[Federal Register Volume 72, Number 118 (Wednesday, June 20, 2007)]
[Rules and Regulations]
[Pages 33914-33916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11806]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 90

[WT Docket No. 02-55--FCC 07-92]


Improving Public Safety Communications in the 800 MHz Band

AGENCY: Federal Communications Commission.

ACTION: Clarification.

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SUMMARY: The Commission clarifies the standard for determining the 
acceptability of costs that Sprint Nextel Corporation (Sprint) is 
required to pay in connection with the 800 MHz rebanding process. 
Specifically, the Commission clarified the provision in the 800 MHz 
Report and Order that such costs must be the ``minimum necessary'' to 
accomplish rebanding of 800 MHz licensees in a reasonable, prudent and 
timely manner

DATES: Effective May 18, 2007.

FOR FURTHER INFORMATION CONTACT: John Evanoff, Public Safety and 
Homeland Security Bureau, (202) 418-0848, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This document summarizes the Memorandum 
Opinion and Order in WT Docket No. 02-55, adopted on May 17, 2007, and 
released on May 18, 2007. The full text of this document is available 
for public inspection on the Commission's Internet site at http:// 
www.fcc.gov. It is also available for inspection and copying during 
regular business hours in the FCC Reference Center (Room CY-A257), 445 
12th Street, SW., Washington, DC 20554. The full text of this document 
also may be purchased from the Commission's duplication contractor, 
Best Copy and Printing Inc., Portals II, 445 12th St., SW., Room CY-
B402, Washington, DC 20554; telephone (202) 488-5300; fax (202) 488-
5563; e-mail [email protected].

Background

    1. In the 800 MHz Report and Order, 69 FR 67823 (November 22, 
2004), the Commission ordered the rebanding of the 800 MHz band to 
resolve interference between commercial and public safety systems in 
the band. In that order, the Commission required Sprint Nextel 
Corporation (Sprint) to

[[Page 33915]]

pay for relocation of all affected 800 MHz licensee systems to their 
new channel assignments, including the expense of retuning or replacing 
the licensee's equipment as required. Sprint must provide each 
relocating licensee with ``comparable facilities'' on the new 
channel(s), and must provide for a seamless transition to enable 
licensee operations to continue without interruption during the 
relocation process. In exchange for Sprint's undertaking these 
obligations and agreeing to relinquish a portion of its 800 MHz 
spectrum, the Commission modified Sprint's licenses to authorize 
operations on 10 megahertz of spectrum in the 1.9 GHz band. At the end 
of the rebanding process, Sprint will receive credit for the expenses 
it has incurred and the spectrum it has relinquished. If the value of 
these expenses and spectrum is less than the value the Commission 
assigned to the 1.9 GHz spectrum, Sprint must make a ``windfall 
payment'' for the difference to the U.S. Treasury.
    2. In an April 20, 2007 ex parte filing, Sprint requested, inter 
alia, that the Commission clarify the standard in this proceeding for 
determining what rebanding costs are acceptable and therefore entitled 
to be credited by Sprint against its windfall payment obligation. 
Specifically, Sprint contends that its ability to negotiate cost 
provisions in its Planning Funding Agreements (PFAs) and Frequency 
Relocation Agreements (FRAs) with 800 MHz licensees is constrained by 
an overly narrow interpretation of language in the 800 MHz Report and 
Order that requires licensees to certify that the funds they request 
from Sprint ``are the minimum necessary to provide facilities 
comparable to those presently in use.'' Sprint asserts that ``this 
`minimum necessary' cost standard has been interpreted for 21 months of 
this process to essentially mean the `absolute lowest cost.' '' As a 
result, ``Sprint Nextel is in the position of having to challenge 
virtually every dollar spent on band reconfiguration to assure 
compliance with `minimum cost.' '' If it does not do so, Sprint 
contends that it risks violating its windfall payment obligation and 
could face criminal liability for agreeing to compensation of licensees 
that is later found to exceed the minimum cost standard.
    3. To address this concern, Sprint states that it requires 
``unambiguous Commission guidance and permission to spend more dollars 
than it may think is absolutely necessary in order to move retuning 
forward and achieve the overall goals of 800 MHz reconfiguration.'' 
Sprint requests that the Commission afford it ``greater flexibility in 
its review and acceptance of cost proposals that may not be the lowest 
cost, but that are `reasonable and prudent' and that are consistent 
with the Commission's objectives in the overall band reconfiguration 
initiative.'' However, Sprint stresses that ``[t]his does not mean that 
all public safety proposed costs should be `rubber stamped' by Sprint 
Nextel or the TA.'' Sprint asserts that under its proposed 
clarification of the ``minimum necessary'' cost standard, ``public 
safety should still have the burden of demonstrating that requested 
funds are reasonable, prudent and necessary.''
    4. On May 9, 2007, representatives of several public safety 
organizations submitted an ex parte letter supporting Commission 
clarification of this issue. The letter states that Sprint's ``narrow 
interpretation'' of the ``minimum necessary'' cost language has led to 
many protracted negotiations between Sprint and public safety licensees 
regarding rebanding costs, and has required public safety licensees to 
justify costs in ``excruciating detail.'' Public safety's letter urges 
the Commission ``to take appropriate steps to permit rapid resolution 
of rebanding disputes, without parties having to battle over every 
dollar of estimated cost.''

