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P ? q   s    `   '  E&BD&" %E&&E&B& D&f % D&" F    '' 88 WW L;;;L;F  ;F; ; F;F ?#&H&c'H&u&F jaFaA%,aS #*X0 PT6UUP#48 km P  a48 kmA%,!#*X0 PT6UUP#48 km P  48 kmA%, "%#*X0 PT6UUP#24 km P   "24 kmA%,!% #*X0 PT6UUP#24 km P  ! 24 km@$+  #*X0 PT6UUP#Node P   Node@$+  #*X0 PT6UUP#Node P   Node=!(#*X0 PT6UUP#X P  X=!(( ) #*X0 PT6UUP#Y P  ( YF E&S D&2% E& & E&S &D&v%D&2 X'   $//R&O, Plan for Sharing the Costs of Microwave Relocation, FCC 96196//$ $/ 15.307, Coordination with fixed microwave service/$ $/ 22.602, Transition of the 21102130 and 21602180 MHz Channel to emerging technologies/$ $/ 24.239, CostSharing Requirements for Broadband PCS/$ FOR RECORD ONLY\ ` `   X14    Before the  X 4aFEDERAL COMMUNICATIONS COMMISSION(#(#FCC 96196 Washington, D.C. 20554  X4Amendment to the Commission's Rulesq)WT Docket No. 95157  Xy4Regarding a Plan for SharinghhCq)RM8643  Xb4the Costs of Microwave RelocationhhCq)  X4Br FIRST REPORT AND ORDER AND  X40FURTHER NOTICE OF PROPOSED RULE MAKING \ Comment Date: May 28, 1996 Reply Comment Date: June 7, 1996 Adopted: April 25, 1996 Released: April 30, 1996 By the Commission: Chairman Hundt and Commissioner Quello issuing separate statements. " xxx"Ԍ X-  X-P Table of Contents  X - \  X!-~  Paragraph (#\  X#- I.XINTRODUCTION (#p"(# 1 à  XQ%-II.EXECUTIVE SUMMARY p"(#2  X#'- III.XBACKGROUND (#p"(#3  X(- IV.X FIRST REPORT AND ORDER (#"(0*0*0*'"Ԍ X-ԙA. Microwave Relocation Rulesp`"(#10 ` ` 1. Voluntary Negotiationsp`"(#10 ` ` 2. Mandatory Negotiationsp`"(#16 ` ` 3. Involuntary Relocationp`"(#23 ` `  a. Comparable Facilitiesp`"(#24 ` `  b. Relocating Individual Linksp`"(#35 ` `  c. Transaction Expensesp`"(#39 ` `  d. TwelveMonth Trial Periodp`"(#44  XH-` `  e. Request for Clarification of Involuntary Relocation Proceduresp`"(#51 ` ` 4. Public Safety Certificationp`"(#53 ` ` 5. Dispute Resolutionp`"(#58 ` ` 6. Ten Year Sunsetp!(# 60  X -B. CostSharing Planp`"(#69 ` ` 1. Overviewp`"(#69 ` ` 2. Dispute Resolution Under the CostSharing Planp`"(#78 ` ` 3. Administration of the CostSharing Planp`"(#81 C. Licensing Issuesp`"(#86 D. Application to Other Emerging Technology Licenseesp`"(#90  XK- V. FURTHER NOTICE OF PROPOSED RULE MAKING p`"(#93  X- VI.XCONCLUSION (#p!(#100 à  X-  X- VII.XPROCEDURAL MATTERS(#  X- XA. Regulatory Flexibility Act(#p!(#101 B. Ex Parte Rulesp!(#106 C. Comment Periodp!(# 107 XD. Authority(#p!(#108 E. Ordering Clausesp!(#109 XF. Further Information(#p!(#120  X - APPENDIX A Mechanics of the CostSharing Plan  X -APPENDIX B Final Rules  X-APPENDIX C List of Commenters  X- APPENDIX D Initial Regulatory Flexibility Analysis  X -  X!- "!0*(( "  X-   I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a) MII. INTRODUCTION ă  X-    X-1. By this First Report and Order and Further Notice of Proposed Rule Making, we  X-change and clarify certain aspects of the microwave relocation rules adopted in our Emerging  X-Technologies proceeding, ET Docket No. 929. We also adopt a plan for sharing the costs of relocating microwave facilities currently operating in the 1850 to 1990 MHz ("2 GHz") band, which has been allocated for use by broadband Personal Communications Services ("PCS"). Our plan establishes a mechanism whereby PCS licensees that incur costs to relocate microwave links receive reimbursement for a portion of those costs from other PCS licensees that also benefit from the resulting spectrum clearance. We condition the costsharing plan, however, on selection of one or more entities or organizations to administer the plan. Finally,  X -we seek further comment on whether to adjust the negotiation periods by shortening the voluntary negotiation period and lengthening the mandatory negotiation period for the D, E, and F blocks, and whether the negotiation periods for the C block should be subject to the same adjustment. We also seek comment on whether microwave incumbents should be permitted to seek reimbursement from PCS licensees through participation in the costsharing  X-plan. We believe that the rules adopted and proposed herein, along with the implementation of an industry sponsored costsharing plan, will expedite the clearing of the 2 GHz band in an equitable and efficient manner.  XS-X` hp x (#%'0*,.8135@8: yO='-ԍ PCIA Comments at 20.> Western Wireless Corporation asserts, however, that requiring such estimates" @0*((" during the voluntary period as it now stands would be an exercise in frustration, because the  X-parties are not even obligated to negotiate in good faith during the voluntary period.J yOb-ԍ Western Wireless Comments at 16.J Microwave incumbents argue that adopting such a requirement would impose an affirmative obligation on the parties during the voluntary period, which contradicts the voluntary nature of  X-this period.X {O-ԍ See, e.g., API Comments at 16; UTC Comments at 26; Valero Comments at 5; City of Dallas Reply Comments at 4. ` `   Xv- 13. Discussion. We agree with commenters who argue that the public interest would not be served by changing the rules regarding the voluntary period for the A and B blocks at  XH-this time.vH {O -ԍ See, e.g., API Comments at 4, AAR Comments at 4, APCO Comments at 35.v First, the A and B block licensees who are now negotiating with incumbents were on notice of the voluntary period when they bid for their licenses, and they presumably have factored the length of the period and the potential cost of relocation into their bids. They have offered no persuasive justification to shorten the period now. Second, we note that many voluntary agreements have already been reached or are now being negotiated between A and B block licensees and incumbents. We are concerned that altering the voluntary period could inadvertently delay the deployment of PCS, because negotiations are likely to be interrupted while parties reassess their bargaining positions. Nevertheless, we agree with PCS licensees that changing the negotiation period for blocks other than the A and B blocks may not raise the same concerns, because negotiations in these blocks have not commenced. Therefore, in  Xb-the Further Notice of Proposed Rule Making below, we seek comment on the possibility of adjusting the voluntary and mandatory negotiation periods for the D, E, and F blocks. We also seek comment on whether the same adjustments should be made to the negotiation periods for the C block.  