After much trepidation, you have just purchased a new luxury vehicle. The first few moments with the car are spent testing the sun roof, the stereo and envisioning just where you will go in your sleek new automobile. In the excitement of your first spin, you might overlook whether or not there is any gas in the tank and forget how far away you are from a filling station. This new car, purchased on an empty tank, is not going anywhere without fuel. Most personal communications services licensees find themselves in this very situation.
The challenge
With the culmination of the Federal Communications Commission’s broadband auctions March 13, winners purchased the right to operate PCS systems for the next 10 years.
Because each licensee is responsible for not interfering with existing 2 GHz microwave incumbents, most PCS licensees will be unable to fully deploy their systems until the spectrum is cleared. The clearing process, which could take many years and cost up to several million dollars, is fraught with complexities and variables that PCS licensees may not have fully taken into consideration.
Some apparent challenges to the microwave relocation process include identifying, contacting and performing system analysis for each affected incumbent system. It also will be difficult to bring some incumbents to the table for “good faith” negotiations because of lengthy negotiation periods.
FCC rules provide two time periods for negotiation between PCS licensees and microwave incumbents. The first period is a voluntary negotiation period, which is three years for public-safety entities and two years for all other incumbents. The second phase is a mandatory negotiation period for which public-safety entities have two years to negotiate and other incumbents have one year.
Another challenge for PCS licensees will be reaching agreement on the FCC’s broadly termed “comparable system” to be provided to each incumbent. By FCC definition, a “comparable” system must be technically equivalent to those facilities being replaced. Incumbents may view subsidized relocation as an opportunity to substantially upgrade their systems as well as seeking compensation for a multiplicity of “soft” costs.
Qualitative human factors also will play an integral role in reaching agreements with incumbents and will affect all issues of comparability, timing and cost. Because of these hurdles, it is important for PCS licensees to address the relocation process and identify a team qualified to negotiate, engineer and manage the relocation process.
Less apparent challenges
Unfortunately, the complexities do not end there. With each incumbent negotiation, there will be additional factors contributing to the cost and timing of the relocation. Very often, the affected 2 GHz path(s) will be part of a larger microwave system. Incumbents therefore may be involved in negotiations with other licensees for other paths on the same system, but within separate PCS blocks or even different MTAs. Negotiations therefore frequently will involve discussions around relocating more than the affected link, or be contingent on other negotiations. Incumbents’ internal forecasting of communications needs, business strategies and management restructuring also will affect the timing of the relocation process.
It is important to note that 2 GHz paths affected by a PCS licensee do not always fall within the PCS licensee’s designated frequency or geographic area. While co-channel paths, or those that are within the PCS licensee’s designated frequency range are an anticipated cost, resolution of adjacent channel interference can increase greatly the cost and timing of the relocation process. Adjacent channel interference may include negotiations with incumbents involved in co-channel negotiations with other PCS licensees, making one negotiation contingent on another.
Additionally, one microwave path may straddle two MTAs or two PCS blocks creating the need to relocate the entire path, although only one-half of the paired link actually affects the PCS licensee. These scenarios create what is known as the “free rider” problem. One PCS licensee actually may find itself paying to clear the frequencies or geographic area of a competitor.
Public-safety and government incumbents create challenges of their own. These incumbents often require a lengthy and time-consuming public bid process for procuring any new equipment, services or related contracts, adding substantially to any relocation timeline. Some of these incumbents may desire digital upgrades or total system replacement, and because PCS licensees are responsible only for providing comparable facilities for relocation, the incumbent will need to secure additional funds to pay the difference. These additional funds often are not included in the complicated budgeting process and procuring these funds can be difficult. Lastly, these incumbents frequently are understaffed and the decision-making and approval process within these entities often are done by committee and includes a series of approval levels and documentation, all adding more intricacies and delay to the relocation process.
Arguably the most important and complex issues are the potential environmental liabilities and compliance issues associated with the actual relocation, equipment procurement, zoning and permitting, and equipment disposal. Any system changes, upgrades or additional communication sites will require a series of permits and fact finding before relocation can occur. As PCS licensees are responsible for the entire relocation process, it is imperative these operators ensure that all aspects of the relocation adhere to federal, state and municipal regulations and that precautions are taken to limit potential liabilities. The removal of all used equipment will require documentation and strict adherence to all disposal regulations. Many incumbents, such as nuclear power plants and pipeline companies, have additional environmental compliance issues and operating standards that must be considered in the cost and timing of the relocation process.
What solutions are available?
With the multitude of relocation issues facing PCS licensees, it is important for each operator to develop a comprehensive relocation strategy. The first step is to identify all affected incumbents, including those subject to adjacent and co-channel interference both within the MTA as well as within a coordination distance of the MTA. Second, the operator should determine standards, expectations and negotiation contacts through incumbent interviews. Through engineering analysis and multiple vendor pricing information, an operator can determine projected relocation costs. Using the information gathered from incumbents, a PCS licensee can evaluate the complexity of each negotiation and factor this into the projected relocation costs. Based on costs, projected time and internal deployment schedules and analyses, market clearing priority lists can be established.
As PCS licensees gear up for actual negotiations, they may want to establish cost-sharing arrangements where possible. It is conceivable that well more than half of all negotiations will involve paths affected by more than one PCS licensee. By negotiating a cost-sharing arrangement between PCS operators, it is possible to realize substantial relocation savings. Licensees also should familiarize themselves with policy trends and developments regarding cost-sharing rules. It is important to become involved with those entities focused on establishing efficiencies and standards for cost-sharing issues.
Negotiations with public-entity incumbents should be conducted by teams who can work with the incumbents to expedite the public bid process. It is important for any negotiation team to understand all legal alternative solutions to the competitive bid process as well as work with equipment vendors to develop proposals appropriate to the expedited bidding process.
Consistency in negotiation teams also is important as
it is likely that operators with more than one MTA license will encounter the same incumbent in other market negotiations. This consistency will help the PCS licensee realize certain economies with respect to relocation costs in addition to helping the incumbent find more global system solutions. Lastly, it is imperative that the PCS licensee take all necessary precautions in limiting liabilities associated with the relocation process and environmental laws. PCS licensees should familiarize themselves with all pertinent codes of environmental compliance for each phase of the relocation process. Included in this is a comprehensive list of all necessary permits and zoning requirements, environmental impact studies, equipment disposal requirements and vendor indemnification. Licensees should develop relationships with reputable disposal firms, site acquisition firms, knowledgeable counsel and vendors all able to help mitigate any risk and ensure environmental compliance for the licensee.
The relocation process involves more than most anticipate, or have begun to contemplate. While there are solutions available, organization, planning and research are imperative to ensure the process proceeds rapidly and at minimal cost and risk to each licensee.
Katie Brennan is senior vice president at Columbia Spectrum Management, which plans to provide negotiation and relocation services to the PCS industry.