Discussion

    5. We agree with Sprint that the term ``minimum necessary'' cost 
does not mean the absolute lowest cost in all circumstances. Rather, 
the term refers to the minimum cost necessary to accomplish rebanding 
in a reasonable, prudent, and timely manner. We do not expect Sprint to 
insist on reducing rebanding costs to their lowest possible level if 
the cost savings it seeks to achieve come at the expense of a 
reasonable, prudent, and timely approach toward accomplishing the 
rebanding task in question.
    6. As Sprint notes, the Commission in the 800 MHz Report and Order 
provided that licensees seeking compensation from Sprint for rebanding 
costs must certify that ``the funds requested are the minimum necessary 
to provide facilities comparable to those presently in use.'' However, 
the Commission never intended this articulation of the standard for 
assessing costs to be viewed in isolation. In the 800 MHz Supplemental 
Order, 70 FR 6758 (February 8, 2005), the Commission further elaborated 
on the issue of acceptable costs, stating that ``the Transition 
Administrator may authorize the disbursement of funds for any 
reasonable and prudent expense directly related to the retuning of a 
specific 800 MHz system.'' Thus, the standard for determining 
acceptable costs takes into consideration both the cost amount and the 
degree to which the expenditure reasonably furthers the Commission's 
objectives in this proceeding. We therefore provide the following 
clarification of the standard to provide guidance to rebanding 
stakeholders and to reduce the likelihood of disputes over costs that 
could impede the rebanding process.
    7. We clarify that the assessment in any individual PFA or FRA 
negotiation of whether a cost is ``reasonable and prudent'' may-- and 
indeed should--take into account the overall goals of this proceeding, 
not just the issue of minimum cost. As the Commission has stated 
previously, one of the most critical of these goals is timely and 
efficient completion of the rebanding process, to ensure that the 
interference problem that threatens 800 MHz public safety systems is 
resolved as quickly and as comprehensively as possible. Another key 
goal is to minimize the burden rebanding imposes on public safety 
licensees, and to provide a seamless transition that preserves public 
safety's ability to operate during the transition.
    8. In some instances, achieving these goals may justify greater 
expenditure than the minimum cost required to accomplish a task if 
these goals were not considered. For example, if identifying the most 
inexpensive equipment component required to provide ``comparable 
facilities'' would take months, thereby impeding timely completion of 
the task, Sprint would be justified in purchasing a slightly more 
expensive component that could be identified and procured within a few 
days. Similarly, in some systems, additional rebanding may proceed more 
efficiently and with less burden on first responders if rebanding tasks 
are initiated early in the process and carried on in stages throughout 
the process, even though this may be more costly than performing all of 
the rebanding work at once at a later date. In such cases, the 
Commission's orders allow the additional expense because performing all 
of the rebanding work at a later stage of the process could increase 
the transition burden on public safety and jeopardize timely completion 
of rebanding.
    9. Another situation in which greater expenditure may be justified 
is when the possibility of identifying cost reductions is outweighed by 
the cost and time required to pursue the negotiation and mediation 
process. The Commission established the negotiation