X- 14. Whether or not the negotiation periods are changed, we also agree with PCS licensees that additional information about the value of an incumbent's system, the estimated amount of time it would take to relocate the incumbent, and the anticipated cost of relocation  X-may help facilitate negotiations during the voluntary period, as we suggested in the Cost X-Sharing Notice. D {O -ԍ CostSharing Notice, 11 FCC Rcd at 1959,  78; see, e.g., PCIA Comments at 20; PrimeCo Reply Comments at 10; BellSouth Comments at 1112. Therefore, we require that, if the parties have not reached an agreement within one year after the commencement of the voluntary period, the incumbent must allow the PCS licensee, if the PCS licensee so chooses, to gain access to the microwave facilities to be relocated so that an independent third party can examine the incumbent's 2 GHz system and prepare an estimate of the cost and the time needed to relocate the incumbent to comparable facilities. The PCS licensee must pay for any such cost estimate. Because the oneyear anniversary of the commencement of the voluntary period for A and B block licensees has already passed, this requirement shall become effective for the A and B block on the effective"  0*((Z" date of the rules adopted in this proceeding. We disagree with incumbents that a cost estimate paid for by the PCS licensee changes the nature of the voluntary period, because participation in negotiations remains voluntary.  X-15. Finally, although we are not altering the basic structure or length of the voluntary period for A and B block PCS licensees, we emphasize that our rules provide incentives for voluntary agreements. We have stated in the past that PCS licensees may choose to offer  X_-incumbents premiums to relocate quickly.w!_ {O-ԍ See, e.g., CostSharing Notice, 11 FCC Rcd at 1927,  6.w "Premiums" could include: replacing the analog facilities with digital facilities, paying all of the incumbent's transactions costs, or relocating an entire system as opposed to just the interfering links. These incentives are available only to microwave incumbents who consent to relocation by negotiation. By contrast, PCS licensees  X -are not obligated to pay for such premiums during an involuntary relocation, which is  X -discussed in Section IV(A)(3), infra.  X - ` `  X - 2. Mandatory Negotiations  X -  X- 16. Background. If a relocation agreement is not reached during the voluntary period, the PCS licensee may initiate a mandatory negotiation period. Like the voluntary period, the mandatory period is intended as a period of negotiation between the parties resulting in a contractual relocation agreement. The major difference between the voluntary period and the mandatory period is that (1) an incumbent may not refuse to negotiate once the mandatory  X-period has commenced, and (2) the parties are required to negotiate in good faith."Z {O*-ԍ 47 C.F.R.  94.59(b); see also ET Third Report and Order, 8 FCC Rcd at 6595,  15.  X-17. PCS licensees have requested that we provide guidance with respect to what  X-constitutes good faith in the context of mandatory negotiations. In the CostSharing Notice, we proposed that, for purposes of the mandatory period, an offer by a PCS licensee to replace a microwave incumbent's system with comparable facilities would be considered a good faith offer; whereas, failure on the part of an incumbent to accept an offer of comparable facilities  X-would create a rebuttable presumption that the incumbent is not acting in good faith.g# {O-ԍ CostSharing Notice, 11 FCC Rcd at 1955,  69.g We also sought comment on the appropriate penalty to impose on a licensee who does not  XR-negotiate in good faith during the mandatory period.3$R~ {O"-ԍ Id.3  X;- ` `  X$-18. Comments. PCS licensees support clarification of how the term good faith will be applied during the mandatory negotiation period, because they believe that additional guidance"  $0*((y"  X-will facilitate negotiations.% {Oy-ԍ See, e.g., DCR Comments at 9; GTE Comments at 17 ; PacBell Comments at 9; PCIA Comments at 16;  yOC- STV Comments at 18; US Airwaves Comments at 9; UTAM Comments at 14. CTIA also encourages us to establish rules which declare that demands by microwave incumbents that exceed twice the cost of comparable facilities are  X-prima facie unreasonable and are evidence of bad faith during the mandatory period.=&" yO-ԍ CTIA Comments at 9.=  Furthermore, many PCS licensees argue that they should not have to pay to relocate an  X-incumbent that does not negotiate in good faith.' {O -ԍ See, e.g., PacBell Comments at 910; PrimeCo Comments at 17; UTAM Comments at 14. CTIA recommends that microwave incumbents who fail to negotiate in good faith should have their licenses revoked and should  Xx-lose their right to be relocated to new spectrum.