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FCC proposes changing rules governing local microwave frequency.

Faced with allegations by the new personal communications service (PCS) licensees that municipalities and other incumbent microwave radio users are trying to negotiate exorbitant "buy-outs" of their microwave frequencies, the FCC has put out for public comment new procedures to facilitate such buy-outs. The controversy arises because the FCC has given over primary rights in the 2-gcs. microwave band to the new PCS licensees, subject to PCS licensees' paying the incumbent microwave operators for changing their radio facilities to higher-frequency bands.

At the behest of the PCS industry the Commission is proposing to change the ground rules governing the cities' vacating existing microwave frequencies. The Commission's proposal, if adopted, would severely limit the amount of compensation the cities could negotiate for the expense, inconvenience, and possibly degraded performance attendant on the move.

The Commission also proposes to stop protecting existing 2 gcs. microwave systems from interference in the year 2005.

PCS is a new generation of localized cellular telephone technology. In 1992 the FCC assigned PCS to a band of frequencies that was already occupied by nine thousand microwave systems owned by state and local governments, pipelines, utilities, and railroads. The FCC contemplated that the incumbent users would move to other frequencies to make way for PCS.

Microwave Users Required to Move

In 1992 the FCC tried to eliminate the frequency conflict between current users and the new PCS licensees by adopting a rule that was intended to encourage the incumbents to voluntarily negotiate relocation agreements with PCS licensees. The period allowed for voluntary negotiations was three years in the case of public safety incumbents and two years in the cases of all others.

Under the 1992 scheme, if no agreement were reached during the voluntary negotiation period, the PCS operator could request mandatory negotiations--a period of two years for public safety licensees and one year for all others. Should the parties fail to reach an agreement during the mandatory negotiation period, the PCS operator could request involuntary relocation of the existing radio facility and, in such a case, the PCS operator would be required to pay the cost of relocating the incumbent to a comparable facility.

Once the new facilities were available and their comparability had been tested, the Commission would amend the incumbents' license to specify secondary status in the 2-gcs. band. After the relocation, the incumbent microwave licensee would still be entitled to a one-year trial period to determine whether the facilities were indeed comparable.

Meanwhile, the FCC has proceeded with the auctioning of 2- gcs. band frequencies to would-be PCS operators. Licenses for A- and B-block frequencies were awarded in June, 1995. C-block auctions are scheduled to begin in mid December, although the C-block auctions have been the subject of three different judicial stays. Specific dates for the D-, E-, and F-block auctions have not yet been determined. The period for voluntarily negotiations with A-and B-block licensees started April 5, 1995. The negotiations periods for C-, D-, E-, and F-block licensees are to be announced in the future.

PCS Complaints to the FCC

The PCS industry now claims that municipalities and other microwave radio licensees are trying to negotiate exorbitant "buy-outs" from the new PCS licensees. The controversy arises because the FCC has given primary rights in the 2-gcs. microwave band to the new PCS licensees, subject to the right of incumbents to receive payment for changing their radio facilities to higher-frequency bands.

After the opening of the season for voluntary negotiation, the PCS industry claims that the negotiations have been proceeding too slowly and that incumbents have been holding out for unreasonably high payments. In addition, the A- and B-block licensees complain that C-through-F block licensees will get a "free ride," i.e., that it is unfair that the A- and B-block licensees should pay for all the early relocations, some of which relocations will benefit the C-through-F block licensees also.

The Commission's Proposals

The FCC has put out for public comment a new procedure to facilitate the buy-outs. The Commission's notice proposes to solve the "free-rider" problem by requiring subsequent licenses to contribute to the cost of prior "buy-outs" by the A- and B-block licensees. The buy-out costs to be apportioned, however, are capped at $250,000 per microwave link, plus $150,000 for each new tower. These caps may serve as benchmarks limiting negotiated buy-out prices and certainly as an economic deterrent to A- and B-block licensees' paying more to municipalities and other microwave users.

Notice Goes Beyond Free-rider Problem

The proposal would establish a rebuttable presumption that an incumbent's refusal of an offer of comparable facilities at a higher frequency during the mandatory negotiation period would not be negotiating in good faith. The Notice asks what penalty should be attached to such a failure by a municipality or other microwave user to negotiate in good faith.

The Commission proposes to determine comparability based on three factors, viz., communications throughput, system reliability, and operating cost. Only if the substitute system were equal or superior in these three categories to the incumbent's existing system would the substitute system be considered comparable.


In order to reduce the number of microwave systems that have to be bought out, the Commission proposes to limit the ability of cities to augment existing 2-gcs. microwave systems during the pendency of the rulemaking. During this period the Commission proposes to process only those microwave applications for primary status in the 2 gcs. band that are for minor modifications of existing facilities. Licenses for all other microwave systems would be afforded status secondary to PCS use. The Commission further proposes that in 2005 all existing licenses to municipalities, etc., in the 2 gcs. band be converted from primary status to secondary status.

New Conflict

Once again, local governments may be headed for a direct confrontation with the PCS industry before the FCC. The PCS industry is already trying to get the federal government, either at the FCC or through legislation, to pre-empt local zoning authority over cellular tower siting. Comments are due at the FCC November 30, 1995, and reply comments are due December 21, 1995.

William Malone is of counsel to the law firm of Miller, Canfield, Paddock and Stone. He practices communications law in the firm's Washington, D.C., office.
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Title Annotation:Federal Communications Commission
Author:Malone, William
Publication:Nation's Cities Weekly
Date:Nov 20, 1995
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