[[Page 33916]]

and mediation mechanism to facilitate resolution of disputed issues 
between Sprint and individual licensees. The Commission further 
determined that Sprint should pay the cost of both sides' participation 
in negotiations and mediation and receive credit for the expense. 
However, we are concerned that Sprint's assumption that it must adhere 
to a narrow interpretation of the ``minimum necessary'' cost standard 
has caused it to routinely challenge cost claims in virtually every 
negotiation and mediation. In many cases, the resulting cost of 
prolonged negotiation and mediation appears to be higher than the 
savings that resolution of the disputed issues would generate. In 
addition, prolonged negotiation and mediation of cost issues in 
multiple cases has impeded timely completion of the rebanding process. 
Therefore, we clarify that it is appropriate for Sprint to agree to 
(and the TA to approve) payment of disputed costs where such payment 
will avoid greater expense to negotiate and/or mediate the dispute and 
will further the goal of timely and efficient rebanding.
    10. In providing the flexibility discussed above, we agree with 
Sprint that this standard does not allow ``goldplating'' by licensees 
or ``rubber stamping'' of proposed costs by Sprint and the TA. 
Licensees remain responsible for demonstrating that their funding 
requests do not exceed the minimum cost necessary to accomplish 
rebanding in a reasonable, prudent, and timely manner. Furthermore, 
Sprint should not propose to pay and the TA should not approve payment 
of higher costs when a lower-cost alternative is clearly available that 
would provide the licensee with comparable facilities as defined by the 
Commission's orders in this proceeding and would effectuate a smooth 
and timely transition.
    11. We further clarify that in determining whether particular costs 
are acceptable, Sprint and other 800 MHz licensees may take into 
account costs that have been negotiated in other PFAs and FRAs for 
rebanding of similar systems, and that have been approved by the TA. 
Similarly, Sprint and other licensee may consider cost metrics that 
have been derived by the TA from aggregated PFA and FRA data. At this 
point in the rebanding process, Sprint has entered into numerous PFAs 
and FRAs with 800 MHz licensees. These agreements have been reached 
through vigorous arms-length negotiations and (in many cases) 
mediation, and have been approved by the TA as meeting the Commission's 
cost standards. As a result, the cost data from these agreements 
provides an important set of benchmarks for assessing the reasonability 
of costs in ongoing and future negotiations. In cases where Sprint and 
a licensee reach a PFA or FRA with costs that the TA can verify are 
consistent with these benchmarks, we will presume that the costs comply 
with the Commission's cost standard as articulated in this and prior 
orders in this proceeding.

Ordering Clauses

    12. Accordingly, it is ordered that, pursuant to Sections 4(i), 
303(f), 332, 337 and 405 of the Communications Act of 1934, as amended, 
47 U.S.C. 154(i), 303(f), 332, 337 and 405, this Memorandum Opinion and 
Order is hereby adopted.
    13. It is further ordered that the request of Sprint Nextel 
Corporation is RESOLVED to the extent indicated herein.
    14. This document does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995 
(PRA), Public Law 104-13. In addition, therefore, it does not contain 
any new or modified ``information collection burden for small business 
concerns with fewer than 25 employees,'' pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4).
    15. The Commission will send a copy of this Memorandum Opinion and 
Order in a report to be sent to Congress and the Government 
Accountability Office pursuant to the Congressional Review Act, see 5 
U.S.C. 801(a)(1)(A).

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
 [FR Doc. E7-11806 Filed 6-19-07; 8:45 am]
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