Insights into 2.1 GHz Relocation Negotiations
September 01, 2010
By C. Douglas Jarrett
In 2006, wireless carriers bid almost $14 billion or more for the AWS spectrum, which includes half of the 2.1 GHz band. The wireless community is now well into the fourth year of the 2.1 GHz relocation process. Verizon Wireless, one of the largest AWS-1 auction winners, and Cox Communications are now approaching incumbents to initiate relocation negotiations.
In the 2.1 GHz relocation process, the winners in Auction 66, AWS-1, compensate licensees of 2.1 GHz fixed microwave systems (FMS) — the incumbents — to migrate to replacement facilities or services. FMS licensees include state and county public-safety agencies and critical-infrastructure companies, such as petroleum firms, pipeline operators and utilities. To retain negotiation rights, incumbents must maintain primary status by keeping their 2.1 GHz systems operational and renewing, but not modifying, their licenses.
All the relocation negotiation rules continue to apply, including the rolling two-year mandatory negotiation period, and the rights of incumbents to:
• Demand full system replacement as opposed to the “interfering links” sought by the Advanced Wireless Services (AWS) licensees;
• Retain primary status until late 2016 if a frequency relocation agreement (FRA) isn’t finalized with a AWS licensee; and
• Self-relocate and file costs with a clearinghouse to preserve the possibility of being compensated to some extent in the future if the incumbent’s 2.1 GHz system must be replaced and no carrier is requesting to negotiate a frequency relocation agreement (FRA).
A number of trends have developed. One AWS carrier has resorted to initiating negotiations, and if the incumbent doesn’t agree to its low-ball offer, ceases to negotiate and re-engineers its system to minimize the likelihood of interference to the incumbent's system. Another AWS auction winner is demanding an intrusive disclosure statement from the incumbent after the FRA is executed.
As to the FRAs, the major issues remain the scope (systemwide or something less), cash payment versus turnkey replacement facilities, the assumption of recordkeeping obligations by incumbents, the timing for cash payments and overly broad indemnity obligations the wireless carriers’ look to impose on incumbents.
Douglas Jarrett is a partner with Keller and Heckman, representing critical-infrastructure industry (CII) companies, state and local governments, and other entities before the FCC and on related telecommunications matters. As part of Jarrett’s wireless practice, he represents CII firms in acquiring spectrum to meet voice and broadband communications requirements from FCC auction winners and advises CII firms on spectrum opportunities, including FCC spectrum auctions. Contact Jarrett at firstname.lastname@example.org