=(xD yOm -ԍ CTIA Comments at 9.= PCIA suggests that, if the incumbent fails to negotiate in good faith, the relocating PCS provider should only be required to tender a cash payment to the incumbent in an amount not to exceed the greater of two independent  X3-appraisals of what constitutes comparable replacement facilities.A)3 yO-ԍ PCIA Comments at 1617.A U.S. Airwaves contends that it is premature to decide what penalty to apply if either party refuses to negotiate in good  X -faith.F* d  yO-ԍ U.S. AirWaves Comments at 9.F  X -19. By contrast, microwave incumbents argue that the clarification we proposed reflects an improper level of government management of negotiations and has no rightful place  X -in the Commission's rules.+  {ON-ԍ AAR Comments at 14; see also County of Los Angeles at 4; APCO Comments at 5. They also claim that enforcement of such a standard would be  X-administratively burdensome on the Commission and may delay the relocation process.k,  {O-ԍ SoCal Comments at 1819; see also APCO Comments at 5.k Moreover, they assert that clarification of the term good faith is unnecessary, because local, state, and federal laws and regulations already govern how the term is applied in the context of  XM-contract negotiations.O-M {O!-ԍ See, e.g., NRECA Comments at 6.O Commenters also express uncertainty and confusion over how our proposed clarification of the term good faith would apply in practice. For example, incumbents voice concern over whether a counteroffer by an incumbent would constitute an act  X-of bad faith.. {Oc%-ԍ See, e.g., UTC Reply Comments at 21; AAR Comments at 14; APPA Comments at 3; County of LA Comments at 4; Tenneco Comments at 8. In addition, incumbents claim that the proposed clarification is onesided./ {O-ԍ See, e.g., AAR Comments at 14; APPA Comments at 3, Tenneco Comments at 8; UTC Comments at 1819; API Reply Comments at 1415. " "/0*((d" They suggest that, if the provision is retained, a reciprocal obligation of good faith should be  X-imposed on PCS licensees, which would require them to accept the incumbent's assessment of  X-what constitutes comparable facilities.30" {O-ԍ Id.3 Finally, microwave incumbents emphasize that the same penalties that apply to them should also be imposed on PCS licensees who fail to  X-negotiate in good faith.T1 {O -ԍ See, e.g., UTC Reply Comments at 21.T   Xv-20. Discussion.  As the comments on this issue demonstrate, the question of whether parties are negotiating in good faith typically requires consideration of all the facts and circumstances underlying the negotiations, and thus is likely to depend on the specific facts in  X1-each case.V21F {O(-ԍ See, e.g., County of Los Angeles at 4.V We are concerned that creating a presumption that a party is acting in good or  X -bad faith, as proposed in the CostSharing Notice, may slow down resolution of disputes by prompting parties to bring claims of "bad faith" to the Commission prematurely rather than  X -focusing on resolving the underlying disputes through the negotiation process.d3  {Ow-ԍ See, e.g., SoCal Comments at 18; APCO Comments at 5.d For these reasons, we decline to adopt our proposal creating a presumption that a party who declines an offer of comparable facilities is acting in bad faith. Instead, we conclude that good faith  X -should be evaluated on a casebycase basis under basic principles of contract law.O4 j  {O-ԍ See, e.g., NRECA Comments at 6.O Nevertheless, we agree with those commenters who suggest that guidance with respect to the  X{-factors we will consider if a dispute arises over good faith would be helpful.W5{  {O(-ԍ See, e.g., U.S. Airwaves Comments at 9.W  XM-21. First, we believe that good faith requires each party to provide information to the other that is reasonably necessary to facilitate the relocation process. For example, upon request by a PCS licensee, we expect incumbents to allow inspection of their facilities by the PCS licensee and to provide any other information that the PCS licensee needs in order to evaluate the cost of relocating the incumbent to comparable facilities. Second, when  X-evaluating claims that a party has not negotiated in good faith, we will consider, inter alia, the  X-following factors: (1) whether the PCS licensee has made a bona fide offer to relocate the incumbent to comparable facilities; (2) if the microwave incumbent has demanded a premium,  X-the type of premium requested (e.g., whether the premium is directly related to relocation, such as systemwide relocations and analogtodigital conversions, versus other types of premiums) and whether the value of the premium as compared to the cost of providing comparable"m 50*((1"  X-facilities is disproportionate (i.e., whether there is a lack of proportion or relation between the two); (3) what steps the parties have taken to determine the actual cost of relocation to comparable facilities; and (4) whether either party has withheld information requested by the other party that is necessary to estimate relocation costs or to facilitate the relocation process.  X-22. To ensure that parties do not bring frivolous bad faith claims, we will also require  Xx-any party alleging a violation of our good faith requirement to provide an independent estimate of the relocation costs of the facilities in question. Independent estimates must include a specification for the comparable facility and a statement of the costs associated with providing that facility to the incumbent licensee. These cost estimates are similar to the cost estimates that we require if a dispute arises over comparable facilities during the involuntary relocation  X -period.