FCC division rules: SMR channels in Lead, SD must go to Nextel
Michael Lees, president of Western Wireless, Rapid City, SD, thought he had dodged a bullet in June last year. He had failed to renew a license for one of his six five-channel 800MHz SMR systems, but the FCC granted a late-filed renewal. The license had expired on Aug. 24, 1999. Western filed a waiver request with the FCC to accept a late-filed license renewal application, and it was granted on June 26, 2000.
“We had not filed a timely application for renewal,” Lees said. “The FCC sent a reminder, and it dropped through the cracks. After the license had expired, we filed for reinstatement.”
But in a decision released on Aug. 10, the FCC Wireless Telecommunications Bureau’s Commercial Wireless Division granted a petition for reconsideration that Nextel Communications had filed on July 24, 2000. The division reversed the Licensing and Analysis Branch’s decision. The latest FCC decision gives Nextel the authority to use Western’s former frequencies in Lead. Nextel owns an 800MHz Economic Area license that includes Lead and the frequencies previously granted to Western under the site-based licensing system that preceded spectrum auctions.
Western has been in business since 1960. Lees resigned an army commission and returned to Rapid City to purchase the business from his mother in the early ’80s following an auto collision that injured his mother and killed his stepfather, who was one of the three original owners.
“We are a sales and service organization,” Lees said. “We have all kinds of radios on all kinds of spectrum. We have paging systems, and we’re building out a 450MHz system. We have had systems at 800MHz for a long time, but we’re feeling like we’re getting squeezed out. The manufacturers aren’t making as many models as they used to, and cellphones have taken a chunk out of our market because of their nationwide coverage. We’ve been seeing a big change in the 800MHz market.”
The expired license is one of six five-channel licenses Western obtained for SMR systems in Lead, Pierre and Reliance, SD. The Lead system is the only SMR on Terry Peak.
“This decision is bad news for the customers using the Lead system. Nextel has no system here. It will be expensive and inconvenient for subscribers because no one else has Privacy Plus systems in the area,” Lees said.
“We were treated as criminals,” Lees said, in describing the FCC’s reversal of its decision to accept his applications for a waiver and license renewal. “It was our responsibility to file a timely renewal, yet we were treated as though we committed a felony, and they took the license away. We’re guilty of negligence, and that shouldn’t have the same penalty as a felony.”
To renew expired licenses, ex-licensees must file within 30 days of expiration or must ask the FCC to waive a rule that bars acceptance of renewal applications beyond the 30-day period. Western’s waiver application stated that it did not receive a renewal notice and that the loss of the license would be “extremely hard on its customers and its business.” The FCC Wireless Telecommunications Bureau’s Licensing and Technical Analysis Branch granted the waiver on June 26, 2000.
Nextel saw an opportunity to oust Western and filed its petition, stating that Western failed to demonstrate that it satisfied waiver requirements. It asked the FCC to recover the channels and give them to Nextel.
The FCC Wireless Telecommunications Bureau’s Commercial Wireless Division agreed. In a decision issued by Katherine M. Harris, the division’s deputy chief, the division overruled the branch.
The decision reads, in part: “In its waiver request, Western does not address the underlying purpose of the rule or how the rule would be frustrated by its application. Western mentions its customers, but provides no showing that termination of service to these customers would leave them without service alternatives or result in loss of a unique service.”
The decision continues: “Western also fails to show that any unique or unusual circumstances existed that would justify a waiver of the commission’s rules. Western’s claim that it did not receive a renewal notice is unpersuasive. The commission has repeatedly held that each licensee is solely responsible for knowing the term of its license and submitting a renewal application in a timely manner. In similar instances, the commission has denied requests to reinstate licenses that are the subject of untimely filed renewal applications and inadequate waiver requests.”
Besides denying Western’s license renewal, the division confirmed that Western’s five channels at Lead revert to Nextel.
In addition, on its own initiative the division granted special temporary authority to Western to continue operations for 90 days or until Nextel notifies Western that it is ready to provide service in the area previously served by Western, whichever comes first. The division took this step to facilitate the transition of Western’s customers using the Lead system. Western might be able to continue operating the system beyond the 90 days, if Nextel doesn’t give notice and if the FCC extends the STA. Upon request, the FCC often extends STAs, which normally are given initially for short periods.
In granting the STA, the FCC appears to validate Western’s contention about its customers’ hardship while the license renewal decision rejects it. A source in the commission indicated that an STA grant passes a lower threshold than a license renewal and helps to avoid an interruption in service, and denying the license renewal upholds policies adopted in 1999 regarding late-filed renewal applications and the types of showings required to support them.
Here’s a twist to the story. Lees said that Nextel has talked with him from time to time during the past several years about retuning his systems to other frequencies to move them from the Economic Area spectrum.
“We haven’t progressed to a completed agreement,” Lees said. “We’ve talked, is all. We discovered that it’s difficult to communicate with Nextel. We’ve been waiting for years to get these six five-channel systems retuned so we can get on with our business. It takes two to tango. But sometimes, they walk off the dance floor.”
Under the FCC ruling, Nextel has no reason to retune the Lead system. Western must turn off the system when its STA terminates.
“Eventually, we will have to move those customers to another system,” Lees said. “We were active in the last auction, and we have an Economic Area license for southwestern South Dakota. We’ll probably move them to our EA frequencies.”
Lees explained that Western has been unable to expand for many years because of changes in FCC licensing from site licenses to auctions and the site licensing freeze that continued for years leading up to the auctions. He said that Western would license five channels, construct and load the system, and then apply for more, as the FCC rules then required. But under the freeze, the company couldn’t expand geographically or in numbers of channels for five or six years.
Prices in the first auction for the upper 200 channels in the 800MHz band where Nextel purchased many licenses (including the Economic Area affecting Western’s Lead system) ran too high for Lees to afford. Watching the bidding, Lees found himself “significantly outbid” while observing that Nextel even raised its own high bids.
“I couldn’t figure that out,” he said. “That seemed unusual. Perhaps they had informally promised the FCC that they wouldn’t embarrass them with the bid amount.”
Yet subsequent auctions proved affordable.
“The licenses in the General Category and Lower 80 bands were reasonably priced for us,” Lees said. “I was shocked and amazed that it was. Someday I would like to buy a beer for whoever was in charge of Nextel’s bidding. They must have gotten tired and let us have it. We bought five channels here and five channels there. Nextel had the resources to blow us away and didn’t. We took what we could get.”
The bottom line for Lees? “We want a place for our customers to go. We don’t have that many in western South Dakota, and we want to take care of the ones we have.”
Western Communications has until Sept. 10 to file an application for review with the FCC if it wants to seek a different outcome in its effort to renew the license for the Lead system.
A spokesperson for Nextel said that because the matter is subject to an appeal process, the company wants to reserve comment except to say that Nextel representatives have had some informal discussions with Lees to talk about the next steps to take.