.
    10. Section 101.71 is revised to read as follows:


Sec. 101.71  Voluntary negotiations.

    During the 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 for non-public safety entities, or 
within three years after the commencement of the voluntary period for 
public safety entities, 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.
    11. Section 101.73 is amended by revising paragraph (a) to read as 
follows:


Sec. 101.73  Mandatory negotiations.

    (a) If a relocation agreement is not reached during the 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.
* * * * *
    12. Section 101.77 is amended by revising the section heading and 
paragraph (a) to read as follows:


Sec. 101.77  Public safety licensees in the 1850-1990 MHz, 2110-2150 
MHz, and 2160-2200 MHz bands.

    (a) Public safety facilities are subject to the three-year 
voluntary and two-year mandatory negotiation period, except as 
otherwise defined in paragraph 101.69(c). 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; and
    (2) The majority of communications carried on the facilities at 
issue involve safety of life and property.
* * * * *
    13. Section 101.79 is amended by revising the section heading and 
paragraph (a) to read as follows:


Sec. 101.79  Sunset provisions for licensees in the 1850-1990 MHz, 
2110-2150 MHz, and 2150-2160 MHz bands.

    (a) FMS licensees will maintain primary status in the 1850-1990 
MHz, 2110-2150 MHz, and 2160-2200 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 of 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

[[Page 12759]]

Commission, unless the parties have entered into an agreement which 
allows the FMS licensee to continue to operate on a mutually agreed 
upon basis.
* * * * *
    14. Section 101.81 is amended by revising the section heading and 
the introductory paragraph to read as follows:


Sec. 101.81  Future licensing in the 1850-1990 MHz, 2110-2150 MHz, and 
2160-2200 MHz bands.

    After April 25, 1996, all major modifications and extensions to 
existing FMS systems in the 1850-1990 MHz, 2110-2150 MHz, and 2160-2200 
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 add to the relocation costs of ET licensees. Incumbent FMS 
licensees will maintain primary status for the following technical 
changes:
* * * * *
[FR Doc. 97-6751 Filed 3-17-97; 8:45 am]
BILLING CODE 6712-01-P