In the Matter of                                                                        )
                                                                                                )
Mandatory Reimbursement Rules For                                       )                 Docket No. 001206341-0341-01
Frequency Band or Geographic Relocation                               )
of Federal Spectrum-Dependent Systems                                 )
 
 

Motorola, Inc. ("Motorola") hereby respectfully submits its comments in response to the National Telecommunications and Information Administration’s ("NTIA") Notice of Proposed Rule Making in the above-referenced matter.¹ As discussed herein, NTIA should make every effort to ensure that relocation costs and procedures are clearly defined prior to any competitive bidding activities. In addition, the overall relocation reimbursement mechanism proposed by NTIA should be streamlined to avoid the unnecessary delay and uncertainty that would result from post-auction negotiations. Furthermore, auction revenues should be used to directly compensate displaced Government spectrum users. A simple, streamlined relocation process of this nature will ensure that mission critical Government facilities are properly accommodated while providing certainty to potential commercial entities in evaluating costs prior to auction.

To further facilitate non-Government use of reallocated frequency bands, Motorola urges the NTIA to promote spectrum sharing between Government and non-Government users. Also, when appropriate, the NTIA should encourage Government spectrum users to relocate to alternative communications media such as landline networks or commercial carriers by permitting non-Government entities to reimburse Government spectrum users for such changes. Finally, Federal Power Agencies (FPAs) and other exempt Federal users should be encouraged to participate in the relocation process to help ensure that reallocated spectrum can be used for non-Government services on an expedited basis.

1. Background
   
   

The Relocation NPRM seeks to establish procedures for Government entities to receive reimbursement for the relocation or modification expenses that are incurred as a result of the reallocation of radio spectrum mandated by the Omnibus Budget Reconciliation Act of 1993 ("OBRA 93")², the Balanced Budget Act of 1997 ("BBA 97")³,and future reallocations. This action is necessitated by the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 ("NDAA-99"), which requires reimbursement of displaced Government users.⁴

In particular, the Relocation NPRM seeks comment on eligibility of Government users for relocation, definitions of comparable facilities, cost-sharing requirements, negotiations surrounding relocation, overall relocation procedures, and the kind of information to be provided non-Government licensees seeking to reimburse displaced Government users.



2. Relocation Policies and Costs Must Clearly Be Defined for Government Incumbents Prior to Competitive Bidding.
   
   

As discussed in the Relocation NPRM, NDAA-99 requires mandatory rather than permissive reimbursement of Government spectrum users in spectrum identified for transfer in response to BBA-97, the 1710 to 1755 MHz band, and Government spectrum users when future auctions lead to the relocation of a Government facility.⁵ NTIA has proposed relocation procedures for Government systems governed by NDAA-99 and proposes a process that would require the NTIA to provide relevant information for unclassified Government facilities, including total cost of relocation, in advance of the relevant auction. For classified government facilities, NTIA would provide more general information focusing solely on the total cost of relocating classified systems from a particular spectrum block and market. Interested bidders would then be able to factor this relocation information into their bidding strategies.

As described in more detail below, Motorola strongly supports the NTIA proposal to clearly specify relocation costs before any auction of reallocated Government spectrum subject to mandatory reimbursement. Clearly identifying costs prior to the auction, rather than allowing those costs to be determined through post-auction negotiations, will greatly reduce uncertainty regarding the true acquisition cost of the spectrum and will benefit new licensees, the incumbents, and provide for the rapid deployment of services.



1. Government Facilities Present Novel Relocation Issues


The relocation policies and procedures promulgated by the Federal Communications Commission ("FCC" or "Commission") to relocate incumbent non-Government users have generally been successful.⁶ However, Government use of spectrum is inherently different than non-Government use and requires a different framework to be successful. Government facilities have radio systems that are often vastly different than non-Government networks, particularly with respect to classified systems. As such, non-Government users of the spectrum have limited, if any, expertise with such systems and face difficulty in ascertaining relocation costs for Government equipment. It is therefore extremely difficult for a non-Government auction winner to negotiate in a meaningful way with Government users to determine relocation costs after an auction. The Office of Management and Budget ("OMB") and NTIA, working in conjunction with the Commission, may be best positioned to work with Government users to accurately determine the relocation costs prior to an auction. Such a determination of the reasonable value of the Government facilities to be relocated will provide certainty to the displaced Government user that its relocation costs will be reimbursed while also allowing potential non-Government licensees to factor in the appropriate relocation costs that must be borne. All this critical information should be supplied to bidders before the auction to ensure the proper functioning of the competitive bidding system.

