WASHINGTON-Incumbent microwave operators who have been less than forthcoming in their relocation negotiations with A- and B-block personal communications services licensees will be subject to third-party inspections of their facilities to assess true relocation costs.

In action taken April Thursday, the Federal Communications Commission adopted an order that should hasten, in a satisfactory financial manner, the relocation of incumbents and the startup of new PCS services. The order also clarified the definition of “good faith” negotiations and “comparable facilities.” Facilities will be deemed “comparable” if communications throughput, system reliability and operating costs are the same or better.

According to Wireless Telecommunications Bureau chief Michele Farquhar, while more than 90 percent of relocation talks between incumbents and PCS licensees are going well, there are a few incumbents who appear to be holding out for more money or for rebuilt systems that exceed the commission’s definition of comparable. She named Sprint Spectrum as one licensee that was having problems in a handful of markets, but that bad-faith negotiations in those markets were holding up the buildout process in others.

Regarding good-faith negotiations, the commission said it now will: consider common-law principles when interpreting the obligation of negotiating in good faith, require parties to share information and place the burden of proving bad-faith negotiations and an estimate of cost estimates on the party alleging such. The commission also will weigh factors as: Did the parties submit reasonable moving costs? Did either party withhold information? Did anyone request a premium and what was its proportionality when compared with actual moving costs?

“I find it somewhat surprising that we would need to explicitly require our licensees, whether they are incumbents or new entrants, to negotiate in good faith,” wrote Commissioner James Quello in a separate statement. “I believe that good-faith behavior is required at all times. Some negotiations, however, have floundered significantly. These instances, although a minority, nevertheless threaten the rapid and rational deployment of PCS.”

Two days before last week’s meeting, Sen. John Breaux (D-La.) and three other Commerce, Science and Transportation Committee members sent a letter to FCC Chairman Reed Hundt, urging him to “consider imposing enforceable good-faith negotiating obligations on all parties to all relocation negotiations, now and in the future*…*such action by the commission now will establish the minimum ground rules needed to ensure that current and future negotiations proceed fairly for all parties without unnecessary cost or delay, as was originally intended by Congress and the commission.” A like letter was sent by Rep. Cliff Stearns (R-Fla.). When asked why Congress was weighing in with an opinion at the 11th hour, Farquhar chose not to comment on anyone’s motive.

Along with the third-party inspection clause-which kicks in immediately now that Year One of voluntary negotiations has been completed-and the enhanced definitions, the commission also voted to limit the amount of compensation an incumbent can receive during a five-year time period for “hard” costs (like equipment) associated with involuntary relocation. In addition, incumbents only will receive 2 percent of total compensation garnered for hard costs to reimburse such “soft” costs as legal or consulting expenses.

According to other clauses in the order, the 12-month trial relocation period only applies to incumbents who have undergone an involuntary move; public-safety licensees must self-certify that they meet FCC criteria for any extension of the negotiation period; and PCS licensees’ relocation obligations end in 2005. Licensees, however, still will have to give incumbents who do not need to be moved six months notice if certain PCS transmissions could interfere with their microwave links.

The second prong of the order concerned a cost-sharing mechanism that would allow an incumbent microwave operator to move an entire system at once and that would distribute the cost among current and future PCS licensees via a clearinghouse, which probably will be the Personal Communications Industry Association. Such a determination entails a three-step process: the PCS licensee sends a Prior Coordination Notification to the clearinghouse just before a system is cut over. The clearinghouse then determines whether any reimbursement is owed. If the PCS licensee is required to contribute to another licensee’s relocation expenses, the exact amount will be determined by a set formula. “In general, the later a PCS licensee enters the market, the lower its payment obligation under the cost-sharing plan,” the order said.

An adjunct further notice of proposed rulemaking tacked on to the microwave-relocation order asked for industry comment on whether incumbent microwave operators who move voluntarily and without going through a negotiation process should be reimbursed for their expenses via the cost-sharing plan. The commission also wants to know if the voluntary negotiation period should be shortened by one year and the mandatory negotiation period lengthened by one year for D-, E- and F-block licensees, and possibly for C-block licensees via a rule change.


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