Several uncertainties face small specialized mobile radio operators in the future if spectrum above 860 MHz is auctioned off next year-a plan that has been proposed by the Federal Communications Commission.
“The FCC is giving the frequency to the mountaintop owner,” said Guntis Ositis, owner of a 30-channel system that operates in Northern California. “The owner could triple the rent and how can you move? You could find two different sites, maybe, but then that’s twice the investment putting equipment at both sites, and customer equipment must be modified as well,” Ositis said.
Rulemaking on the auction of SMR spectrum is now underway at the FCC. It is part of a push-and-pull that has been going on in the SMR industry since 1993, when large companies with big plans first sought wide-area waivers from federal regulators.
Large fish, like Nextel Communications Inc. and Pittencrieff Communications Inc., want contiguous spectrum in which to build digital systems and compete with other wireless services. Small fish, which aspire to offer only city-wide service, say they won’t be able to grow in the future if all spectrum is allocated.
“The auction would have a domino effect,” said Kathy Lagorio, owner of Lagorio Communications Co., which owns or manages 100 to 150 channels in Northern California, some of which are above 860 MHz.
Following the auction, SMRs now using spectrum above 860 MHz would probably have to relocate to a lower spot in the frequency and retune their systems. That could harm a company’s relationship with its customers, Lagorio said.
“That would be a monstrous task that could take a year’s time. Your customers won’t have their 30 trucks lined up for you all at one time and, as we disrupt their business system to do this, we could put good-standing relationships in jeopardy.”
After retuning is accomplished, the SMR operator is confined to that spectrum space. “We lost the ability to apply (to the FCC) to relocate sites and reuse frequency,” Lagorio said. Lagorio also is concerned that winners of spectrum won’t be able to find an appropriate replacement spot for the SMR being displaced.
Eleven members of Congress, led by Rep. Michael Crapo of Idaho, wrote FCC Chairman Reed Hundt a letter late last month stating that Congress was authorized only to auction unlicensed spectrum, not licensed spectrum. The Congress members suggested that “renting” occupied spectrum bands would be an acceptable alternative that also could avoid “difficult constitutional lawsuits over the `taking of property.”‘
It’s not a dilemma without solution, said Alan Shark, president and chief executive officer of the American Mobile Telecommunication Association. “The smaller companies can get more channels through new technologies, like EDACS, but that means investing in their business. There isn’t a business in the United States that doesn’t do that,” Shark said.
Ericsson GE Mobile Communications Inc. said its Enhanced Digital Access Communications System product for SMRs, called ProtoCall, should be available during the first half of 1996. The technology can increase channels, enable more capacity and provide a migration path to Time Division Multiple Access technology.
Unlike the personal communications services industry, SMRs have not yet formed consortia to bid for spectrum. That’s because two-way radio operators traditionally do not trust one another, Ositis said.
“I’ve been in this business for 40 years, since I was 18, and it’s a working- scared atmosphere. People are afraid you might get bigger and take their customers. Everybody is threatening everybody else. And really, there isn’t that much money in this business unless you own property. This is a bread-and-butter industry turned very glamorous,” Ositis said.
Lagorio said there wouldn’t be an advantage in forming consortia to bid for spectrum because most SMRs aren’t interested in cellular-like, contiguous systems.
Shark said many SMRs are positioning themselves to sell because they believe they can make more money selling than operating their system. Systems with value are those in a lucrative geographical area with good cash flow.