B.  Determination of Relocation Expenses Prior to an Auction Is Consistent With The Communications Act.

Because Government systems required to relocate will receive mandatory reimbursement from auction participants, it is logical and in the public interest to enumerate clearly the costs and timing of relocation prior to any license auction. In fact, the Communications Act requires the FCC to ensure that an adequate period is allowed for interested parties to develop business plans, assess market conditions, and evaluate the availability of equipment for the relevant services⁷. Undoubtedly business plans, market conditions and even equipment availability are affected by relocation costs and policies. With certain guidance on relocation requirements prior to an auction, interested parties will be able to fully develop and understand each of these issues before auction participation, in keeping with the requirements of the Communications Act, and accurately factor in relocation costs when bidding.

C.  To Ensure Expeditious Government Relocation, Reimbursement Should Come Directly From Auction Revenues.



Another crucial component needed to create a fair and efficient competitive bidding system is expeditious relocation of incumbents post-auction. The best method to achieve this goal is the use of auction revenues to directly compensate Government users. Monies from the auction, sufficient to cover the full costs of relocation, would go directly to the affected Government entity post-auction. Such a relocation mechanism has several advantages for both Government and non-Government users. First, while the NDAA-99 provides for compensation, it does so subject to authorization and appropriation acts.⁸ This mechanism has the potential to add unnecessary uncertainty and delay with respect to relocation of Federal entities. Efficient and complete compensation of Federal entities could be better facilitated if monies from prospective auctions of reallocated spectrum were used to directly compensate any Federal entity affected by the reallocation. This will help speed implementation of new services in an efficient and effective manner and will give the Federal entities more control over the deployment of new systems. Second, with a level of certainty concerning relocation costs, the relocation process will be expedited. This in turn will enable new entrants faster access to encumbered spectrum.

Motorola recognizes that using auction revenues to compensate directly Government users for relocation will require legislative action and that it may take some time to enact. Motorola fully intends to work with Congress, the Commission and NTIA on these issues during the next few months to create a suitable framework for Government relocation reimbursement. Absent such preferred legislation affecting Government reimbursement procedures, there still must be a method that effectively and directly compensates relocated Government users. Only if relocation costs are supplied pre-auction can a prospective bidder factor these costs into its bidding strategy. With such costs included in the bidding and business plan of the new entrant, compensation will flow to the affected Government user post-auction in a fast, efficient manner.

Therefore, Motorola strongly urges NTIA to adopt its proposal to gather Government relocation costs pre-auction to support the effective auctioning of reallocated spectrum. If relocation costs are provided to auction winners in the manner suggested by Motorola, compensation and relocation will be greatly simplified. Auction revenues will be paid directly to affected Government users for their costs of relocation without the extensive negotiations, discussions and cost sharing considerations thus allowing new licensees to rapidly deploy commercial networks.
 

3. Government and Non-Government Sharing should be Facilitated When Possible


In the Relocation NPRM, NTIA suggests that it may be technically possible for incumbent Federal entities to continue to share the reallocated spectrum with the new commercial licensees. It seeks comment on whether these Federal entities should be required to relocate in those cases where sharing is technically possible. If not, it seeks comment on the conditions whereby such Federal entities should be permitted to remain in the band and who would pay for any system modification that would enhance spectrum sharing.⁹

Motorola believes that when Government and non-Government users can share spectrum in a way that does not hamper deployment of services, such sharing should be facilitated. In such cases, no relocation should be necessary, and thus, no reimbursement should occur. However, clear rules need to be established to ensure that systems to be deployed are compatible and will not affect either non-Government operations or mission critical Government facilities. If any system modification is necessary to enhance sharing, such costs must be provided prior to the auction of the reallocated spectrum so that the new entrant will be in a position to consider these costs as part of its spectrum acquisition strategy. In the case of auctioned spectrum, the cost to modify incumbent systems would be reimbursed using auction revenue similar to cost reimbursement of relocation costs.