{6  {O~ -ԍ ET Second Memorandum Opinion and Order, 9 FCC Rcd at 7801,  2931. { We believe that requiring such estimates will assist us in determining whether the parties are negotiating in good faith. Finally, we agree with those commenters who argue that  X -penalties for failure to negotiate in good faith should be imposed on a casebycase basis.s7 Z {O-ԍ See, e.g., AAR Comments at 14; County of Los Angeles Comments at 4.s We emphasize, however, that we intend to use the full realm of enforcement mechanisms  X -available to us in order to ensure that licensees bargain in good faith.X8  {OF-ԍ See, e.g., 47 U.S.C.  312, 503. X  X{- 3. Involuntary Relocation   XM- 23. If no agreement is reached during either the voluntary or mandatory negotiation  X6-period, a PCS licensee may initiate involuntary relocation procedures.?96~ yOe-ԍ 47 C.F.R.  94.59.? Under involuntary relocation, the incumbent is required to relocate, provided that the PCS licensee meets the  X-conditions under our rules for making the incumbent whole, such as providing the incumbent  X-with comparable facilities.B: yO-ԍ 47 C.F.R.  94.59(c).B  X- ` ` a. Comparable Facilities  X-  X- 24. Background. Our rules require PCS licensees to provide microwave incumbents  X~-with comparable facilities as a condition for involuntary relocation.;~ {O#-ԍ See 47 C.F.R.  94.59(c)(3); see also ET Third Report and Order, 8 FCC Rcd at 6591,  5. In the Emerging  Xi-Technologies docket, we stated that, in any case brought to us for resolution, we would require  XT-that facilities be equal to or superior to existing facilities to be considered comparable.3<T0  {O5'-ԍ Id.3 To"T <0*(("  X-determine comparability, we said that we would consider, inter alia, system reliability, capability, speed, bandwidth, throughput, overall efficiency, bands authorized for such services,  X-and interference protection.3= {OM-ԍ Id.3 PCS licensees subsequently urged us to specify the elements that  X-constitute a comparable facility in order to remove ambiguity and expedite negotiations.>Z {O-ԍ See CostSharing Notice at 1956,  71 (discussing requests by McCaw and Southwestern Bell for further clarification of what constitutes comparable facilities).  X-25. In the CostSharing Notice, we proposed to clarify the definition of comparable facilities by using the following three factors to determine when a facility is comparable:  Xc-communications throughput, system reliability, and operating cost.a?c {O -ԍ CostSharing Notice, 11 FCC Rcd at 1957,  73.a We defined  XN-communications throughput as the amount of information transferred within the microwave  X9-system for a given amount of time, system reliability as the amount of time it takes for  X$ -information to be accurately transferred within the system, and operating cost as the cost to  X -operate and maintain the system.?@ F {O-ԍ Id. at  74.? Thus, we proposed that a replacement facility would be presumed comparable if the new system's communications throughput and reliability are equal to or greater than that of the system to be replaced, and the operating costs of the replacement  X -system are equal to or less than those of the existing system. We also suggested that comparable replacement facilities could be provided by "trading off" system parameters, which would permit the PCS licensee to compensate for certain factors by substituting others,  X-provided that overall comparability is achieved in the three essential areas we have identified.A yO-ԍ We stated that communications throughput may be increased by using equipment with a more efficient modulation technique, and system reliability may be improved by using better equipment, by adding redundancy  {O-in system design (e.g., multiple receive antennas), or by providing additional coding, such as forward error correction. As an example of a tradeoff, we suggested that obtaining the same throughput with the same reliability might be possible by using a more efficient modulation technique, even though a smaller bandwidth is  {O-used. CostSharing Notice, 11 FCC Rcd at 1958,  75.   XY-26. Comments. Overall, microwave incumbents, PCS licensees, and other commenters agree that the three factors we identified are the most critical for purposes of determining  X+-comparability.B+T  {O0"-ԍ See, e.g., UTC Comments at 2021; APPA Comments at 3; CIPCO Comments at 21; GTE Comments at 18; PacBell Comments at 7; Southern Comments at 10; UTAM Comments at 15. PCS licensees support clarification as a means of adding certainty to the process, facilitating negotiations, and reducing the number of disputes that may otherwise  X-arise.yC {O\&-ԍ See, e.g., DCR Comments at 10; GTE Comments at 17; PacBell Comments at 7.y Although microwave incumbents generally agree that we have identified the three most important factors of comparability, they express concern that permitting PCS licensees to trade"@C0*(("  X-off system parameters will allow them to compromise on certain aspects of comparability by  X-attempting to compensate with other factors.kD {Ob-ԍ See, e.g., APPA Comments at 6; UTC Comments at 2021.k More specifically, incumbents argue that PCS licensees should not be permitted to cut corners on one aspect of comparability, such as  X-reliability, and make up for it in another aspect, such as operating costs or throughput.NEZ {O-ԍ See, e.g., API Comments at 13.N UTC contends that PCS licensees do not have sufficient knowledge or expertise regarding the  X-incumbent's operational requirements to dictate appropriate tradeoffs.