Shine a bright light
The global financial crisis affects everyone. In the land mobile world, the question is whether there is (or will be) any impact on 800 MHz rebanding.
The real increased pressure on finances has been in negotiations. Sprint Nextel has increasingly relied on the “TA Metrics,” a compilation of planning, funding and frequency reconfiguration agreements, broken down into large cost categories and grouped and categorized by the number of subscriber units. The metrics are available from the Transition Administrator at www.800ta.org.
There are a multitude of problems with using these metrics to argue that a licensee’s proposed rebanding costs are excessive. These include (but aren’t limited to):
Timeliness
Until mid-February, the metrics were from June 2008 and excluded a significant number of agreements, particularly those that have taken a long time to negotiate. They were skewed toward lower-cost, non-contentious deals that were negotiated more quickly. The point is proved by the newly released metrics, which show the overall 75th percentile costs for systems with 4000 to 10,000 subscriber units rising approximately $500,000.
Tasks
Because the only grouping is based on subscriber units, there is no distinction between a reband on a fairly new system, which would involve very little new equipment, and an ancient system that literally cannot be rebanded. The cost per subscriber unit can swing from $500 per unit (as an average of all costs) to more than $2700.
Use of outside vendors
Some licensees have elected to use consulting engineers, particularly when there are scant in-house resources. Obviously, those that choose to do the work themselves will have a much smaller project-management cost, as outside vendors are clearly — and understandably — more expensive.
Recovery of internal costs
One licensee we represent has elected to forgo any recovery of internal costs, either for project management or for user downtime (a recoverable cost). Because the metrics lump this system together with licensees who have sought recovery of such costs, the metrics cannot be used reliably for comparison purposes.
When we bring up these arguments during negotiations, the response is typically that such situations are aberrations and shouldn’t negatively affect the metrics. However, because there are so few deals in certain cost categories (for example, just 14 in the 10,000+ subscriber category) they do in fact create bad comparisons. The bottom line is that Sprint Nextel (and the TA) is the holder of this vast store of information about the specifics of these deals and whether they are truly “comparable.” Yet, the information is doled out in confusing ways or on a piecemeal basis to point out that someone else did the same task cheaper.
While licensees are free (by FCC order and probably by local law) to share their cost estimates, few actually do. I have access to perhaps 200 cost estimates because of the number of rebanding deals that we’re working on, but few others have that vast store of information. Thus, I believe that the only way to have fair negotiations using the metrics is for the public to have access to the names of the licensees in each category. Then, if licensees in a similar category want to share information, they know who to approach. There’s little reason to withhold the data, other than to keep licensees in the dark.
Alan Tilles is counsel to numerous entities in the private radio and Internet industries. He is a partner in the law firm of Shulman Rogers Gandal Pordy & Ecker and can be reached at atilles@srgpe.com.
