Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

)

Amendment to the Commission's Rules ) WT Docket No. 95-157

Regarding a Plan for Sharing ) RM-8643

the Costs of Microwave Relocation )

######  {#section .unnumbered}

###### MEMORANDUM OPINION AND ORDER ON RECONSIDERATION {#memorandum-opinion-and-order-on-reconsideration .unnumbered}

Adopted: April 5, 2000 Released: July 19, 2000

By the Commission:

###### Table of Contents {#table-of-contents .unnumbered}

Paragraph Number

I. INTRODUCTION 1

II\. BACKGROUND [2](#background)

III\. DISCUSSION 5

A. Petitions Concerning the *First Report and Order* 5

1\. Background 5

2\. Discussion 6

B. Petitions Concerning the *Second Report and Order* 11

1\. Reimbursement of Self-Relocating Microwave Incumbents for
Relocations Occurring Prior to the Effective Date of the *Second Report
and Order* 12

2\. Reimbursement of Self-Relocating Microwave Incumbents for
Relocations to Leased Facilities 17

3\. Depreciation of Amount Reimbursable to Self-Relocating Microwave
Incumbents 19

4\. Deadline for Self-Relocating Microwave Incumbents to Submit
Documentation of a Relocation to the Clearinghouse 27

5\. The "N" Variable in the Cost-Sharing Formula 29

IV\. CONCLUSION 31

V. PROCEDURAL MATTERS 32

A. Regulatory Flexibility Act 32

B. Paperwork Reduction Act 33

VI\. ORDERING CLAUSES 34

Appendix A -- List of Petitions, Comments, and Replies

Appendix B -- Final Rules

Appendix C -- Supplemental Final Regulatory Flexibility Analysis

# INTRODUCTION 

1.  In this Memorandum Opinion and Order on Reconsideration (*MO&O*), we
    address petitions for reconsideration and/or clarification of, and a
    petition for declaratory ruling concerning, the Commission's rules
    governing the relocation of microwave facilities from the 1850-1990
    Megahertz (MHz) band.[^1] We clarify certain aspects of these rules,
    as discussed below, and deny the remaining requests in the
    petitions.

# background

2.  In 1992, the Commission reserved 220 MHz of spectrum, including the
    1850-1990 MHz band, for reallocation from private and common carrier
    fixed microwave services (microwave incumbents) to services using
    emerging technologies. [^2] The Commission also established
    procedures for microwave incumbents to be relocated to available
    frequencies in higher bands or to other media, including procedures
    governing the compensation of microwave incumbents by providers of
    emerging technology services. [^3] In 1994, the Commission allocated
    the 1850-1990 MHz band to Personal Communications Services (PCS),
    one of the emerging technology services.[^4] This allocation
    included 20 MHz of spectrum, in the 1910-1930 MHz range, for
    unlicensed PCS devices.[^5]

3.  In the *First Report and Order* in this proceeding, the Commission
    changed and clarified certain aspects of its microwave relocation
    procedures and adopted a plan for sharing the costs of relocating
    microwave facilities operating in the 1850-1990 MHz band (the
    "cost-sharing plan").[^6] Under the Commission's cost-sharing plan,
    PCS licensees and manufacturers of unlicensed PCS devices that incur
    costs for relocating an interfering microwave link (together, "PCS
    relocators") are eligible to receive reimbursement from
    later-entrant PCS licensees and later-entrant manufacturers of
    unlicensed PCS devices that benefit from the clearing of their
    spectrum (together, "later-entrant PCS entities").[^7] The
    cost-sharing plan is administered by two private clearinghouses
    designated by the Wireless Telecommunications Bureau (Bureau) \--
    the Personal Communications Industry Association (PCIA) and the
    Industrial Telecommunications Association, Inc. (ITA)[^8] -- using
    the cost-sharing formula adopted by the Commission.[^9] In the
    *Second Report and Order* in this proceeding, the Commission, among
    other things, modified its cost-sharing rules to permit microwave
    incumbents who relocate their own microwave links and pay their own
    relocation expenses ("self-relocating microwave incumbents") to
    collect reimbursement in accordance with the cost-sharing plan
    adopted in the *First Report and Order*, subject to certain
    conditions.[^10]

4.  Ten parties filed petitions for reconsideration and/or clarification
    of the *First Report and Order*,[^11] one party filed a petition for
    declaratory ruling concerning the *First Report and Order*,[^12] and
    three parties filed petitions for reconsideration and/or
    clarification of the *Second Report and Order*. [^13] In addition,
    we received and have considered a number of *ex parte*
    communications in this proceeding, although we do not list them
    individually. In this *MO&O*, we deny the petitions for
    reconsideration and/or clarification and the petition for
    declaratory ruling of the *First Report and Order*, and we grant in
    part and deny in part petitions for reconsideration and/or
    clarification of the *Second Report and Order*.

# discussion

## Petitions Concerning the *First Report and Order* 

### Background 

5.  The MSS Coalition filed a petition seeking clarification that the
    cost-sharing rules adopted in the *First Report and Order* do not
    apply to mobile-satellite service providers in the 2 Gigahertz (GHz)
    band.[^14] A number of parties also filed petitions for
    reconsideration of various cost-sharing rules adopted in the *First
    Report and Order*.[^15] In addition, AT&T Wireless Services, in
    combination with a number of other wireless providers, filed a
    petition for reconsideration or, in the alternative, for rulemaking,
    regarding the Commission's decision not to address in the *First
    Report and Order* certain involuntary relocation procedures
    recommended by these providers.[^16] Furthermore, Powertel PCS, Inc.
    (Powertel), a PCS "A" block licensee that received notification that
    it owes reimbursement to a PCS relocator, filed a petition seeking a
    declaratory ruling that no cost-sharing obligation is owed for the
    relocation of a microwave incumbent's link that is wholly outside of
    a PCS licensee's Major Trading Area (MTA) or Basic Trading Area
    (BTA).[^17]

### Discussion

6.  [MSS Coalition Petition for Clarification]{.underline}. We find it
    unnecessary to reconsider or clarify the Commission's microwave
    relocation rules for the non-PCS emerging technology bands and the
    cost-sharing rules adopted in the *First Report and Order* as they
    apply to 2 GHz mobile-satellite service providers, as urged by the
    MSS Coalition.[^18] In the *First Report and Order*, the Commission
    stated that the "microwave relocation rules already apply to all
    emerging technology services" but that "as new services develop, we
    may review our relocation rules and make modifications to these
    rules where appropriate."[^19] Moreover, the Commission stated that
    "while we conclude that cost-sharing should apply to all emerging
    technology services, we do not adopt specific cost-sharing rules for
    new services at this time, but will develop such rules in future
    proceedings."[^20] We recently established rules that provide for
    the relocation of incumbent Broadcast Auxiliary Service and Fixed
    Service microwave licensees from the 2 GHz band in order to clear
    spectrum for MSS. [^21] In doing so, we generally followed the same
    principles that governed the relocation of fixed microwave
    incumbents to clear spectrum for PCS, but in some cases the rules we
    adopted for MSS reflected unique characteristics of the rollout of
    MSS.[^22] The concerns raised by the MSS Coalition on
    reconsideration regarding the applicability of the microwave
    relocation and cost-sharing rules to the 2 GHz bands allocated to
    MSS were raised and considered in the MSS proceeding, and further
    discussion here is unnecessary.

7.  [Petitions for Reconsideration]{.underline}. We also decline to
    reconsider or clarify the various cost-sharing rules adopted in the
    *First Report and Order*. For example, the Commission was petitioned
    to reconsider extending the 10-year period for microwave incumbent
    relocations,[^23] raising the \$250,000 cap on reimbursable
    relocation costs,[^24] and eliminating the installment payment plan
    for designated entity reimbursement obligations, [^25] among other
    requested amendments to the rules. We find that making the requested
    rule changes at this time would not be in the public interest.

8.  The cost-sharing rules have been in effect since 1996. They
    generally have served to promote an efficient and equitable
    relocation process, one of the goals of the *First Report and
    Order*.[^26] Moreover, changing the cost-sharing rules mid-stream
    could undermine the integrity of the rules that PCS relocators,
    later-entrant PCS entities, and microwave incumbents have relied on
    to effect the relocation from these bands. It could lead to
    confusion and uncertainty among PCS entities and microwave
    incumbents who must comply with the modified rules. We conclude,
    therefore, that none of the suggested changes to the Commission's
    cost-sharing rules would significantly advance our goal of promoting
    an efficient and equitable relocation process as to outweigh the
    risks associated with such rule changes.