@F yO* -ԍ UTC Comments at 2223.@ By contrast, PCS licensees emphasize that permitting parties to tradeoff system parameters promotes  X_-flexibility.OG_| {O -ԍ See, e.g., UTAM Comments at 16.O They stress that comparability should be defined in terms of functionality and  XH-performance, rather than whether an offer is made to provide identical equipment.HH {O-ԍ See, e.g., DCR Comments at 10; CTIA Comments at 910; GTE Comments at 18; PCIA Comments at 18.  X -27. Discussion. We conclude that the factors we identified communications throughput, system reliability, and operating costs will be the three factors used to determine  X -when a facility is comparable. As we stated in the CostSharing Notice, we believe that providing guidance with respect to the term comparable facilities will facilitate negotiations  X -and reduce disputes.aI  {O-ԍ CostSharing Notice, 11 FCC Rcd at 1956,  72.a The record in this proceeding also supports adoption of the factors we have identified. Each factor is discussed in more detail below.   X{-28. Throughput. We define communications throughput as the amount of information transferred within the system in a given amount of time. For analog systems the throughput is measured by the number of voice channels, and for digital systems it is measured in bits per second ("bps"). Therefore, if analog facilities are being replaced by analog facilities, the PCS licensee will be required to provide the incumbent with an equivalent number of 4 kHz voice channels. If an existing digital system is being replaced by digital facilities, the PCS licensee will be required to provide the incumbent with equivalent data loading bps in order for the system to be considered comparable. We agree with commenters that the more difficult issue will be determining equivalent throughput when analog equipment is being replaced with  X-digital equipment, which can be like comparing "apples with oranges."PJ2  {O#-ԍ See, e.g., AUE Comments at p. 5.P If disputes arise, we will determine on a casebycase basis whether comparable throughput has been achieved. For guidance, we plan to refer to other parts of our rules where analogdigital comparisons have been made, such as the minimum channel loading requirements for fixed pointtopoint"i J0*((O"  X-microwave systems in Section 21.710(d).KK yOy-ԍ 47 C.F.R.  21.710(d). K  X-29. We also conclude that, during involuntary relocation, PCS licensees will only be required to provide incumbents with enough throughput to satisfy their needs at the time of relocation, rather than to match the overall capacity of the system, as some microwave  X-incumbents suggest.=LX yO-ԍ API Comments at 13.= For example, we will not require that a 2 GHz incumbent with 5 MHz of bandwidth be relocated to a 5 MHz bandwidth, 6 GHz location when its current needs only justify a 1.25 MHz bandwidth system. If a dispute arises, we will determine what an incumbent's needs are by looking at actual system use rather than total capacity at the time of relocation. We expressly adopted channelization plans for the 6 GHz band with bandwidth requirements ranging from 400 kHz to 30 MHz to increase the efficiency of use by pointtopoint microwave operations. Although we recognize that this policy may affect an incumbent's ability to increase its capacity over time, we agree with PCS licensees that the public interest would not be served if spectrum is automatically held in reserve for all  X -incumbents with the expectation that some may require additional capacity in the future.TM  {OW-ԍ See, e.g.,Western Comments at 1314.T Our goal is to foster efficient use of the spectrum, which would be thwarted if all incumbents are relocated to systems with capacity that exceeds their current needs. Also, limiting spectrum to current needs serves the public interest, because we believe that it will promote the development of spectrumefficient technology capable of increasing capacity without increasing bandwidth.   X-30.   Reliability. We define system reliability as the degree to which information is  X-transferred accurately within the system. As stated in the CostSharing Notice, the reliability  X-of a system is a function of equipment failures (e.g., transmitters, feed lines, antennas, receivers, battery backup power, etc.), the availability of the frequency channel due to  X-propagation characteristic (e.g., frequency, terrain, atmospheric conditions, radiofrequency noise, etc.), and equipment sensitivity. We define comparable reliability as that equal to the overall reliability of the incumbent system, and we will not require the system designer to build the radio link portion of the system to a higher reliability than that of the other components of the system. For example, if an incumbent system had a radio link reliability of 99.9999 percent, but an overall reliability of only 99.999 percent because of limited battery backup power, we require that the new system have a radio link reliability of 99.999 percent to be considered comparable. For digital data systems this would be measured by the percent of time the bit error rate ("BER") exceeds a desired value, and for analog or digital voice  X-transmissions this would be measured by the percent of time that audio signal quality met an"zM0*((<"  X-established threshold.Nx yOy-ԍ Under this approach, for a replacement digital systems to be comparable, the data rate throughput must be equal to or greater than that of the incumbent system with an equal or greater reliability. For example, an incumbent system with a data rate of 10 Mbps with a BER of .0001 would have to be replaced with a system of at least these rates to be comparable. For analog systems, an equivalent or greater number of voice or data channels with an equivalent or greater reliability would have to be provided to have a comparable facility. For example, an incumbent system that provided 24 voice channels with a reliability of 99.9999 percent would have to be replaced with a system of at least an equivalent number of channels and reliability.  