4. Government Users Should Have the Option to Choose the Most Effective Alternatives


NTIA also solicits comment on whether a Federal entity should be entitled to reimbursement of relocation costs if it relocates to a landline communications system or a commercial radio service.¹⁰ NTIA also solicits comment on whether a Federal entity should be entitled to reimbursement of relocation costs if it relocates to a landline communications system or a commercial radio service.

Motorola believes that Federal agencies are in the best position to determine which type of systems best meet their needs. Some types of Government mobile or fixed service communications may be appropriately delivered over commercial systems. Other, more mission critical operations may require the use of Government systems specifically designed to meet the communications needs of an agency or group of agencies. Similarly, operational requirements, cost and reliability must be weighed in considering wireline or fiber as an alternative for fixed microwave.

The electromagnetic spectrum is a scarce public resource and any method that permits more effective use, consistent with operational needs, should be fully supported. As such, any Government facility that could be accommodated by alternative media should provide the cost of this relocation to the NTIA. When the spectrum has been reallocated to services whose licenses will be distributed by auction, these cost figures should be established prior to the auction, with these costs reimbursed the same way that costs would be reimbursed for other types of relocations.



5. Federal Power Agencies and Other Exempted Federal Facilities Should Be Encouraged to Participate in the Relocation Process


NTIA notes that spectrum assignments made to Federal power agencies ("FPAs") are statutorily exempt from the requirement to relocate. NTIA seeks comment on whether an FPA that wishes to relocate from a band of spectrum identified for reallocation can accept voluntary reimbursement from a commercial licensee. If so, NTIA asks if parties should be subject to the relocation rules or solely limited to voluntary negotiations.¹¹ Also, other Federal Government assignments have been exempted from the requirement to relocate from the bands identified for reallocation, either indefinitely or for several years. NTIA seeks comment on whether these Federal entities can accept reimbursement for voluntarily relocating these stations, and if so, whether such negotiations should be subject to the relocation rules.¹²

Motorola believes that permitting the continued operation of FPA and other exempted Federal operations within certain spectrum bands threatens the viability of their use by non-Government entities. For example, in the 1710 to 1755 MHz band, if FPA and exempted Federal operations maintain their legacy operations, the overall usefulness of the spectrum for third generation wireless services is severely threatened.

Therefore, Motorola strongly supports relocating these users. In order to encourage their relocation, Motorola urges that all affected Federal users, whether they are exempt from relocation or not, be required to submit all potential costs needed to support relocation at the same time that others who are subject to mandatory relocation do so. Assuming that a reimbursement program is developed through legislative relief to compensate displaced Government users directly with auction revenues as discussed previously, FPA and other exempted operations would also receive this direct compensation. Without a clear mechanism for relocating these entities, the non-Government use of reallocated Government spectrum is extremely endangered. As with relocation of non-exempt Federal users, the relocation process will ensure that the communications requirements of Federal users will be fully met and that users are fully compensated, thus such a process would not damage mission critical system operations by the Government.



6. Conclusion

   2    See Pub. L. No. 103-66, 107 Stat. 31 (1993).

   3    See Pub. L. 105-33, 111 Stat. 251 (1997).

   4     See NDAA, Pub. L. 105-261, 112 Stat. 1920 § 1064(c)(3) (codified at 47 U.S.C. § 923(c)(3)(B))(“NDAA-99”).

   5    Relocation NPRM at paragraph 6.  As noted in the Relocation NPRM, the frequency bands that qualify for reimbursement at 216-220 MHz, 1432-1425 MHz, 1710-1755 MHz, 2385-2390 MHz, as well as frequency bands identified in the future for relocation.  Other bands identified pursuant to the Omnibus Budget Reconciliation Act of 1993 are not subject to these provisions.

  6     See e.g., Amendment of the Commission’s Rules Regarding a Plan for Sharing the Costs of Microwave Relocation, WT Docket No. 95-157, First Report and Order and Further Notice of Proposed Rule Making, 11 FCC Rcd 8825 (1996).

  7     See § 309(j)(2)(E) of the Communications Act of 1934, as amended.

   8    See Section 113 (g)(C) of the NTIA Organization Act.

   9    See Relocation NPRM at  13.

   10    See Relocation NPRM at  14.

   11    Id. at  26.

   12     Id. at  27.