9.  Similarly, we conclude that the changes to the Commission's
    involuntary relocation rules suggested by AT&T Wireless Services and
    its joint petitioners[^27] would not significantly advance our goal
    of promoting an efficient and equitable relocation process as to
    outweigh the risks discussed above.

10. [Powertel Petition for Declaratory Ruling]{.underline}. Powertel
    asserts that a chart in Appendix A of the *First Report and Order*
    dictates that a later-entrant PCS licensee is not obligated to
    reimburse a PCS relocator for the cost of relocating a link that is
    entirely within the PCS relocator's MTA or BTA, regardless of
    whether the location of the later-entrant PCS licensee's base
    station is within the Proximity Threshold rectangle described in
    Section 24.247(a) of the Commission's rules.[^28] We disagree. We do
    not believe that there is an inconsistency between the chart in
    Appendix A of the *First Report and Order* and the Proximity
    Threshold test adopted by the Commission in that Order.[^29] Thus,
    we find that the Proximity Threshold test set forth in Section
    24.247[^30] controls when a reimbursement obligation exists for a
    later-entrant PCS licensee arising from the relocation of
    interfering links. As the Commission stated in the *First Report and
    Order*, the Proximity Threshold test is administratively convenient
    for the clearinghouses to apply and generally permits existing and
    prospective PCS providers to project their cost-sharing obligations
    accurately.[^31]

## Petitions Concerning the *Second Report and Order*

11. In this section, we consider the following issues raised in
    petitions for reconsideration or clarification of the *Second Report
    and Order*: (1) whether to permit microwave incumbents who
    self-relocated prior to the effective date of the *Second Report and
    Order* to obtain reimbursement from PCS entities under the
    cost-sharing plan; (2) whether to permit self-relocating microwave
    incumbents to collect reimbursement under the cost-sharing plan even
    if they relocate to leased microwave facilities rather than to
    purchased facilities; (3) whether the reimbursement amount to which
    microwave licensees are entitled under the cost-sharing formula
    should be subject to "depreciation;"[^32] (4) the deadline by which
    self-relocating microwave incumbents must submit documentation of a
    relocation to the clearinghouse; and (5) how the cost-sharing
    formula applies to the first PCS entity that has a cost-sharing
    obligation to a relocating microwave incumbent.

### Reimbursement of Self-Relocating Microwave Incumbents for Relocations Occurring Prior to the Effective Date of the *Second Report and Order*

12. [Background]{.underline}. Under the Commission's cost-sharing plan
    that was adopted in the *First Report and Order* and became
    effective on August 12, 1996, PCS relocators seeking reimbursement
    for costs incurred in relocating microwave links are permitted to
    register their reimbursement rights with the clearinghouse for
    relocation expenses incurred since April 5, 1995, the date that the
    voluntary negotiation period for relocation of microwave incumbents
    by A and B block licensees began.[^33] Under amendments to the
    cost-sharing plan that were adopted in the *Second Report and Order*
    and became effective on May 19, 1997, self-relocating microwave
    incumbents seeking reimbursement for costs incurred in relocating
    microwave links are permitted to register reimbursement rights with
    the clearinghouse for relocation expenses incurred prospectively
    from the effective date of the amended rules. [^34] Neither the
    *Second Report and Order* nor the amended rules explicitly address
    whether self-relocating microwave incumbents are permitted to
    register reimbursement rights with the clearinghouse for relocation
    expenses incurred prior to the effective date of the amended rules.

13. On reconsideration, API, Santee Cooper, and UTC argue that microwave
    incumbents that self-relocated their links prior to the effective
    date of the *Second Report and Order* should be entitled to register
    reimbursement rights with the clearinghouse for expenses incurred
    after April 5, 1995.[^35] These petitioners argue that such
    reimbursement is appropriate because microwave incumbents that
    relocated their own links prior to arrangements with PCS entrants
    helped to facilitate the Commission's goal of rapidly clearing the
    1850-1990 MHz band for use by broadband PCS. In addition, these
    petitioners argue that such reimbursement is equitable, given the
    Commission's decision to permit PCS licensees to obtain
    reimbursement for relocation costs incurred prior to the
    Commission's adoption of cost-sharing in the *First Report and
    Order*.

14. [Discussion]{.underline}**.** We decline to extend reimbursement
    rights to microwave incumbents that self-relocated links between
    April 5, 1995 and May 19, 1997 because we find that the petitioners
    have not demonstrated that such reimbursement is warranted. First,
    we note that microwave incumbents that self-relocated links during
    this time period should not have had any expectation that they would
    be reimbursed by later-entrant PCS entities because no Commission
    rule was in effect to permit such reimbursement. Second, microwave
    incumbents that self-relocated links during this time period were
    not obligated to do so by our rules; indeed, for most of this time
    period, these incumbents were not obligated to negotiate with PCS
    entities over relocation. Thus, it is likely that microwave
    incumbents that self-relocated links during this time period did so
    for independent business reasons, such as gaining more options for
    obtaining alternative spectrum or exercising more control over the
    relocation process, and petitioners have not demonstrated to the
    contrary. Even in those cases where microwave incumbents
    self-relocated certain links contemporaneously with other links
    subject to an agreement with a PCS entity, as part of a system-wide
    replacement, the incumbents were under no obligation to do so.[^36]

15. In addition, we are concerned about the ability of independent third
    party appraisers to collect reliable cost data from microwave
    incumbents that self-relocated links prior to May 19, 1997,
    sufficient to verify the actual cost of relocation to comparable
    facilities. The *Second Report and Order* made clear that reliable
    independent verification of a microwave incumbent's relocation costs
    was necessary as a safeguard to determine the compensation
    reimbursable under the cost-sharing plan.[^37] Petitioners have not
    demonstrated how or even if this safeguard could work in practice if
    applied retrospectively.

16. Thus, for these reasons, we find that it would not be in the public
    interest to grant the petitioners' request. We distinguish our
    decision here from our decision to permit PCS relocators to obtain
    reimbursement for costs incurred in relocating microwave links
    between April 5, 1995 and August 12, 1996, the effective date of the
    cost-sharing rules adopted in the *First Report and Order*.[^38]
    First, PCS licensees that negotiated relocation agreements with
    microwave incumbents during this time period expressly did so for
    the purpose of clearing the 1850-1990 MHz band for use by PCS, thus
    facilitating this important Commission goal. Second, these
    agreements provide objective evidence of the negotiated costs for
    relocation, and thus are not subject to the difficulties in
    obtaining reliable cost data years after the relocation occurred, as
    discussed above. Third, if the Commission did not permit PCS
    relocators to obtain reimbursement for costs incurred in relocating
    microwave links during this time period, later-entrant PCS entities
    that benefited from the clearance of this spectrum would have
    received a significant competitive advantage against PCS relocators
    in the market.

### Reimbursement of Self-Relocating Microwave Incumbents for Relocations to Leased Facilities

17. [Background]{.underline}. The Commission's microwave relocation
    cost-sharing formula, set forth in Section 24.243 of the
    Commission's rules, allocates reimbursement to PCS relocators or
    self-relocating microwave incumbents based on the actual costs of
    relocation, subject to certain factors.[^39] Section 24.243(b) of
    the Commission's rules lists "leased facilities" as an actual
    relocation cost to be included in the cost-sharing formula.[^40] API
    encourages the Commission to permit self-relocation to leased
    facilities because it will encourage prompt clearing of the
    1850-1990 MHz band.[^41]

18. [Discussion]{.underline}. We clarify that the cost-sharing formula
    set forth in Section 24.243 permits either PCS relocators or
    self-relocating microwave incumbents to include the actual costs of
    leasing replacement facilities as a compensable cost under the
    formula. We believe that self-relocating microwave incumbents and
    PCS relocators should be able to choose the most efficient method of
    relocation, whether it involves the purchase of replacement
    facilities or the leasing of replacement facilities. Although this
    clarification is opposed by PCIA and UTAM,[^42] we find that PCIA
    and UTAM have not adequately explained why self-relocating microwave
    incumbents should be treated differently than PCS relocators on this
    issue. We also do not agree with the contention of PCIA and UTAM
    that the costs of microwave incumbents relocating to leased
    facilities will be difficult to verify.[^43] If either a microwave
    incumbent or a PCS relocator submits relocation costs based on
    leased facilities, the clearinghouse can determine whether the
    leased facilities represent comparable facilities and can calculate
    the present value of the lease payments. In addition, such
    relocation costs are subject to independent verification by a third
    party appraiser[^44] and to the monetary caps established by the
    Commission.[^45]

