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

The Personal Communications Industry Association ("PCIA")¹ hereby submits these comments in response to the Notice of Proposed Rule Making ("NPRM") issued by the National Telecommunications and Information Administration ("NTIA") in the above-captioned matter on January 18, 2001.² As indicated in comments filed recently with the Federal Communications Commission ("FCC"), PCIA applauds the diligent efforts of the FCC and NTIA to make additional spectrum available for the provision of high-speed, high-bandwidth wireless services, such as advanced third generation ("3G") offerings.³ In its FCC comments, PCIA also underscored the critical importance of keeping the 3G reallocation effort on course if advanced wireless offerings are to reach their full potential in the U.S. and the U.S. wireless industry is to keep apace with rest of the world. The instant NPRM, which proposes a method for compensating Federal users whose communications systems must be relocated to other bands so that reallocated government spectrum can be used for the provision of new wireless services, is an essential part of this process.

As discussed below, in PCIA’s view, the reimbursement mechanism most likely to permit rapid and effective deployment of advanced wireless services is one that would allow auction revenues to be used directly for reimbursement of relocated Federal entities. Such a mechanism would eliminate considerable uncertainty facing auction participants and Federal relocatees, and would avoid delays associated with time-consuming individual negotiations.

PCIA understands that legislative action appears necessary before such a process could be introduced. To the extent that the necessary legislative approval is not forthcoming in the relevant time frame, PCIA urges NTIA to streamline and simplify its proposed relocation and reimbursement mechanism as much as possible. As a key component of any such streamlined process, PCIA urges NTIA to develop procedures that provide for final technical and cost information to be made available to auction participants well in advance of the auction. In addition, it is essential that this information contain the specifics necessary to permit auction participants to make a useful assessment of the relocation costs they face when bidding on various spectrum blocks and geographic areas. Finally, should NTIA conclude that a cost-sharing clearinghouse is needed to manage the reimbursement process in those instances where cost-sharing issues arise, PCIA has specific recommendations and valuable experience in this regard, and would be prepared to assist with the necessary clearinghouse functions.

I. Background

In the NPRM, NTIA seeks comment on proposed procedures for reimbursing Federal Government users for relocation or modification expenses incurred as a result of the reallocation of radio spectrum from Federal Government to non-Government use. The NPRM was adopted in response to the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 ("Thurmond Act"), which requires "any person on whose behalf a Federal entity incurs costs" as a result of spectrum relocation or modification "to compensate the Federal entity in advance" for its expenses.⁴ The Thurmond Act directs NTIA and the FCC to develop procedures to govern the Federal relocation process and to be used to resolve differences between relocated Federal users and commercial licensees with respect to relocation or modification cost estimates.⁵

To this end, the NPRM sets forth proposed reimbursement procedures to be used in connection with auctions involving spectrum subject to the Thurmond Act. Briefly stated, under the NTIA proposal, an affected Federal entity would not be required to relocate until a "comparable facility" is available to it. The NPRM sets forth four factors to be used to determine "comparability," and proposes that auction participants or licensees bear responsibility for reimbursing relocated Federal users for all "marginal costs" incurred to achieve "comparable" capability.⁶ Consistent with its obligations under 47 U.S.C. § 923(g)(1)(A), NTIA would be required to provide information to the FCC at least 180 days before an auction so that the FCC, in turn, could advise potential bidders of applicable relocation or modification costs. As proposed, the specificity of the information to be provided depends on whether the Federal facility in question is "classified" or "unclassified."⁷ NTIA proposes to adopt a cost-sharing plan to be used in those instances where reimbursement requirements could fall disproportionately on one bidder or licensee or a small number of bidders of licensees, and seeks comment on the use of a clearinghouse to assist in the cost-sharing process.⁸

Under the NTIA proposal, within 30 days after its license is issued, an auction winner would be required to contact all Federal entities it is required to relocate. Receipt of the notification would trigger a 135-day mandatory negotiation period subject to extension by mutual consent of the parties. If the parties do not reach agreement during the mandatory negotiation period, they would enter into non-binding arbitration.⁹ Based on the agreement reached by the parties or the arbitrator’s recommendation, an auction winner would then submit a petition for relocation to NTIA (with a copy to the FCC). NTIA is required by statute to approve, modify, or terminate the Federal entity’s license within six months after receiving the petition if certain conditions are met. If NTIA does not act within six months, the petition is considered denied.¹⁰

In PCIA’s view, the most effective way to facilitate prompt reimbursement – and, as a corollary, effective and expeditious relocation – is through a mechanism that permits auction proceeds to be used directly to fund the relocation of Federal Government users. This approach would better serve Federal Government entities facing relocation and auction winners alike by providing certainty with respect to relocation costs and reimbursement processes and by reducing the potential for delay as a result of time-consuming and complex negotiation procedures.