If an analog voice system is replaced with a digital voice system the resulting frequency response, harmonic distortion, signaltonoise ratio, and reliability would be the factors considered. We decline to adopt AUE's request that we include a "system age" component that takes into account how the age of a given system can affect system reliability,  X-because we do not have enough information to determine how age will affect a given system.<O yO] -ԍ AUE Comments at 6.< Moreover, we believe that older equipment of high quality may be as reliable as newer equipment of low quality.  XH-31. Operating Costs. We define operating costs as the cost to operate and maintain the  X3-microwave system. These costs fall into several categories. First, the incumbent must be  X -compensated for any increased recurring costs associated with the replacement facilities (e.g., additional rental payments, increased utility fees). Although we originally proposed that  X -recurring costs should be limited to a tenyear license term,aP  {O9-ԍ CostSharing Notice, 11 FCC Rcd at 1957,  74.a we are persuaded by PCS licensees that a fiveyear time period which is the length of a microwave license in the  X -18501990 MHz band ?Q *  yO-ԍ 47 C.F.R.  94.39.? is a more appropriate time frame, because it strikes an appropriate balance between the burden placed on PCS licensees who must relocate many incumbents, and  X-the burden placed on incumbents that are being forced to relocate.)R\  {O-ԍ See, e.g., PCIA Comments at 19 (stating that reimbursement for increased costs should be limited to a  {O-single fiveyear term, because the term of a microwave license is typically five years.); see also PacBell Comments at 7.) Furthermore, we believe that the fiveyear time period is not unfair to incumbents because, by five years from now, many incumbents would have been forced to bear some of these costs themselves such as  XO-increased rents if they had not already been relocated by PCS licensees. Moreover, we are also persuaded that a fiveyear time period provides incumbents with sufficient time for budget  X!-planning and resource allocation to meet such expenses once the fiveyear period expires. Finally, we conclude that a PCS licensee is permitted but not required to satisfy its obligation by making a lumpsum payment based on present value using current interest rates, as  X-suggested by some incumbents.fS {Ok&-ԍ See, e.g., CIPCO Comments at 12; NRECA Comments at 6.f "pS0*(("Ԍ X-32. Second, increased maintenance costs must be taken into consideration when determining whether operating costs are comparable. As several commenters point out, maintenance costs associated with analog systems are frequently higher than the costs for equivalent digital systems, because manufacturers are producing mostly digital equipment and  X-analog replacement parts can be difficult to find.bT {O-ԍ See, e.g., API Comments at 17; APCO Comments at 6.b We decline to adopt API's suggestion that  X-"serviceability" which would require that access to those elements essential to restoration of service be equal to or greater than the original system should be adopted as a fourth  X_-element, however, because we believe that the ease of servicing the equipment will affect  XH-repair costs, which will be factored into operating costs.=UHZ yOS -ԍ API Comments at 14.= Furthermore, we agree with incumbents that, in some instances, the operating costs of 6 GHz analog equipment might be  X -so high that analog replacement facilities would not qualify as comparable.cV  {O-ԍ See e.g., API Comments at 1314, AUE Comments at 4.c On the other hand, if an available analog replacement system would provide equivalent technical capability without increasing the incumbent's operating costs or sacrificing any of the other factors we  X -have identified, we agree with PCS licensees that such an analog system would be acceptable.jW | {O-ԍ See, e.g., PrimeCo Comments at 18; PCIA Comments at 2021.j In sum, our goal is to ensure that incumbents are no worse off than they would be if relocation were not required, not to guarantee incumbents superior systems at the expense of PCS licensees.  Xb- 33. Trade Offs. We also conclude that comparable replacement facilities may not be  XM-provided by trading off any of the system parameters discussed above.  Thus, we agree with incumbents that PCS licensees should not be permitted to compromise on one aspect of comparability, such as system reliability, by compensating with another factor, such as  X -increased throughput.NX  {O-ԍ See, e.g., API Comments at 13.N Based on the record in this proceeding, we believe that the factors we  X-have identified are central to the concept of comparability, and therefore the replacement system provided to an incumbent during an involuntary relocation must be at least equivalent to the incumbent's existing system with respect to system reliability, throughput, and operating  X-costs.Y {O!