FCC rule waiver helps Securicor Wireless to build 28-channel nationwide system

Securicor Wireless, New York, seems to be getting ready for a possible change in ownership, company name and business strategy.

Securicor Wireless owns licenses for 220MHz spectrum. It manufactures 220MHz infrastructure, mobile and portable equipment; operates and sells airtime on its FCC-licensed 220MHz radio communications systems. It supplies equipment to other organizations with 220MHz licenses, some of which resell equipment and sell airtime, and some of which use the equipment for internal communications. The company also promotes the use of its proprietary linear modulation technology by other manufacturers.

In May, Securicor plc of Sutton, UK, announced its desire to sell its subsidiary, Securicor Wireless, for $36 million by the end of June. The sale didn’t happen, and neither company has issued any further word on the subject.

Shortly thereafter, David George, executive vice president of operations for Securicor Wireless, resigned. He returned to Dallas from Kansas City, MO, where Securicor Wireless has its operations center. George had left Dallas-based ComSpace, a company he co-founded, about a year before to join Securicor Wireless. George remained a large shareholder and director of ComSpace during his Securicor Wireless tenure. There has been no indication that he would rejoin ComSpace in an executive capacity.

On July 23, Securicor Wireless registered a Web site domain name that suggests it may change its name to Aerwav. The next day, it closed a transaction that had been pending for about seven weeks in which it divested its land mobile radio sales and distribution business to Midland Radio for an estimated $2 million.

During the following weeks, the company laid off an unannounced number of workers and relocated its Kansas City operations center to a smaller facility. And on Sept. 12, the FCC granted Securicor Wireless a rule waiver that it had requested in August 2000 to facilitate construction of a 28-channel nationwide 220MHz radio communications system.

The waiver grant may signal a new business plan, and the rumored sale of the company to investors led by Securicor Wireless Chairman Robert Shiver may have been contingent on a favorable FCC decision. Although Securicor Wireless has extensive 220MHz spectrum licenses, they carry various system construction deadlines under different regulations in effect when they were granted and measured from various license issuance dates.

In its pleading before the FCC, the company stated that it wants to use its licenses to construct a nationwide 220 MHz system. Its waiver application reads that it wants to use the licenses to compete effectively with other wireless service providers and to develop band management services in the 220MHz band.

In its decision, the FCC acknowledged that the company’s Phase I nationwide, Phase II nationwide, and Phase II regional licenses are subject to different construction requirements.

For example, Phase I nationwide licensees must construct base stations having a minimum of five assigned nationwide channels, and must place those base stations into operation: (1) in at least 10% of the geographic areas designated in the application within two years of the initial license grant, including base stations in at least seven out of the “Top 100 Urban Areas for Phase I Nationwide Systems” listed in the FCC rules; (2) in at least 40% of the geographic areas designated in the application within four years of the initial license grant, including base stations in at least 28 of the 100 urban areas; (3) in at least 70% of the geographic areas designated in the application within six years of the initial license grant, including base stations in at least 28 of the 100 urban areas; and (4) in all geographic areas designated in the application within 10 years of the initial license grant, including base stations in at least 28 of the 100 urban areas.

Securicor Wireless acquired one Phase I nationwide license dated Sept. 16, 1994 from Global Cellular Communications and one dated Sept. 23, 1994 from ComTech Nationwide Communications. The six-year construction deadlines for both have passed, but the Commercial Wireless Division of the FCC Wireless Telecommunications Bureau agreed to hold the six-year construction deadlines in abeyance pending a decision on the waiver.

Phase II regional licensees must construct enough base stations to cover: (1) at least one-third of the region’s population within five years of the initial license grant; and (2) at least two-thirds of the region’s population within ten years of the initial license grant. The five-year deadlines for Securicor Wireless’s Phase II regional licenses range from March 22 to Oct. 7, 2004.

Phase II nationwide licensees must construct enough base stations to cover: (1) either a composite area of at least 750,000 square kilometers or 37.5% of the U.S. population within five years of the initial license grant; and (2) either a composite area of at least 1,500,000 square kilometers or 75% of the United States population within 10 years of the initial license grant. The five-year deadlines for Securicor Wireless’s Phase II nationwide license is March 22, 2004.

Sites used to satisfy Phase II requirements do not have to be selected from a list the way Phase I sites must be selected. To consolidate its construction requirements, Securicor Wireless wanted the option of applying either the six- and 10-year Phase I construction benchmark requirements to its Phase I nationwide channels or the Phase II nationwide construction benchmarks and timetable. The company offered to meet an interim construction benchmark for its Phase I nationwide channels. To satisfy Phase II regional license requirements, Securicor Wireless asked for the flexibility of meeting construction obligations by either population coverage or geographic coverage.

In its decision, the FCC gave Securicor Wireless alternatives with respect to its Phase I nationwide licenses. As one alternative, it gave the company 30 days (from Sept. 13) to meet the Phase I six-year construction requirements and held it to meeting the 10-year Phase I construction deadline. It is not known how close the company may be to constructing enough base stations to meet six-year new deadline.

Alternatively, the FCC said that Securicor Wireless may apply the Phase II nationwide construction deadlines to its Phase I licenses. With respect Securicor Wireless’s eight Phase II regional licenses, the FCC said that the company may either satisfy the previous construction requirements or it may construct enough base stations to provide coverage to: (1) either a composite area of at least 100,000 square kilometers or one-third of the population of the region within five years of the initial license grant; and (2) either a composite area of at least 200,000 square kilometers or two-thirds of the population of the region within 10 years of the initial license grant. In return for the waiver, and to ensure that Securicor Wireless moves quickly to construct, the FCC is requiring the company to meet an additional interim coverage benchmark of 250,000 square kilometers or 12.5% of the United States population by September 16, 2002. This represents one-third of the coverage required at the five-year benchmark for Phase II nationwide licenses. The company has the option to meet this requirement by demonstrating compliance for the entire group of licenses, rather than satisfying the requirement independently with respect to each license.

In addition, because the FCC based its decision in part on Securicor Wireless’s stated intention to build a nationwide 220MHz system using its various sets of licenses, the waiver it granted will apply to the licenses only if Securicor Wireless or a possible acquirer operates the licenses as an integrated 28-channel system.

Company officials in the New York and Kansas City offices were unavailable for comment on Sept. 14.