The cost to relocate microwave systems has met or been lower than projections for two personal communications services carriers, providing a positive mark on balance sheets otherwise heavy with loss due to network buildout.
“PCS is finding it can reach agreements with microwave incumbents, which is what we said all along,” said Jack Richards, an attorney who represents microwave licensees. He said the Cellular Telecommunications Industry Association had been “blowing a lot of smoke about extortion and greed” that, in general, has not proven true.
Microwave systems operate within the 1900 MHz spectrum, which the federal government recently assigned to personal communications services. The government told microwave operators to move to another frequency, and required PCS license winners pay the cost.
CTIA predicted the worst, saying that microwave operators would be free to make outrageous relocation demands. “It is clear that, instead of good faith negotiations to relocate as required by law, many microwave incumbents are leveraging off the public trust of the license to profiteer,” CTIA President Thomas Wheeler said in 1995.
In their fourth-quarter reports, PCS operators InterCel Inc. and Aerial Communications Inc. noted that the cost of moving microwave links was lower than expected.
“Our capital expenditures were offset by microwave relocation [costs] not as high as anticipated,” said Ed Horner, chief operating officer of Powertel Inc., InterCel’s PCS subsidiary. The company has experienced some problems with microwave incumbents, and works around the microwave frequencies in order to launch a system.
Chicago-based Aerial reported it has cleared 150 microwave paths as of Dec. 31, and had commitments to clear 39 others. Costs incurred to date to clear those paths has been at or below projected levels and “will have a favorable impact on capital expenditures in 1997,” Aerial said. A sufficient number of paths have been cleared to allow the company to launch service next month.
That doesn’t mean problems don’t exist, Wheeler said.
“What I’ve been hearing from CEOs is that microwave relocation has cost more and is taking them longer” than expected, Wheeler said. PCS executives are having to constantly adjust their budget and delay buildout to deal with the issue, he said.
While some bad apples have been encountered, some PCS carriers have made headway enough to launch systems in markets across the country.
“Our program has been successful,” said Lori Baynton, vice president of spectrum management for the Personal Communications Industry Association.
PCIA began operating a microwave relocation clearinghouse last August. In the last five months, PCS operators have identified 1,927 specific microwave links; 80 of those situations will involve cost sharing between PCS operators. And PCS operators reported moving 7,590 base stations into former microwave paths.
Since the main role of the clearinghouse is to notify parties involved in each microwave situation-not to mediate disputes-sour negotiations are a closed-door matter.
“We get the two parties to talk to each other, and if a cost-sharing obligation has been identified, we send out notification. But we don’t act in collections,” Baynton said.
The clearinghouse is a nonprofit subsidiary of PCIA, although it receives a fee for notifying parties of cost-sharing obligations.
It has been estimated that a total of 10,000 to 18,000 links operate in the PCS frequency. If 2,000 links are handled a year, then the matter could be finished by 2005, close to the government’s desired deadline.