-ԍ See, e.g., UTC Comments at 2021; APPA Comments at 3; CIPCO Comments at 21; GTE Comments at 18; PacBell Comments at 7; Southern Comments at 10; UTAM Comments at 15. However, other aspects of the system (e.g., bandwidth) do not have to be equivalent to the incumbent's original 2 GHz system. As PCS licensees point out, it might be possible to achieve comparability with respect to the three main factors, even though all of the features on  Xk-the replacement equipment are not identical to those of the original system.Zk  {O'-ԍ See, e.g., DCR Comments at 10; CTIA Comments at 910: GTE Comments at 18; PCIA Comments at 18. Other media,"k Z0*((1"  X-such as land lines, would also be acceptable, provided that comparability is achieved.    X-!34. Depreciation. In the CostSharing Notice, we also sought comment on whether and how depreciation of equipment and facilities should be taken into account, and whether it would be appropriate for a PCS licensee to compensate an incumbent only for the depreciated  X-value of the old equipment.a[ {O-ԍ CostSharing Notice, 11 FCC Rcd at 1959,  77.a Some PCS licensees contend that depreciation should be taken into account during the mandatory period as a means of encouraging incumbents to accept  Xa-offers during the voluntary period.Q\aZ {Ol -ԍ See, e.g., PacBell Comments at 8.Q We are persuaded by incumbents, however, that compensation for the depreciated value of old equipment would not enable them to construct a comparable replacement system without imposing costs on the incumbent, which would be  X -inconsistent with our relocation rules.Z]  {O-ԍ See, e.g., API Comments at 16.Z We therefore conclude that the depreciated value of old equipment should not be a factor when determining comparability.  X -` ` b. Relocating Individual Links   X -"35. Background. In the Emerging Technologies docket, we concluded that PCS licensees are obligated to pay to relocate incumbents to comparable facilities when the PCS  X}-systems pose an interference problem to the incumbents' microwave links.^}~ {O-ԍ See generally ET Memorandum Opinion and Order, 9 FCC Rcd at 194445,  18. In the Cost Xh-Sharing Notice, we stated that, while we encourage PCS licensees to relocate an entire microwave system at once including noninterfering links outside the PCS licensee's  X<-particular service area we do not regard this as a requirement under involuntary relocation.a_< {O-ԍ CostSharing Notice, 11 FCC Rcd at 1958,  76.a With respect to those links that do cause interference, however, PCS licensees must provide  X-incumbents with a seamless transition from the old facilities to the replacement facilities.` {Oa-ԍ See 47 C.F.R.  94.59; see also ET First Report and Order, 7 FCC Rcd at 6886, 24. Thus, it may be both more efficient and more costeffective in many instances for the parties to relocate all of the links in a system at once, rather than to relocate only a few links and provide the necessary equipment for the microwave incumbent to operate in two different bands simultaneously.  X-  X- #36. Comments. Microwave incumbents strongly oppose the relocation of a single link  Xm-if the link is part of a larger, multilink system.fam4  {OR&-ԍ See, e.g.,WWI Comments at 34; Tenneco Comments at 9. f They argue that selected linkbylink relocation will destabilize the integrity of microwave systems, reduce manageability, impair"V a0*((0"  X-throughput, and increase operational costs.>b yOy-ԍ WWI Comments at 34.> Although UTC agrees that a PCS licensee's relocation obligation extends only to those specific microwave paths to which the PCS licensee causes interference, it argues that the obligation to provide a seamless transition may require the PCS licensee to relocate additional links or pay the additional costs associated with  X-integrating replacement links in different bands.cZX {O-ԍ UTC Comments at 2324; see also TIA Reply Comments at 6; API Comments at 1415 (stating that in some instances, like a rock thrown into a pond, relocation of one link in a system may have a ripple effect upon the remainder of the system). By contrast, PCS licensees contend that  X-incumbents' concerns are overstated.Xdz {O -ԍ See, e.g., PrimeCo Reply Comments at 11.X PCS PrimeCo, for example, points out that incumbents who are phasing in digital technology are voluntarily converting a few links at a time, which  X_-necessarily involves a network comprised of a combination of analog and digital links.Ge_  yO-ԍ PrimeCo Reply Comments at 11.G  X1-$37. Discussion. We affirm our decision in Emerging Technologies docket that PCS licensees are obligated to pay to relocate incumbents to comparable facilities only with respect  X -to the specific microwave links for which their systems pose an interference problem.tf  {OR-ԍ  ET Memorandum Opinion and Order, 9 FCC Rcd at 194445,  18.t Thus, we clarify that PCS licensees are not under an obligation to move an incumbent's entire system at once, unless all of the links in the incumbent's system would be subject to interference by the PCS licensee. Although systemwide relocations may be preferable and less disruptive to the incumbent, we conclude that it would be inappropriate to increase a PCS licensee's  X-monetary obligation, e.g., by requiring it to pay to relocate links that it never intended to move, after the licenses have already been auctioned. In fact, several commenters particularly those bidding in the C block auction have stated in their comments that they are intentionally designing their systems in such a way that existing links will not have to be  X8-relocated.