Under this approach, relocation costs would be calculated in advance of the auction and the relevant information made available to bidders. After the auction, however, rather than requiring the parties to engage in negotiations, the relevant funds would be made available directly to the affected Federal entity, subject to its authorization and appropriations Acts. Such a mechanism would give Federal entities greater control over the types of systems deployed by Federal users and would help facilitate prompt provision of advanced wireless offerings by avoiding lengthy delays likely to accompany any negotiation-based relocation/reimbursement process.

Unfortunately, legislative action appears necessary to permit direct Federal compensation of this sort. Although several entities are actively pursing legislative relief, it may not be forthcoming in time to be used in the first 3G reallocation auction.

If the necessary legislative action is not secured in time, PCIA urges NTIA to streamline and simplify the process proposed in the NPRM to the greatest extent possible. For example, PCIA suggests that the relocation cost information provided by NTIA to the FCC and, in turn, to auction participants, be made as final as possible, with few, if any, issues remaining for negotiation. Clear – and, to the greatest extent possible, final – identification of relocation costs prior to the auction as opposed to a process that provides for determining those costs through post-auction negotiations, as is typically done with the relocation of non-Government users, will eliminate uncertainty regarding the true acquisition cost of spectrum and provide a useful guidepost to steer any remaining negotiation issues.

In this connection, it is important to underscore that the relocation of Federal entities presents issues that are novel and unique, and that are wholly unfamiliar to non-Government wireless service providers. Wireless auction winners have had experience with relocation and reimbursement involving incumbent users in various bands, including fixed microwave users in the 1850 to 1990 MHz band and the "upper 200" Specialized Mobile Radio Service ("SMRS") channels. Government users are, however, considerably different from private or commercial non-Government users. Potential bidders for spectrum reallocated from Federal users are unlikely to have the expertise or knowledge to ascertain actual costs of relocation for Federal spectrum holders. Therefore, NTIA’s proposal to gather relevant relocation cost information prior to any auction of reallocated Federal spectrum would be extremely beneficial to Federal incumbents and wireless auction winners alike. In order for the relocation/reimbursement process to be effective and efficient, however, the pre-auction cost estimate must be made sufficiently definitive.

In addition, it is essential that the information provided by NTIA to the FCC and auction participants in advance of the auction be sufficiently complete to permit bidders to assess relative relocation costs of various spectrum blocks within each geographic area. Where "classified" and "sensitive" assignments are at issue, PCIA urges NTIA to work with the FCC and affected Federal Government users to ensure that sufficient information is provided to auction participants through means that adequately protect the interests of the Federal user, such as limiting disclosure to persons with a security clearance and requiring non-disclosure agreements.

3. If NTIA Determines That A Cost-Sharing Plan Is Necessary, PCIA Is Well Suited To Act As A Clearinghouse

In particular, PCIA provides the clearinghouse function for the relocation of fixed microwave licensees in the 1850 to 1990 MHz and 2110 to 2200 MHz bands. The clearinghouse is an independently incorporated, non-profit subsidiary of PCIA with its own by-laws, membership, and Board of Directors. Full-time professional staff execute the daily activities of the clearinghouse. The functions of the clearinghouse are funded through transaction fees charged to each clearinghouse participant that chooses PCIA to calculate and notify participants of their reimbursement obligation under the microwave relocation cost-sharing plan. To ensure confidentiality, appropriate safeguards were established to protect sensitive proprietary information and to ensure that such information is only distributed to those entities who require it for legitimate cost-sharing purposes.

If NTIA determines that a clearinghouse function is necessary in connection with the relocation of Federal users, PCIA recommends that it be supported by auction participants and the commercial wireless industry. Based on its experience with clearinghouse functions, PCIA believes that industry-funded administration of cost-sharing is the most effective method for handling the cost-sharing aspects of relocation reimbursement issues.