### Depreciation of Amount Reimbursable to Self-Relocating Microwave Incumbents 

19. [Background]{.underline}. The reimbursement obligation of
    later-entrant PCS entities that is derived from the cost-sharing
    formula adopted in the *First Report and Order* decreases over a
    ten-year period, so that the amount that the PCS relocator receives
    in reimbursement is reduced, *i.e.*, depreciates, over time.[^46]
    Thus, with the exception of the "full reimbursement" category
    described below, the PCS relocator's reimbursement for a given link
    is reduced for every month that elapses between the date that the
    PCS relocator obtains reimbursement rights for that link and the
    date that a later-entrant PCS entity incurs a reimbursement
    obligation for that link.[^47] The PCS relocator obtains
    reimbursement rights on the date it signs an agreement with a
    microwave incumbent for the relocation of the link. [^48] The
    Commission stated in the *First Report and Order* that this decrease
    in reimbursement over time reflects the fact that the PCS relocator
    has received the benefit of being first to market, and to ensure
    that the PCS relocator pays the largest amount, which would provide
    an incentive to the relocator to limit relocation expenses. [^49]
    The Commission also determined, though, that PCS relocators should
    be entitled to full reimbursement, not subject to depreciation, for
    relocating non-interfering links that are either fully outside their
    market area (*e.g.*, MTA, BTA) or their licensed frequency band
    (*e.g.*, A block, B block).[^50] The rationale for this exception to
    the application of the depreciation factor is to provide further
    incentive for a PCS relocator to relocate an entire system of a
    microwave incumbent, rather than singling out links that interfere
    solely with the PCS relocator's own operations.[^51]

20. In the *Second Report and Order*, the Commission determined that the
    reimbursement of self-relocating microwave incumbents should be
    subject to depreciation.[^52] The Commission explained that
    depreciation ensures that incumbents pay for benefits that result
    from early relocation on a voluntary basis: more options for
    obtaining alternative spectrum; more control over the relocation
    process; and reduced uncertainty about further operations. The
    Commission also concluded that the application of a depreciation
    factor to the reimbursement formula for self-relocating microwave
    incumbents provides an incentive for the incumbent to minimize costs
    because its own share of the costs is not depreciated.

21. Petitioners challenge the Commission's decision to depreciate the
    amount reimbursable to a self-relocating microwave incumbent under
    the cost-sharing formula, arguing that incumbents have other
    incentives to minimize relocation costs, that incumbents do not
    receive the same type of "first-to-market" benefits that PCS
    relocators receive, and that Commission's decision treats microwave
    incumbents differently than PCS relocators.[^53]

22. [Discussion]{.underline}. We find that the petitioners do not raise
    any arguments that warrant our reconsideration of the decision in
    the *Second Report and Order* to depreciate the amount reimbursable
    to a self-relocating microwave incumbent under the cost-sharing
    formula.[^54] Under the Commission's cost-sharing plan, depreciation
    applies equally to reimbursement of self-relocating microwave
    incumbents and to reimbursement of PCS relocators, except for PCS
    relocators that move non-interfering links that are either fully
    outside their market area or their licensed frequency band. As
    discussed above, the rationale for applying depreciation to
    reimbursement under the cost-sharing formula is the same for both
    self-relocating microwave incumbents and PCS relocators. Both
    receive benefits from the costs they incur for early relocations
    that should reduce reimbursement obligations of later-entrant PCS
    entities: microwave incumbents, for example, gain more options for
    obtaining alternative spectrum; and PCS relocators are the first to
    market. Moreover, both self-relocating microwave incumbents and PCS
    relocators are in a position to minimize relocation costs.

23. Although the Commission did permit PCS relocators that relocate
    out-of-market or out-of-band links to receive full reimbursement,
    not subject to depreciation, that exception reflects an analysis by
    the Commission that such PCS relocators need additional incentive to
    relocate these links.[^55] The Commission did not find in the
    *Second Report and Order* that such additional incentives were
    necessary for microwave incumbents to self-relocate links, and we
    see no reason to reconsider that decision here.

24. We do, however, amend Section 24.243(d) of our rules to clarify the
    date on which the depreciation factor begins to apply to the amount
    reimbursable to a self-relocating microwave incumbent under the
    cost-sharing formula. As discussed above, the amount reimbursable to
    a PCS relocator under the cost-sharing formula begins to depreciate
    on the date that the relocator signs an agreement with the microwave
    incumbent.[^56] In the *First Report and Order*, the Commission
    found that the use of the signed agreement date was easily
    verifiable.[^57] In the case of a self-relocating microwave
    incumbent, the self-relocating incumbent is, by definition,
    relocating before the existence of an agreement with a PCS
    relocator.

25. We find that, in the case of a self-relocating microwave incumbent
    seeking reimbursement for the relocation of links in the 1850-1990
    MHz band, a reasonable substitute for the signed agreement date is
    the date that the incumbent notifies the Commission that it intends
    to discontinue, or has discontinued, the use of these links,
    pursuant to Section 101.305 of the Commission's rules.[^58] We find
    that, similar to a signed agreement date, this date is easily
    verifiable and thus will not result in significant administrative
    burden for self-relocating incumbents or the clearinghouses. We also
    find that this date can be applied to incumbent relocations to
    microwave networks or wireline networks (*e.g.*, fiber optic)
    because in either case the incumbent must notify the Commission of
    the discontinuance of its displaced facilities under Section
    101.305.[^59] We note that the use of this date is supported by
    ITA,[^60] and that no party has challenged its use in the record.

26. Thus, we conclude that the date that the depreciation factor begins
    to apply to the amount reimbursable to a microwave incumbent for its
    self-relocated links is the date that the incumbent notifies the
    Commission that it intends to discontinue, or has discontinued, the
    use of these links, pursuant to Section 101.305 of the Commission's
    rules.[^61] We emphasize that the obtainment of reimbursement rights
    by a fixed microwave incumbent is contingent upon the incumbent's
    compliance with Section 101.305 of the Commission's rules. We amend
    Section 24.243(d) of the Commission's rules accordingly. We also
    make a related amendment to Section 24.245(a)(2) of the Commission's
    rules in Section III.B.4 below, regarding when a self-relocating
    microwave incumbent must submit documentation of the relocation to
    the clearinghouse.

### Deadline for Self-Relocating Microwave Incumbents to Submit Documentation of a Relocation to the Clearinghouse

27. [Background]{.underline}. Under Section 24.245(a)(2) of the
    Commission's rules, a self-relocating microwave incumbent seeking
    reimbursement must submit documentation to the clearinghouse within
    ten business days of the date that "relocation occurs."[^62] The
    rule does not define when relocation occurs. In the case of a PCS
    relocator seeking reimbursement, relocation occurs (*i.e.*, the PCS
    relocator obtains reimbursement rights) on the date that the
    relocator signs an agreement with an incumbent for the relocation of
    the incumbent's links.[^63]

28. [Discussion]{.underline}. Microwave incumbents request that the
    Commission clarify whether the relocation of a self-relocating
    microwave incumbent occurs on the date that the incumbent's links
    are decommissioned, the date that the replacement facilities are
    fully implemented, or some other date.[^64] In Section III.B.3
    above, we found that depreciation begins to apply to the amount
    reimbursable to a microwave incumbent for its self-relocated links
    on the date that the incumbent notifies the Commission that it
    intends to discontinue, or has discontinued, the use of these links,
    pursuant to Section 101.305 of the Commission's rules.[^65] We see
    no reason why this date should not also serve as the date that
    triggers the obligation of the incumbent to file documentation with
    a clearinghouse. The date that the relocation agreement is signed
    serves as the date that triggers a PCS relocator's obligation to
    submit documentation to the clearinghouse and the date when the
    depreciation factor begins to apply to the amount reimbursable to a
    PCS relocator.[^66] Thus, we find that in order to obtain
    reimbursement for the relocation of links in the 1850-1990 MHz band,
    a self-relocating microwave incumbent must submit documentation of
    the relocation to the clearinghouse within ten business days of the
    date that the incumbent notifies the Commission that it intends to
    discontinue, or has discontinued, the use of these links, pursuant
    to Section 101.305 of the Commission's rules.[^67] We modify Section
    24.245(a)(2) accordingly.

