WASHINGTON-The June 23 adoption of the Second Report and Order regarding the Phase II rules governing the future of 800 MHz specialized mobile radio and related auctions by the Federal Communications Commission was received on two levels by the wireless industry. On one level, those whose business plans have been on hold for almost two years took some relief in that they now can move forward. Others were just happy that “right or wrong,” the commission “had gotten off its duff and done something.”
“The American Mobile Telecommunications Association is gratified to see that the proposed new rules include the adoption of geographic licensing on an economic area basis-a concept the association has championed from the beginning,” commented AMTA President Alan Shark in a written statement. In its reply comments on the auction notice of proposed remaking submitted in March 1996, AMTA forwarded a consensus plan outlining an industry viewpoint on how 800 MHz channels should be treated, but only parts of it were included in the order.
“All in all, we are pleased with the efforts that the commission has made to protect private wireless incumbents, despite our historical view that overlying licensing schemes to accommodate auction desires in these bands is unsound spectrum policy,” said John Kneuer, executive director of government relations for the Industrial Telecommunications Association. The Personal Communications Industry Association declined to comment on the item until the entire text is released.
According to Jill Lyon, AMTA’s director of government relations, most of her constituency “was in shock” that the new rules actually had been signed after such a long wait, and that most people wouldn’t have an opinion on the action until the full text is released sometime during the next two or three weeks.
The order changes commission rules in five separate groupings. Regarding the lower 230 channel service rules, the order now reads that the lower 80 SMR channels and 150 General Category channels will be licensed on a geographic basis using EA service areas developed by the Commerce Department and advocated by AMTA. The lower 80 SMR channels will be licensed in 16 noncontiguous five-channel blocks, while the 150 GC channels will be licenses in three contiguous 50-channel blocks. Licensees also are limited to the 45 megahertz commercial mobile radio service spectrum aggregation cap.
EA licensees in the lower 230 channels can operate anywhere within their territories as long as incumbents are protected from interference. These licensees also will have rights to any recovered incumbent spectrum should those licenses be canceled or if the channels are laying fallow.
While it did not define what “substantial” means in real terms, the commission also required an EA licensee to provide services to a “substantial” portion of its EA within five years.
Restrictions against transferring incumbent licenses prior to their construction have been waived temporarily, and incumbents will not be subject to mandatory relocation. ITA’s Kneuer commented, “By allowing the transfer of unconstructed licenses, prospective bidders can begin acquisitions in targeted markets pre-auction. This clearly enhances the revenue-raising potential for the licenses in this auction.”
However, incumbent licensees on the upper 200 channels who must relocate can force any and all EA licensees into negotiations regarding the shared costs of such a move, a notion first forwarded in AMTA’s consensus agreement. In turn, the EA will be reimbursed for its share of the moving expenses by other EAs “who benefit from the relocation.” And moved incumbents have the right to comparable facilities based on system, capacity, quality of service and operating costs.
The auctioning of the lower 230 channels will encompass both SMR and GC channels via simultaneous multiple-round bidding. Credits will be available on a tiered basis to small businesses; those proving revenues of $3 million or less during the past three years will receive a 35-percent credit, and those reporting $15 million in revenues for the last three years will receive a 25-percent credit. No decision has been made regarding installment payments, pending resolution of a related docket.
On partitioning and disaggregation for 800 MHz and 900 MHz licensees, both sets of licensees may do so with other eligibles for any geographic area and for any amount of spectrum. Designated-entity licensees that partition or disaggregate to non-DEs will be liable for “unjust enrichment” payments to the commission.
Also released June 23 was a memorandum opinion and order that reversed the commission’s previous decision to redesignate the GC category for SMRs only. While GC frequencies now will be open for all private radio eligibles, licenses will be EA-based and auctionable. In addition, the relocation negotiation period has been reduced to one year each for voluntary and mandatory discussions, bidding credits will be on the same tiered basis as are the lower 230 channels. The ruling to allow installment payments also was reversed, and a prior decision to allow the Wireless Telecommunications Bureau to set bid increments before or during the auction was modified.