In addition, NTIA may wish to follow the clearinghouse designation process used by the FCC when the microwave relocation clearinghouses were certified. In selecting certified clearinghouses, the FCC requested interested parties to submit business plans that demonstrated the capabilities of such entities to support a clearinghouse function.¹¹ As part of the minimum criteria, the FCC asked that clearinghouse business plans include the following information:

1. Financial Data. Business plans should address how the entity intends to raise start-up funds and how much the entity plans to charge for individual transactions.
2. Timing. Plans should address timing issues, such as how long it would take the organization to become operational and how many days it would take the clearinghouse to notify licensees of a reimbursement obligation.
3. Accounting Methods. Accounting methods should be described in detail.
4. Confidentiality. The plan should describe how the entity intends to address the concerns about confidentiality.
5. Neutrality. Each entity should describe how it intends to remain impartial, especially if both PCS licensees and microwave incumbents are permitted to participate in cost-sharing.
6. Dispute Resolution. The plan should describe how the entity intends to resolve disputes between parties (e.g., disputes over whether a particular expense is reimbursable).

IV. Conclusion

As mentioned above, the instant NPRM represents a significant part of the 3G allocation process. In PCIA’s view, the goal of facilitating prompt provision of advanced wireless offerings will be served best through the adoption of relocation and reimbursement procedures that are as streamlined and simplified as possible. To this end, PCIA believes that the optimal mechanism would be one that permits auction proceeds to be used to provide direct payment to relocated Federal entities. Short of that, PCIA supports a streamlined process, along the lines proposed by NTIA, that would make the relocation cost information provided to the FCC and auction participants as final as possible, thereby reducing the role of the negotiation process. In addition, the information provided to auction participants must be specific and sufficient to permit them to make a well-founded assessment of the relocation costs associated with different spectrum blocks and geographic areas. Finally, if NTIA adopts a reimbursement and relocation process that necessitates adoption of a cost-sharing plan, PCIA recommends that an industry-supported clearinghouse administer this program.

                                                                                    Respectfully submitted,

                                                                                    PERSONAL COMMUNICATIONS INDUSTRY ASSOCIATION

                                                                                    By: _____________________________

                                                                                    Robert L. Hoggarth
                                                                                    Senior Vice President,
                                                                                    Government Relations

                                                                                    Harold Salters
                                                                                    Director,
                                                                                    Government Relations

                                                                                    PERSONAL COMMUNICATIONS
                                                                                    INDUSTRY ASSOCIATION
                                                                                    500 Montgomery Street, Suite 700
                                                                                    Alexandria, VA 22314-1561
                                                                                    (703) 739-0300

Dated: March 19, 2001

  ²    See Mandatory Reimbursement Rules for Frequency Band or Geographic Relocation of Federal Spectrum-Dependent Systems, Docket No. 001206341-0341-01, 66 Fed. Reg. 4771 (Jan. 18, 2001) (Notice of Proposed Rule Making).

  ³    See Comments of the Personal Communications Industry Association, ET Docket No. 00-258, et al., (filed Feb. 22, 2001); see also Joint Comments of the Cellular Telecommunications & Internet Association, the Telecommunications Industry Association, and the Personal Communications Industry Association, ET Docket No. 00-258, et al., (filed Feb. 22, 2001).

  ⁴    See Pub. L. 105-261, 112 Stat. 1920 § 1064(c)(3) (codified at 47 U.S.C. § 923(c)(3)(B)).  Frequency bands subject to the mandatory reimbursement rules include the 1710-1750 MHz band, the 20 MHz of spectrum identified in response to the Balanced Budget Act of 1997, and any future reallocations.

  ⁵    Id. 

  ⁶    NPRM,  16.

  ⁷    Id.,  35.

  ⁸    Id.,  29-31.

  ⁹    Id.,   36-38.

 ¹⁰    Id.,  39.

¹¹    See Public Notice, Wireless Telecommunications Bureau Solicits Business Plans From Parties Interested In Becoming The Clearinghouse That Will Administer The 2 GHz Relocation Cost Sharing Plan, DA 96-647, (rel. April 25, 1996).