### The "N" Variable in the Cost-Sharing Formula

29. [Background]{.underline}. Under the Commission's cost-sharing
    formula, the amount of reimbursement owed to the PCS relocator or
    self-relocating microwave incumbent by later-entrant PCS entities is
    calculated by: (1) determining the actual costs of
    reimbursement; (2) dividing by the variable "N," which represents
    the number of PCS entities that would have interfered with the
    incumbent's link; and (3) applying a depreciation factor.[^68] Under
    Section 24.243(c) of the Commission's rules, N equals 1 for the PCS
    relocator, N equals 2 for the next PCS entity that would have
    interfered with the link, and so on.[^69]

30. [Discussion]{.underline}. As requested by API and UTC, we clarify
    that when the cost-sharing formula is applied in the case of a
    self-relocating microwave incumbent, N equals 1 for the first PCS
    entity that would have interfered with the relocated link, and we
    amend Section 24.243(c) accordingly.[^70] If N were to equal 2 when
    the cost-sharing formula is applied to the case of a self-relocating
    microwave incumbent, the incumbent's reimbursement would be reduced
    by half, a result that is inconsistent with the Commission's goal of
    encouraging self-relocation. We note that no party opposes this
    clarification.

# conclusion

31. As discussed above, in this *MO&O* we clarify that: (1) the
    Proximity Threshold test set forth in Section 24.247 of the
    Commission's rules controls when a reimbursement obligation exists
    for a later-entrant PCS licensee; (2) microwave incumbents that
    self-relocated links between April 5, 1995 and May 19, 1997 are not
    entitled to reimbursement; (3) microwave incumbents are permitted to
    relocate to leased facilities, as well as purchased facilities; (4)
    the date that the depreciation factor begins to apply to the amount
    reimbursable to a microwave incumbent for its self-relocated links
    is the date that the incumbent notifies the Commission that it
    intends to discontinue, or has discontinued, the use of these links,
    pursuant to Section 101.305 of the Commission's rules; (5) the
    deadline for self-relocating microwave incumbents to file
    documentation of the relocation with the clearinghouse shall be
    within ten business days of the date referred to in the preceding
    clause; and (6) under the cost-sharing formula as applied to
    self-relocating microwave incumbents, the variable N equals 1 for
    the first PCS entity that would have interfered with the relocated
    link. We deny the remaining requests in the petitions for
    reconsideration and/or clarification of the *First Report and Order*
    and *Second Report and Order* in this proceeding.

# PROCEDURAL MATTERS

## Regulatory Flexibility Act 

32. Appendix C contains a Supplemental Final Regulatory Flexibility
    Analysis, in accordance with the Regulatory Flexibility Act.[^71]

## Paperwork Reduction Act

33. This *MO&O* contains no new or modified information collections
    subject to the Paperwork Reduction Act of 1995, Public Law 104-13.

# Ordering clauseS

34. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the
    Commission's rules, 47 C.F.R. § 1.106, that the petitions for
    reconsideration and/or clarification of the *First Report and Order*
    filed by the American Petroleum Institute, the Association of
    American Railroads, the Association of Public-Safety Communications
    Officials-International, Inc, AT&T Wireless Services, Inc. (jointly
    with GTE Mobilnet, PCS PrimeCo, L.P., Pocket Communications, Inc.,
    Western PCS Corporation and the Cellular Telecommunications Industry
    Association), the MSS Coalition, Omnipoint Communications, Inc., the
    Personal Communications Industry Association, Small Business in
    Telecommunications, Tenneco Energy, and UTC/The Telecommunications
    Association ARE DENIED, as discussed in Section III.A *supra*.

35. IT IS FURTHER ORDERED, pursuant to Section 1.2 of the Commission's
    rules, 47 C.F.R. § 1.2, that the petition for declaratory ruling
    concerning the *First Report and Order* filed by Powertel PCS, Inc.
    IS DENIED, as discussed in Section III.A *supra*.

36. IT IS FURTHER ORDERED, pursuant to Section 1.106 of the Commission's
    rules, 47 C.F.R. § 1.106, that the petitions for reconsideration
    and/or clarification of the *Second Report and Order* filed by
    American Petroleum Institute, UTC/The Telecommunications
    Association, and the South Carolina Public Service Authority ARE
    GRANTED IN PART and DENIED IN PART, as discussed in Section III.B
    *supra*.

37. IT IS FURTHER ORDERED that Sections 24.243 and 24.245 of the
    Commission's rules, 47 C.F.R. §§ 24.243, 24.245, ARE AMENDED as set
    forth in Appendix B, effective 30 days after publication in the
    Federal Register.

38. IT IS FURTHER ORDERED that the Commission's Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    Memorandum Opinion and Order on Reconsideration, including the
    Supplemental Final Regulatory Flexibility Analysis set forth in
    Appendix C, to the Chief Counsel for Advocacy of the Small Business
    Administration.

FEDERAL COMMUNICATIONS COMMISSION

> Magalie Roman Salas
>
> Secretary

**APPENDIX A**

**LIST OF PETITIONS, COMMENTS, AND REPLIES**

####### First Report and Order {#first-report-and-order .unnumbered}

######## Petitions for Reconsideration, Clarification, and/or Rulemaking  {#petitions-for-reconsideration-clarification-andor-rulemaking .unnumbered}

######## (received July 12, 1996, unless otherwise noted) {#received-july-12-1996-unless-otherwise-noted .unnumbered}

American Petroleum Institute (API)

Association of American Railroads

Association of Public-Safety Communications Officials-International,
Inc. (APCO)

AT&T Wireless Services, Inc.; GTE Mobilnet; PCS PrimeCo, L.P.; Pocket
Communications, Inc.; Western PCS Corporation; and Cellular
Telecommunications Industry Association (AT&T et al.)

Celsat America, Inc., COMSAT Corporation, Hughes Space and
Communications International, ICO Global Communications, and Personal
Communications Satellite Corporation (collectively, the MSS Coalition)

Omnipoint Communications, Inc. (Omnipoint)

Small Business in Telecommunications (May 28, 1996)

Personal Communications Industry Association (PCIA)

Tenneco Energy

UTC, the Telecommunications Association (UTC)

[Comments/Oppositions (received August 8, 1996)]{.underline}

American Petroleum Institute (API)

Association of American Railroads

Association of Public-Safety Communications Officials-International,
Inc. (APCO)

AT&T Wireless Services, Inc.

Omnipoint Communications, Inc.

Pacific Bell Mobile Services

Personal Communications Industry Association (PCIA)

UTC, the Telecommunications Association (UTC)

[Replies (received August 19, 1996, unless otherwise noted)]{.underline}

American Petroleum Institute (API)

Association of American Railroads

AT&T Wireless Services, Inc.; GTE Mobilnet; PCS PrimeCo, L.P.; Pocket
Communications, Inc.; Western PCS Corporation; and the Cellular
Telecommunications Industry Association (AT&T et al.) (August 21, 1996)

MSS Coalition (August 21, 1996)

Omnipoint Communications, Inc. (Omnipoint)

Personal Communications Industry Association (PCIA)

Tenneco Energy

[Petition for Declaratory Ruling (received September 26,
1997)]{.underline}

Powertel PCS, Inc.

[Response to Petition for Declaratory Ruling (received October 24,
1997)]{.underline}

PCIA Microwave Clearinghouse

#########  {#section-1 .unnumbered}

######### Second Report and Order {#second-report-and-order .unnumbered}

[Petitions for Reconsideration and/or Clarification]{.underline}

[(received April 17, 1997, unless otherwise noted)]{.underline}

American Petroleum Institute (API) (April 16, 1997)

South Carolina Public Service Authority (Santee Cooper)

UTC, the Telecommunications Association (UTC)

[Comments/Oppositions (received May 20, 1997)]{.underline}

Pacific Bell Mobile Services

Personal Communications Industry Association (PCIA)

Southern Company

UTAM, Inc.

UTC, the Telecommunications Association (UTC)

[Replies (received May 30, 1997, unless otherwise noted)]{.underline}

American Petroleum Institute (API)

Personal Communications Industry Association (PCIA)

South Carolina Public Service Authority (Santee Cooper) (June 4, 1997)

UTAM, Inc.

