Honing in on the 800 MHz order
By now, you’re aware of the FCC’s 800 MHz order. While it’s impossible to summarize the 256-page document here, there is one important difference between the order and the original Consensus Plan. The FCC decided to value both the 1.9 GHz spectrum Nextel will receive and the 800 MHz spectrum the carrier is giving up, and — after factoring in Nextel’s costs to retune it and others — is requiring Nextel to pay the difference into the U.S. Treasury.
This is a huge departure from the original proposal — which called for Nextel to pay $850 million to reband the 800 MHz airwaves — and one the carrier will carefully consider before it agrees to the FCC’s decision. (Because the commission did not accept the Consensus Plan in total, Nextel will have 30 days to accept the order once it’s published in the Federal Register.)
The FCC valued the 1.9 GHz airwaves at $4.86 billion, while determining the 800 MHz spectrum Nextel is ceding to public safety is worth $1.61 billion. (The commission chose not to assign a monetary value to the 700 MHz spectrum that Nextel also is giving up.) Nextel also is required to put up a $2.5 billion letter of credit to secure the 800 MHz retuning costs.
In addition, the FCC created a demarcation point between cellularized and non-cellularized spectrum (at least without a waiver) at 862.0125 MHz. Thus, Nextel will be giving up its entire spectrum below 862.0125 MHz. Public-safety entities will be able to vacate 860.0125-860.9875 MHz, if they wish, and no entity will be forced to relocate to 861.0125-861.9875 MHz.
There is still a question, however, regarding the Canadian and Mexican border areas. The FCC said it intends to have discussions with these countries to establish channel plans along the borders that will separate cellularized and non-cellularized systems and maintain the interoperability channels.
The FCC also established a Transition Administrator (TA) to oversee this process. The TA will have enormous responsibilities, including an important fiduciary role. A committee consisting of the Association of Public-Safety Communications Officials, Nextel, the Industrial Telecommunications Association, the United Telecom Council and SouthernLinc will select the TA. A supermajority (four votes) of these five entities is required.
The commission elected to extend the Consensus Plan’s original proposal to move licensees from 851.0125-853.9875 MHz to include the entire General Category, reserving the vacated channels for public safety. Licensees from 854.0125-854.7625 MHz will now be required to move higher in the band.
SouthernLinc received major relief from the FCC in the form of a “carve-out” of its service area regarding the demarcation point between cellularized and non-cellularized systems. Nextel and SouthernLinc have now been charged with the responsibility to work out a final agreement regarding re-banding in this geographic area.
The final major departure from the Consensus Plan was the FCC’s decision to make so-called critical-infrastructure entities eligible for the vacated channels during years four and five.
At the recent APCO Conference, I was struck by some of the discussions outside the regular meetings. At one point, it was related to me that one public-safety licensee was adamant about not cooperating with the TA. This puzzled me because the function of the TA is to ensure that Nextel stays on its toes.
Another public-safety licensee related to me a conversation where he was told not to employ consultants or attorneys to assist in the retune. This also struck me as strange, since these costs will not be paid by the incumbent licensee, but rather would be part of the costs (along with the actual labor and equipment costs) that will be picked up by Nextel (some licensees in Montreal didn’t realize this). In fact, I was aghast when I was told some large public-safety licensees plan to do this in house. I can imagine trying to explain why a combiner needs to be replaced to a lawyer in the city attorney’s office. Yes, the sharks are circling. However if a licensee selects carefully amongst those that have experience, it will reap the benefits of those that have gone before.
Don’t miss the Primedia series of traveling “road show” seminars on the order. It will be the one place where all facets of the industry (licensees, radio dealers, engineers, manufacturers and Nextel) come together.
Alan Tilles is a partner in the law firm of Shulman Rogers Gandal Pordy & Ecker. Tilles served on the committee that drafted the original Consensus Plan. He can be reached at atilles@srgpe.com.
