Mandatory Reimbursement Rules for       )
Frequency Band or Geographic               ) Docket No. 001206341-0341-01
Relocation of Spectrum-Dependent         )
Systems                                                  )

Pursuant to the National Telecommunications and Information Administration’s ("NTIA’s") Notice of Proposed Rulemaking, released January 18, 2001, MicroTrax ("MicroTrax") hereby submits its reply comments in the above-captioned proceeding. MicroTrax filed reply comments on April 9, 2001, in a related proceeding commenced by the Federal Communications Commission ("Commission"). The comments submitted today are intended to set forth MicroTrax’s general position on the issues surrounding the reimbursement of federal entities for spectrum relocation costs.

I. Introduction

NTIA should implement relocation and reimbursement policies in a way that maximizes the benefits of spectrum reallocation. Specifically, MicroTrax believes that NTIA should make specific information about incumbent users available to potential bidders well in advance of any auction. In addition, MicroTrax urges NTIA and the Commission to implement and support a reimbursement mechanism that relies directly on auction proceeds. The more clear, fair, and flexible reimbursement and relocation rules are, the more likely there will be willing bidders for a given band of spectrum.

II. The Timely Release of Specific Information Will Allow for More Rational Bids

MicroTrax strongly supports AT&T Wireless Services’ comments asserting that "adequate information regarding a variety of issues (such as the nature, location, and use of the affected facilities or frequencies) must be disclosed prior to auction so that industry may fully evaluate the feasibility and cost of those plans." Such information is essential in any effort to formulate an economically rational bid for spectrum. When potential costs are unclear, bidders are forced to reduce bids or avoid auctions altogether.

Furthermore, MicroTrax supports the proposal advanced by Securicor Wireless Holdings- that relocation costs must be specified before auction and capped for negotiation. Such a rule would give would give more certainty to potential bidders prior to the auction, and thus more confidence, leading them to participate in the auction.

As Cingular Wireless points out, where bidders have adequate information regarding costs, auction revenues are likely to be higher. For example, if MicroTrax had timely and specific information regarding the 2385-2390 MHz band currently under consideration for reallocation, it would likely participate in the bidding, driving up the price. However, MicroTrax feels that it does not have the information required to make a rational bid, and thus will avoid the auction for that band entirely. As a result, there will be less competition, and a presumably lower winning bid.

III. Relocation Costs Should Be Paid From Auction Revenues

MicroTrax supports AT&T, Cingular, and others who advance the proposal that a superior option for funding relocation costs would be to use auction proceeds to pay those expenses rather than requiring licensees to pay those costs in addition to the price paid for the spectrum itself. As AT&T Wireless Services argues, such an approach would encourage "the most efficient and cost-effective" relocation of government users, as it resultsing in a greater amount of the proceeds being retained by the Treasury. In addition, the guaranteed availability of funds for relocation would provide relocating users with additional assurance that relocation costs will be paid.

Paying from auction revenues will also encourage participation from smaller firms. The AT&T’s of the world may be embarrassed if the ultimate relocation costs turn out to be $25 million higher than budgeted, but such an outcome could be fatal for a small startup. Consequently, such small firms will be forced to bid lower than they would otherwise choose in order to hedge against unexpectedly high relocation costs. In contrast, if the relocation costs are taken from auction revenues, such firms will not face any uncertainty about total spectrum costs and will be able to bid the full amount they judge the spectrum to be worth.

VI. NTIA Must Act Quickly

MicroTrax asks that NTIA work quickly to establish its rules and disseminate the information necessary for bidders to participate the upcoming auctions. As AT&T Wireless points out, "just under nineteen months from the date of this filing, both the NTIA and Commission rulemakings must be completed, the relevant auctions must be scheduled, the proper information regarding marginal costs must be compiled by the affected federal entities and forwarded to NTIA and then to the Commission and potential bidders, and the auctions must be completed." MicroTrax recognizes the considerable challenge facing NTIA, but urges it to likewise recognize and address and address the urgent need for specific information on the part of private bidders who will be participating in the auctions.

V. Conclusion

For these reasons, NTIA should act quickly to establish rules that govern the reimbursement of incumbent government users of reallocated spectrum. MicroTrax asks that NTIA promulgate these rules in a way that is fair and consistent with the comments of AT&T Wireless and Cingular Wireless. Because potential bidders should have access to expected relocation costs as far in advance of the auction as possible, MicroTrax urges NTIA and the Commission to conclude these proceedings expeditiously.

Respectfully submitted,

MICROTRAX