**APPENDIX B**

**FINAL RULES**

Part 24 of Title 47 of the Code of Federal Regulations is amended as
follows:

1\. Section 24.243 is amended by revising subsections (c) and (d) as
follows:

**§ 24.243 The cost-sharing formula.**

\* \* \* \* \*

(c) N equals the number of PCS entities that would have interfered with
    the link. For the PCS relocator, N = 1. For the next PCS entity that
    would have interfered with the link, N = 2, and so on. In the case
    of a voluntarily relocating microwave incumbent, N=1 for the first
    PCS entity that would have interfered with the link. For the next
    PCS entity that would have interfered with the link, N = 2, and so
    on.

(d) Tm equals the number of months that have elapsed between the month
    the PCS relocator or voluntarily relocating microwave incumbent
    obtains reimbursement rights for the link and the month that the
    clearinghouse notifies a later-entrant of its reimbursement
    obligation for the link. A PCS relocator obtains reimbursement
    rights for the link on the date that it signs a relocation agreement
    with a microwave incumbent. A voluntarily relocating microwave
    incumbent obtains reimbursement rights for the link on the date that
    the incumbent notifies the Commission that it intends to
    discontinue, or has discontinued, the use of the link, pursuant to
    Section 101.305 of the Commission's rules, 47 C.F.R. § 101.305.

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2.  Section 24.245 is amended by revising subsection (a)(2) as follows:

**§ 24.245 Reimbursement under the Cost-Sharing Plan.**

\(a\) \* \* \*

\(2\) To obtain reimbursement, a voluntarily relocating microwave
incumbent must submit documentation of the relocation of the link to the
clearinghouse within ten business days of the date that the incumbent
notifies the Commission that it intends to discontinue, or has
discontinued, the use of the link, pursuant to Section 101.305 of the
Commission's rules, 47 C.F.R. § 101.305.

**\* \* \* \* \***

**APPENDIX C**

**SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS**

1\. As required by the Regulatory Flexibility Act (RFA), *see* 5 U.S.C.
§ 603,[^72] an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Notice of Proposed Rulemaking (*Notice*) in WT
Docket No. 95-157.[^73] The Commission sought written public comment on
the proposals in the *Notice*, including the IRFA. A Final Regulatory
Flexibility Analysis (FRFA) was incorporated in the *First Report and
Order* in WT Docket No. 95-157.[^74] The *First Report and Order* also
included a Further Notice of Proposed Rulemaking (*Further Notice*), and
thus incorporated an IRFA on the additional proposals in the *Further
Notice*.[^75] The Commission sought written public comment on the
additional proposals in the *Further* *Notice*, including the IRFA. A
FRFA on the additional proposals in the *Further Notice* was
incorporated in the *Second Report and Order* in WT Docket No.
95-157.[^76] This present Supplemental Final Regulatory Flexibility
Analysis in this *Memorandum Opinion and Order on Reconsideration*
(*MO&O*) supplements the FRFAs in the *First Report and Order* and
*Second Report and Order*, and conforms to the RFA, as amended.

**I. Need for, and Objectives of, the Rules**

2\. This *MO&O* addresses petitions for reconsideration and/or
clarification of, and a petition for declaratory ruling concerning, the
Commission's plan for PCS market entrants to share the costs of
relocating microwave facilities from the 1850-1990 MHz band. Under the
Commission's cost-sharing plan, PCS licensees and manufacturers of
unlicensed PCS devices that incur costs for relocating an interfering
microwave link (together, "PCS relocators") are eligible to receive
reimbursement from later-entrant PCS licensees or later-entrant
manufacturers of unlicensed PCS devices that benefit from the clearing
of their spectrum (together, "later-entrant PCS entities").[^77] In
addition, the cost-sharing plan permits microwave incumbents who
relocate their own microwave links and pay their own relocation expenses
("self-relocating microwave incumbents") to collect reimbursement from
later-entrant PCS entities that benefit from the clearing of the
spectrum, subject to certain conditions.[^78] This *MO&O* clarifies
certain aspects of this cost-sharing plan, as discussed in Section IV
below, and denies the remaining requests in the petitions, including a
request to eliminate the installment payment plan for designated entity
reimbursement obligations. These clarifications will facilitate the
efficient relocation of fixed microwave incumbents from the 1850-1990
MHz band in order to clear the band for the provision of PCS service.

3\. In particular, the *MO&O* clarifies that: (1) the Proximity
Threshold test set forth in Section 24.247 of the Commission's rules, 47
C.F.R. § 24.247, controls when a reimbursement obligation exists for a
later-entrant PCS licensee; (2) microwave incumbents that self-relocated
links between April 5, 1995 and May 19, 1997 are not entitled to
reimbursement; (3) microwave incumbents are permitted to relocate to
leased facilities, as well as purchased facilities; (4) the date that
the depreciation factor begins to apply to the amount reimbursable to a
microwave incumbent for its self-relocated links is the date that the
incumbent notifies the Commission that it intends to discontinue, or has
discontinued, the use of these links, pursuant to Section 101.305 of the
Commission's rules, 47 C.F.R. § 101.305; (5) the deadline for
self-relocating microwave incumbents to file documentation of the
relocation with the clearinghouse shall be within ten business days of
the date referred to in the preceding clause; and (6) under the
cost-sharing formula as applied to self-relocating microwave incumbents,
the variable N equals 1 for the first PCS entity that would have
interfered with the relocated link.

**II. Summary of Issues Raised in Response to the FRFAs**

4\. None of the petitions filed on the *First Report and Order* and
*Second Report and Order,* or comments filed on these petitions, were
specifically in response to the FRFAs in those orders. Several of the
petitions and comments regarding the *First Report and Order*, though,
raised issues that may impact small entities, and were considered by the
Commission, as discussed in Section V below. In particular, Tenneco
Energy argues that the Commission should eliminate the payment plan that
permits PCS providers that are designated entities (a small business
classification used for Commission spectrum auctions) to make
reimbursement payments in installments over time, as set forth in
Section 24.249(b) of the Commission's rules.[^79] Omnipoint and PCIA
oppose Tenneco's argument.[^80] Moreover, Omnipoint contends that,
although it does not qualify as a designated entity under the
Commission's rules, it should be permitted to make reimbursement
payments according to the installment plan schedule set forth in Section
24.249(b).[^81]

5\. Small Business in Telecommunications (SBT) argues that the
Commission should refine its definitions of communications throughput
and network reliability in evaluating whether a microwave incumbent's
new system is comparable to the old one, and that the Commission should
require PCS providers to compensate microwave incumbent's for internal
resources devoted to the relocation process.[^82] Other fixed microwave
incumbents, such as the Association of American Railroads, support a
refinement of the definitions of throughput and reliability,[^83]
whereas PCS providers such as AT&T, Omnipoint, and Pacific Bell, oppose
such a refinement.[^84] In addition, AT&T opposes SBT's suggested
modification to include internal resources in compensation.[^85]

III\. Description and Estimate of the Number of Small Entities to Which
the Rules Will Apply

6\. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.[^86] The RFA generally
defines the term \"small entity\" as having the same meaning as the
terms \"small business,\" \"small organization,\" and \"small
governmental jurisdiction.\"[^87] In addition, the term \"small
business\" has the same meaning as the term \"small business concern\"
under the Small Business Act.[^88] A small business concern is one
which: (1) is independently owned and operated; (2) is not dominant in
its field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).[^89] A small
organization is generally \"any not-for-profit enterprise which is
independently owned and operated and is not dominant in its
field.\"[^90] Nationwide, as of 1992, there were approximately 275,801
small organizations.[^91] \"Small governmental jurisdiction\"[^92]
generally means \"governments of cities, counties, towns, townships,
villages, school districts, or special districts, with a population of
less than 50,000.\"[^93] As of 1992, there were approximately 85,006
such jurisdictions in the United States.[^94] This number includes
38,978 counties, cities, and towns; of these, 37,566, or 96 percent,
have populations of fewer than 50,000.[^95] The Census Bureau estimates
that this ratio is approximately accurate for all governmental entities.
Thus, of the 85,006 governmental entities, we estimate that 81,600 (96
percent) are small entities. Below, we further describe and estimate the
number of small entity licensees and regulatees that will be affected by
the rule clarifications adopted in this *MO&O*.

