NEW YORK-Never mind the summer sun. When it comes to microwave incumbent relocation, it’s beginning to look a lot like Christmas to personal communications services providers.
By late July, about two-thirds of the incumbents already “are off the system” industrywide, according to Tim Rich, manager of industry affairs for the Cellular Telecommunications Industry Association, Washington, D.C.
“It’s one of those 80: 20 rules (in which) a few bad apples are ruining the whole bunch,” Rich said. “But most incumbents are negotiating in good faith.”
That things “are going along fine” is a sentiment shared by Jack Richards, a partner in the Washington, D.C., law firm of Keller & Heckman, which represents a large number of microwave incumbents. In fact, Richards added, “there are a number of joint venture deals where both microwave incumbents and PCS carriers have worked things out to mutual advantage.”
However, Richards also noted he has seen some instances “where a microwave incumbent is still waiting for contact and movement from the PCS side, and the PCS side is claiming the incumbent is recalcitrant.”
The relocation pace is steady now. But with the Christmas shopping season will come “more of a push for sales” and more pressure to plug fast any gaps in PCS systems, said CTIA’s Rich.
“We, as an industry, are striving to get seamless national coverage in PCS. When there are holes in various places, it is counterproductive to our goals,” he said. If necessary, “there are technical ways to do an end-run around holes in the spectrum, but they are pretty expensive.”
According to Karen M. Stewart, vice president of investor relations for American Portable Telecom Inc., Chicago, the company by late July had obtained permission to clear 165 of 226 microwave incumbents by year end-enough to launch service in six markets. APT’s status is typical of the two-thirds industry average cited by CTIA.
“The costs of relocation are at or below projected levels,” Stewart said. Earlier this year, Clark Smith, chief financial officer of APT, said relocating each incumbent costs an average of $275,000.
“Ninety percent of the people are willing to strike a fair bargain, but most want to upgrade to digital,” Smith added.
In response to the push among incumbents for upgrades, Congress and the Federal Communications Commission recently have clarified the rules. “The need to bargain in good faith is for a comparable related system, not a better system,” Rich said. This clarification is helping to expedite the process.
“We bought spectrum at the end of May.” said Barry Winkler, executive vice president of sales and marketing for Pocket Communications Inc., a C-block auction winner. “In most cases, we’re finding [the incumbents] are friendly. It’s just a question of time [for relocating them]. But there are some people out there who are going to give you a problem.”
Another stumbling block has been disagreement between A-block and B-block winners and C-block winners over who will pay to relocate existing users of the 2 GHz spectrum for their shared benefit, according to David J. Roddy, chief telecommunications analyst for Deloitte & Touche Consulting Group, Atlanta.
“Many situations involve multiple PCS carriers who must coordinate to relocate an existing user. In those instances, some sort of cost-sharing mechanism must be negotiated,” said a recent report.
“Although the FCC has made some progress in this area in Wireless Telecommunications Docket 95-157, final resolution will take time and resources to accomplish,” the report states.
Rich of CTIA is more sanguine, citing FCC issuance of detailed “Mechanics of the Cost Sharing Plan” as a positive and concrete development to implement this stated goal and mandate.
“The overall theme is that the A and B blocks now know it’s not up to them to pick up the full cost,” Rich said. “This got the ball rolling. It remains to be seen how [the mechanics] will work.”