7\. The rule clarifications adopted in this *MO&O* will affect small
entities that participate in the microwave relocation process in the
1850 MHz to 1990 MHz band: providers of broadband personal
communications service (PCS); providers of fixed microwave services; and
manufacturers of unlicensed PCS devices.

8\. [Broadband Personal Communications Service (PCS)]{.underline}. The
broadband PCS spectrum is divided into six frequency blocks designated A
through F, and the Commission has held auctions for each block. The
Commission defined \"small entity\'\' for Blocks C and F as an entity
that has average gross revenues of less than \$40 million in the three
previous calendar years.[^96] For Block F, an additional classification
for \"very small business\" was added and is defined as an entity that,
together with their affiliates, has average gross revenues of not more
than \$15 million for the preceding three calendar years.[^97] These
regulations defining \"small entity\'\' in the context of broadband PCS
auctions have been approved by the SBA.[^98] No small businesses within
the SBA-approved definition bid successfully for licenses in Blocks A
and B. There were 90 winning bidders that qualified as small entities in
the Block C auctions. A total of 93 small and very small business
bidders won approximately 40% of the 1,479 licenses for Blocks D, E, and
F.[^99] However, licenses for Blocks C through F have not been awarded
fully; therefore, there are few, if any, small businesses currently
providing PCS services. Based on this information, we estimate that the
number of small broadband PCS licensees will include the 90 winning C
Block bidders and the 93 qualifying bidders in the D, E, and F blocks,
for a total of 183 small entity PCS providers as defined by the SBA and
the Commission\'s auction rules.

9\. [Fixed Microwave Services]{.underline}. The Commission has not yet
defined a small business with respect to microwave services. For
purposes of this IRFA, we will utilize the SBA\'s definition applicable
to radiotelephone companies \-- *i.e.*, an entity with no more than
1,500 persons.[^100] The Commission's Office of Engineering and
Technology developed a study in 1992 that provides statistical data for
all microwave incumbents in 1850 to 1990 MHz band.[^101] Specifically,
the study finds that in the 1850 MHz to 1990 MHz band, local
governments, including public safety entities, have 168 licenses;
petroleum companies have 67 licenses; power companies have 164 licenses;
railroad companies have 18 licenses; and all other microwave incumbents
in this band have 143 licenses.[^102] However, the Commission does not
have specific statistics that determine how many of these companies are
small businesses. We therefore are unable to estimate the number of
fixed microwave service providers that qualify under the SBA's
definition.

10\. [Manufacturers of Unlicensed PCS Devices]{.underline}. The
Commission has not yet developed a definition of small entities
applicable to manufacturers of unlicensed PCS devices. Therefore, the
applicable definition of small entity is the definition under the SBA
applicable to the "Communications Services, Not Elsewhere" category \--
an entity with less than \$11.0 million in annual receipts.[^103] The
Census Bureau estimate indicate that of the 848 firms in the
"Communications Services, Not Elsewhere" category, 775 are small
businesses. The Commission does not have specific statistics, though, on
how many of these 775 small businesses are manufacturers of unlicensed
PCS devices.

IV\. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements

11\. This *MO&O* does not contain any additional reporting or
recordkeeping requirements. The *MO&O* does clarify several aspects of
the Commission's cost-sharing plan for microwave relocation, as
discussed in Section I above, but these clarifications do not create new
compliance obligations.

V. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered

12\. This *MO&O* clarifies certain aspects of the Commission's plan for
PCS market entrants to share the costs of relocating microwave
facilities from the 1850-1990 MHz band, as discussed in Section I above.
Under the Commission's cost-sharing plan, PCS relocators[^104] and
self-relocating fixed microwave incumbents that pay for the relocation
of microwave links are entitled to reimbursement from later-entrant PCS
entities[^105] that benefit from the clearing of the spectrum. A number
of the clarifications set forth in this *MO&O* will affect the amount of
reimbursement that a PCS relocator or self-relocating microwave
incumbent is entitled to receive under the plan and, conversely, the
amount of reimbursement that a later-entrant PCS entity is obligated to
pay. In some cases, the clarifications will result in an increase in
reimbursement, to the benefit of the PCS relocator or self-relocating
microwave incumbent; in other cases, the clarifications will result in a
decrease in reimbursement, to the benefit of the later-entrant PCS
entity. Because some entities on both sides of the reimbursement
equation are small businesses, we do not believe that, on the whole,
these clarifications to the cost-sharing plan will have a significant
economic impact on small businesses. We do believe that these
clarifications will make it easier for the affected regulated entities
to comply with our cost-sharing rules and, to some extent, reduce the
staff resources needed to handle compliance, a result that is especially
beneficial for small businesses.

13\. The *MO&O* also denies the remaining requests in the petitions
(retaining the status quo), including the requests by Tenneco,
Omnipoint, and SBT set forth in Section II above. We believe that the
remaining requests would require changes in the cost-sharing rules that
might undermine the integrity of the rules that PCS relocators,
later-entrant PCS entities, and microwave incumbents have relied on
since 1996 to effect the relocation from these bands. Thus, as discussed
in paragraph 8 of the *MO&O*, we conclude that granting these remaining
requests would not significantly advance our goal of promoting an
efficient and equitable relocation process as to outweigh the risks
associated with such rule changes.

[Report to Congress]{.underline}. The Commission will send a copy of
this *MO&O*, including this Supplemental FRFA, in a report to be sent to
Congress pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996, *see* 5 U.S.C. § 801(a)(1)(A). In addition, the Commission
will send a copy of this *MO&O*, including this Supplemental FRFA, to
the Chief Counsel for Advocacy of the Small Business Administration. A
copy of this *MO&O* and this Supplemental FRFA (or summaries thereof)
will also be published in the Federal Register. *See* 5 U.S.C. § 604(b).

[^1]: *See* Amendment to the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    RM-8643, *First Report and Order and Further Notice of Proposed
    Rulemaking*, 11 FCC Rcd 8825 (1996) (*First Report and Order*),
    *Second Report and Order*, 12 FCC Rcd 2705 (1997) (*Second Report
    and Order*). *See also* 47 C.F.R. §§ 24.239 - 24.253; 47 C.F.R. §§
    101.69 - 101.81.

[^2]: *See* Redevelopment of Spectrum to Encourage Innovation in the Use
    of New Telecommunications Technologies, ET Docket No. 92-9,
    RM-7981and RM-8004, *First Report and Order and Third Notice of
    Proposed Rulemaking*, 7 FCC Rcd 6886 (1992) (*Emerging Technologies
    First Report and Order*).

[^3]: *See* *id. See also* Redevelopment of Spectrum to Encourage
    Innovation in the Use of New Telecommunications Technologies, ET
    Docket No. 92-9, RM-7981and RM-8004, *Third Report and Order and
    Memorandum Opinion and Order*, 8 FCC Rcd 6589 (1993), *Memorandum
    Opinion and Order*, 9 FCC Rcd 1943 (1994).

[^4]: *See* Amendment of the Commission's Rules to Establish New
    Personal Communications Services, GEN Docket No. 90-314, RM-7140,
    RM-7175, RM-7618, *Memorandum Opinion and Order*, 9 FCC Rcd 4957
    (1994).

[^5]: *See id.* at 4990-91, ¶¶ 84-87. *See also* 47 C.F.R. §§ 15.301 -
    15.323. The Commission subsequently designated the Unlicensed PCS Ad
    Hoc Committee for 2 GHz Microwave Transition and Management ("UTAM")
    to coordinate relocation in the 1910-1930 MHz band. *See* Amendment
    of the Commission's Rules to Establish New Personal Communications
    Services, GEN Docket No. 90-314, *Fourth Memorandum Opinion and
    Order*, 10 FCC Rcd 7955 (1995).

[^6]: *See First Report and Order*, 11 FCC Rcd 8825.

[^7]: *See* *id.* at 8861-67, ¶¶ 71-85.

[^8]: *See* Amendment of the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    *Memorandum Opinion and Order*, 11 FCC Rcd 9394 (Wir. Tel. Bur.
    1996) (*Memorandum Opinion and Order*). We note that one party
    requested that the Commission take certain actions to facilitate the
    provision of advance notice from the clearinghouses to C block
    licensees of their potential reimbursement obligations resulting
    from earlier relocations funded by A and B block licensees. *See*
    Letter from Sylvia Lesse to the Commission's Commercial Wireless
    Division, dated July 28, 1997. Several parties filed comments on
    this issue. We believe that the record on this issue has become
    stale since the letter and comments were filed, and we have no
    indication that this continues to be a live issue. Accordingly, we
    decline to take action on this issue at this time.

[^9]: *See* *First Report and Order*, 11 FCC Rcd at 8878, Appendix A at
    ¶ 3; 47 C.F.R. § 24.243.

[^10]: *See* *Second Report and Order*, 12 FCC Rcd 2717-18, ¶¶ 25-28.
    The Commission sought comment on this issue in the *First Report and
    Order*, 11 FCC Rcd at 8871-72, ¶¶ 98-99.

[^11]: Parties filing petitions for reconsideration and/or clarification
    of the *First Report and Order* are as follows: (1) American
    Petroleum Institute (API); (2) Association of American Railroads;
    (3) Association of Public-Safety Communications
    Officials-International, Inc. (APCO); (4) AT&T Wireless Services,
    Inc., GTE Mobilnet, PCS PrimeCo, L.P., Pocket Communications, Inc.,
    Western PCS Corporation, and Cellular Telecommunications Industry
    Association (AT&T et al.); (5) Celsat America, Inc., COMSAT
    Corporation, Hughes Space and Communications International, ICO
    Global Communications, and Personal Communications Satellite
    Corporation (collectively, the MSS Coalition); (6) Omnipoint
    Communications, Inc. (Omnipoint); (7) Personal Communications
    Industry Association (PCIA); (8) Small Business in
    Telecommunications; (9) Tenneco Energy; and (10) UTC, The
    Telecommunications Association (UTC). All petitions were received on
    July 12, 1996, except for the petition of Small Business in
    Telecommunications, which was received on May 28, 1996. *See*
    Appendix A for a complete list of parties filing petitions,
    comments, and replies.

[^12]: Petition For Declaratory Ruling filed by Powertel PCS, Inc.,
    Sept. 26, 1997. *See also* Response filed by PCIA Microwave
    Clearinghouse, Oct. 24, 1997; Appendix A.

[^13]: Parties filing petitions for reconsideration and/or clarification
    of the *Second Report and Order* are as follows: (1) API; (2) UTC;
    and (3) the South Carolina Public Service Authority (Santee Cooper).
    Petitions by Santee Cooper and UTC were received on April 17, 1997,
    and the petition by API was received on April 16, 1997. *See*
    Appendix A for a complete list of parties filing petitions,
    comments, and replies.

[^14]: *See* note 11 *supra*.

[^15]: *See* *id.*

[^16]: *See* *id.*

[^17]: *See* note 12 *supra*.

[^18]: *See* MSS Coalition Petition at 2.

[^19]: *See First Report and Order*, 11 FCC Rcd at 8870, ¶ 92. The
    microwave relocation rules originally were adopted in the *Emerging
    Technologies* proceeding and were found to apply to all emerging
    technology services. *Emerging Technologies First Report and Order*,
    7 FCC Rcd 6886.

[^20]: *See First Report and Order*, 11 FCC Rcd at 8870, ¶ 92.

[^21]: *See* Amendment of Section 2.106 of the Commission's Rules to
    Allocate Spectrum at 2 GHz for Use by the Mobile-Satellite Service,
    ET Docket No. 95-18, *Second Report and Order and Second Memorandum
    Opinion and Order*, FCC 00-233 (released July 3, 2000) (*MSS
    Order*).

[^22]: *See, e.g.*, *MSS Order* at ¶ 94 (declining to maintain the right
    of return for relocated incumbents because of disruption to
    region-wide or world-wide satellite systems).

[^23]: *See, e.g.*, API Petition at 5-6; UTC Petition at 5-6; Tenneco
    Energy Petition at 9-11.

[^24]: *See* API Petition at 10-11.

[^25]: *See* Tenneco Energy Petition at 5-6.

[^26]: *See First Report and Order*, 11 FCC Rcd at 8832, ¶ 9.

[^27]: *See* Joint Petition of AT&T et al. at 3. *See also* note 11
    *supra*.

[^28]: *See* Powertel Petition at 1; note 12 *supra*. *See also First
    Report and Order*, 11 FCC Rcd 8884-85, ¶ 16; 47 C.F.R. § 24.247(a).
    Under Section 24.247(a), a reimbursement obligation arises when a
    fixed base station in a subsequent PCS licensee's network,
    regardless of location, falls within the Proximity Threshold
    rectangle described in the rule.

[^29]: Powertel relies on the chart in the *First Report and Order* to
    support its argument that a later-entrant PCS licensee is not
    obligated to reimburse a PCS relocator for the cost of relocating a
    link that is entirely within the PCS relocator's MTA or BTA. *See*
    Powertel Petition at 4; *First Report and Order* at Appendix A, ¶
    16. The narrow purpose of the chart was to illustrate a PCS
    relocator's rights to obtain reimbursement when it relocated
    *non-interfering links* that are *outside* its market area or
    licensed frequency band, for instance, as a part of the PCS
    relocator's effort to relocate an incumbent's entire microwave
    system. *See First Report and Order* at Appendix A, ¶ 16. The links
    relocated by the PCS relocator in the Powertel case do not fall into
    this category because they consist of *interfering links within* the
    PCS relocator's market area. As such, the *First Report and Order*
    chart cited by Powertel does not apply to these links. However, the
    Proximity Threshold test in Section 24.247(a) does.

[^30]: 47 C.F.R. § 24.247.

[^31]: *See First Report and Order*, 11 FCC Rcd at 8893, Appendix A at ¶
    33.

[^32]: For purposes of this *MO&O*, the terms "depreciation" or
    \"depreciates\" refer only to the factor in the cost sharing formula
    set forth in Section 24.243 that reduces the amount reimbursable to
    a PCS relocator or self-relocating microwave incumbent for every
    month that elapses between the date that the relocator or incumbent
    obtains reimbursement rights for that link and the date that a later
    entrant PCS entity incurs a reimbursement obligation for that link.
    *See* Section III.B.3 *infra*. The term is to be distinguished from
    \"depreciation\" as used in the context of accounting for the cost
    of a microwave incumbent's relocation, *i.e.*, depreciated cost or
    full replacement cost.

[^33]: *See First Report and Order*, 11 FCC Rcd at 8887, Appendix A at ¶
    23; 47 C.F.R. § 24.245(b); 61 Fed. Reg. 29679.

[^34]: *See* *Second Report and Order*, 12 FCC Rcd at 2717, ¶ 25; 47
    C.F.R. § 24.245; 62 Fed. Reg. 12752.

[^35]: *See* API Petition at 4-7; Santee Cooper Petition at 5-9; UTC
    Petition at 7-9. *See also* Southern Comments at 3-5.

[^36]: As the Commission noted in the *First Report and Order*, the
    Commission's microwave relocation rules adopted in ET Docket No.
    92-9 protect incumbents from system disruptions by requiring PCS
    relocators to provide incumbents with a seamless transition from
    their old facilities to the replacement facilities and to pay for
    additional costs associated with integrating the new links into the
    old system. *See* *First Report and Order*, 11 FCC Rcd at 8845-46, ¶
    37.

[^37]: *See Second Report and Order*, 12 FCC Rcd at 2718, ¶ 28.

[^38]: *See First Report and Order*, 11 FCC Rcd at 8887-8, Appendix A at
    ¶23; 61 Fed. Reg. 29679.

[^39]: *See* 47 C.F.R. § 24.243.

[^40]: *See* 47 C.F.R. § 24.243(b).

[^41]: *See* API Petition at 7-8.

[^42]: *See* PCIA Opposition at 8-9; UTAM Opposition at 5-6.

[^43]: *See* PCIA Opposition at 9; UTAM Opposition at 6.

[^44]: *See Second Report and Order*, 12 FCC Rcd at 2718, ¶ 28.

[^45]: *See id.* at 2717, ¶ 26; *First Report and Order*, 11 FCC Rcd at
    8862, ¶ 74.

[^46]: *See First Report and Order*, 11 FCC Rcd at 8880, Appendix A at ¶
    8; 47 C.F.R. § 24.243. *See also* note 32 *supra* for an explanation
    of "depreciation" in this context.

[^47]: *See* 47 C.F.R. § 24.243(d).

[^48]: *See* *id.*

[^49]: *See First Report and Order*, 11 FCC Rcd at 8862, ¶ 74.

[^50]: *See id.* at 8884, Appendix A at ¶ 16.

[^51]: *See* Amendment to the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    RM-8643, *Notice of Proposed Rulemaking*, 11 FCC Rcd 1923, 1937-38,
    ¶ 32 (1995) (*Notice*); *First Report and Order*, 11 FCC Rcd at
    8884, Appendix A at ¶ 16.

[^52]: *See Second Report and Order*, 12 FCC Rcd at 2718, ¶ 27.

[^53]: *See* API Petition at 9-11; Santee Cooper Petition at 9-12; UTC
    Petition at 2-5.

[^54]: *See Second Report and Order*, 12 FCC Rcd at 2718, ¶ 27.

[^55]: *See First Report and Order*, 11 FCC Rcd at 8884, Appendix A at ¶
    16; *Notice*, 11 FCC Rcd at 1937-38, ¶ 32.

[^56]: *See* paragraph 19 *supra*; 47 C.F.R. § 24.243(d).

[^57]: *See First Report and Order*, 11 FCC Rcd at 8882, ¶ 10.

[^58]: *See* 47 C.F.R. § 101.305. Under Section 101.305(b), an incumbent
    subject to regulation under Title II of the Communications Act is
    required to obtain authorization from the Commission before
    voluntarily discontinuing service. Under Section 101.305(c), an
    incumbent not subject to Title II regulation may voluntarily
    discontinue service without prior authorization, but must notify the
    Commission within seven days of doing so.

[^59]: In contrast, the date that the incumbent files an application for
    new facilities would not encompass incumbent relocations to wireline
    networks because under Section 63.01 of the Commission's rules,
    construction of new domestic transmission lines does not require
    prior authorization from the Commission, unless the transmission
    will use radio frequencies or the construction would have a
    significant effect on the environment as detailed in Section 1.1307
    of the Commission's rules. *See* 47 C.F.R. §§ 63.01, 1.1307.

[^60]: *See* Letter from Mark E. Crosby, Industrial Telecommunications
    Association, Inc., to David Furth, FCC, dated June 10, 1997, at 8.

[^61]: *See* 47 C.F.R. § 101.305.

[^62]: *See* 47 C.F.R. § 24.245(a)(2).

[^63]: *See* 47 C.F.R. § 24.245(a)(1).

[^64]: *See* API Petition at 5 n.2; Southern Company Comments at 5; UTC
    Comments at 7-8.

[^65]: *See* 47 C.F.R. § 101.305.

[^66]: *See* 47 C.F.R. §§ 24.243(d), 24.245(a).

[^67]: *See* 47 C.F.R. § 101.305. *See* note 58 *supra*.

[^68]: *See* 47 C.F.R. § 24.243.

[^69]: *See* 47 C.F.R. § 24.243(c).

[^70]: *See* API Petition at 11-12; UTC Petition at 6-7.

[^71]: *See* 5 U.S.C. § 601 *et seq.*

[^72]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et seq.*,
    has been amended by the Contract With America Advancement Act of
    1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (CWAAA). Title II of
    the CWAAA is the Small Business Regulatory Enforcement Fairness Act
    of 1996 (SBREFA).

[^73]: *See* Amendment to the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    RM-8643, *Notice of Proposed Rulemaking*, 11 FCC Rcd 1923 (1995)
    (*Notice*).

[^74]: *See* Amendment to the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    RM-8643, *First Report and Order and Further Notice of Proposed
    Rulemaking*, 11 FCC Rcd 8825, 8872-73, ¶¶ 101-105 (1996) (*First
    Report and Order*).

[^75]: *See* *id.* at 8870-72, ¶¶ 93-99, Appendix D.

[^76]: *See* Amendment to the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    RM-8643, *Second Report and Order*, 12 FCC Rcd 2705, 2728-31 (1997)
    (*Second Report and Order*).

[^77]: *See* *First Report and Order*, 11 FCC Rcd at 8861-67, ¶¶ 71-85.

[^78]: *See* *Second Report and Order*, 12 FCC Rcd 2717-18, ¶¶ 25-28.

[^79]: *See* Petition for Clarification and Partial Reconsideration of
    the *First Report and Order* in WT Docket No. 95-157, filed by
    Tenneco Energy, July 12, 1996, at 5-6; 47 C.F.R. §§24.249(b).

[^80]: *See* Comments of the Personal Communications Industry
    Association on Petitions for Reconsideration of the *First Report
    and Order* in WT Docket No. 95-157, filed August 8, 1996, at 4-5;
    Opposition of Omnipoint Communications, Inc. to Petitions for
    Reconsideration of the *First Report and Order* in WT Docket No.
    95-157, filed August 8, 1996, at 4-5 (Omnipoint Opposition).

[^81]: *See* Petition for Reconsideration and Clarification of the
    *First Report and Order* in WT Docket No. 95-157, filed by Omnipoint
    Communications, Inc., July 12, 1996, at 2-4.

[^82]: *See* Petition for Reconsideration of the *First Report and
    Order* in WT Docket No. 95-157, filed by Small Business in
    Telecommunications, May 28, 1996.

[^83]: *See, e.g*.*,* Petition for Partial Clarification and
    Reconsideration of the *First Report and Order* in WT Docket No.
    95-157, filed by the Association of American Railroads, July 12,
    1996, at 7-8.

[^84]: *See, e.g.*, Opposition of AT&T Wireless Services, Inc. to
    Petitions for Reconsideration of the *First Report and Order* in WT
    Docket No. 95-157, filed August 8, 1996, at 6-7 (AT&T Opposition);
    Omnipoint Opposition at 6-7; Opposition of Pacific Bell Mobile
    Services to Petitions for Reconsideration of the *First Report and
    Order* in WT Docket No. 95-157, filed August 8, 1996, at 5-6.

[^85]: AT&T Opposition at 7-8.

[^86]: 5 U.S.C. § 603(b)(3).

[^87]: 5 U.S.C. § 601(6).

[^88]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    \"small business concern\" in 15 U.S.C. § 632). Pursuant to the RFA,
    the statutory definition of a small business applies \"unless an
    agency, after consultation with the Office of Advocacy of the Small
    Business Administration and after opportunity for public comment,
    establishes one or more definitions of such term which are
    appropriate to the activities of the agency and publishes such
    definition(s) in the Federal Register.\" *Id.*

[^89]: Small Business Act, 15 U.S.C. § 632 (1996).

[^90]: 5 U.S.C. § 601(4).

[^91]: 1992 Economic Census, U.S. Bureau of the Census, Table 6 (special
    tabulation of data under contract to Office of Advocacy of the U.S.
    Small Business Administration).

[^92]: 47 C.F.R. § 1.1162.

[^93]: 5 U.S.C. § 601(5).

[^94]: U.S. Dept. of Commerce, Bureau of the Census, \"1992 Census of
    Governments.\"

[^95]: *Id.*

[^96]: *See* Amendment of Parts 20 and 24 of the Commission\'s Rules \--
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, *Report and Order*, WT Docket No. 96-59, 11
    FCC Rcd 7824, 7850-52, ¶¶ 57- 60 (1996) (*Spectrum Cap Report and
    Order*), 61 Fed. Reg. 33859 (Jul. 1, 1996); *see also* 47 CFR §
    24.720(b).

[^97]: *See* *Spectrum Cap* *Report and Order*, 11 FCC Rcd at 7852, ¶
    60.

[^98]: *See, e.g.*, Implementation of Section 309(j) of the
    Communications Act \-- Competitive Bidding, PP Docket No. 93-253,
    *Fifth Report and Order*, 9 FCC Rcd 5532, 5581-84 (1994).

[^99]: FCC News, "Broadband PCS, D, E and F Block Auction Closes," No.
    71744 (released Jan. 14, 1997).

[^100]: 13 C.F.R. § 121.201, Standard Industrial Classification (SIC)
    4812.

[^101]: *See* "Creating New Technology Bands for Emerging
    Telecommunications Technology," OET/TS 92-1 (January 1992).

[^102]: *Id.* at 8.

[^103]: 13 C.F.R. § 121.201, SIC Code 4899.

[^104]: PCS relocators can be broadband PCS providers or manufacturers
    of unlicensed PCS devices.

[^105]: Later-entrant PCS entities can be broadband PCS providers or
    manufacturers of unlicensed PCS devices.