[g8.  yO-ԍ GO Comments at 6; SBMS Reply Comments at 6.[ Moreover, incumbents are not harmed by this policy because, as PCS licensees point out, many incumbents already operate networks that consist of both 2 GHz and 6 GHz  X -links or a combination of digital and analog technology.hZ   {Oy!-ԍ PrimeCo Reply Comments at 11. Also, in Tenneco's ex parte filing, dated February 13, 1996, Tenneco submitted a map of its current microwave system, showing links operating at the following frequencies: 2.1 GHz; 6 GHz; and 1.9 GHz. Furthermore, our rules protect microwave operations by requiring PCS licensees to provide incumbents with a seamless  X-transition from their old facilities to the replacement facilities.Bi yOm&-ԍ 47 C.F.R.  94.59(d).B Thus, if providing a seamless transition requires it, PCS licensees must relocate additional links or pay for additional costs"pi0*((" associated with integrating the new links into the old system, such as employing a different  X-modulation technique to preserve the system's overall integrity.=j yOb-ԍ UTC Comments at 24.= If problems arise, the PCS  X-licensee is required under our rules to remedy the situation.BkX yO-ԍ 47 C.F.R.  94.59(e).B   X-%38. To ease the burden on incumbents, we have adopted a costsharing plan to promote  X-the relocation of all links in a system at the same time, which is discussed in Section IV(B),  Xv-supra. By enabling PCS licensees to collect reimbursement from subsequent licensees that benefit from the relocation, we believe that our costsharing plan will promote a larger number of systemwide relocations.  X3- ` `   X - ` ` c. Transaction Expenses  X - &39. Background. In the Emerging Technologies docket, we stated on several occasions that emerging technology providers will be required to pay all costs associated with  X -relocation.l  {O[-ԍ See, e.g., ET Third Report and Order, 8 FCC Rcd at 6595,  16; ET Second Memorandum Opinion and  {O%-Order, 9 FCC Rcd at 7800,  22. In the CostSharing Notice, however, we sought comment on whether we should narrow this rule by requiring that reimbursement for relocation costs should be limited to the  X-actual costs associated with providing a replacement system, e.g., equipment and engineering  X-expenses.amD {Ov-ԍ CostSharing Notice, 11 FCC Rcd at 1958,  76.a We proposed to exclude extraneous expenses, such as fees for attorneys and consultants, that are incurred by the incumbent without the advance approval of the PCS  XS-relocator.3nS {O-ԍ Id.3 We sought comment on whether such extraneous expenses should be considered "premium payments" that are not reimbursable after the voluntary negotiation period has  X%-concluded.3o%h  {O>-ԍ Id.3  X-'40. Comments. Microwave incumbents argue that they should be reimbursed for all expenses they incur as a result of relocation, and that they should not be required to seek the  X-PCS licensee's prior approval.pZ  {Ot#-ԍ See, e.g., APCO Comments at 89; CIPCO Comments at 1; San Diego Comments at 1011; East River Comments at 2; LA County Comments at 56; NRECA Comments at 5; Santee Cooper Comments at 2; SoCal Comments at 8; UTC Comments at 2425.  They contend that the exclusion of such expenses contradicts  X-the principle of full compensation for relocation costs that was adopted in the ET Third Report"p0*(("  X-and Order.}q {Oy-ԍ APPA Comments at 7; see also ET Third Report and Order, 8 FCC Rcd 6589.} According to incumbents, relocation negotiations are highly technical, and the exclusion of such fees would deprive them of the ability to contribute meaningfully and  X-effectively to the negotiation process.MrZ {O-ԍ See, e.g., AAR Comments at 7.M In addition, APCO asserts that incumbents, especially public safety licensees with limited budgets, should be entitled to reimbursement for reasonable  X-internal expenses as well.=s yOC -ԍ APCO Comments at 9.= As an example, APCO states that an incumbent may choose to commit the time of its own engineers and attorneys (rather than hiring outside experts) and, in such circumstances, the incumbent should be reimbursed for that overhead, based on standard  Xa-accounting principles.4ta| {O -ԍ Id. 4 Nonetheless, some incumbents recognize the potential for abuse if fees for attorneys and consultants are fully reimbursable without limitation. As a way to contain such expenses, CIPCO suggests that we impose a cap, such as $5,000 per link for legal  X -expenses.>u  yO-ԍ CIPCO Comments at 1.> Cox & Smith suggest that maximum fees could be established based on the number of paths being relocated or on a percentage of the total "hard" costs involved in the  X -relocation (e.g., equipment, new towers, site acquisition).Dv  yO=-ԍ Cox & Smith Comments at 4.D  X -(41. PCS licensees insist that they should not have to pay for attorney and consultant  X -fees incurred by incumbents.w .  {O-ԍ See, e.g., PacBell Comments at 8; PrimeCo Comments at 18; UTAM Comments at 1516. They argue that some incumbents are hiring costly consultants in an effort to extract premiums from PCS licensees, and that they should not be required to pay such fees for incumbents that view the relocation process as a profitmaking business  Xf-opportunity.x"f  yO-ԍ BellSouth Reply Comments at 18 (stating that one incumbent paid a consultant $180,000 to negotiate the relocation of only four paths); STV Reply Comments at 14, n. 22 (stating that the consultant agreement between the City of San Diego and the law firm of Keller and Heckman includes the preparation of an economic  {O/ -assessment that reviews, inter alia, the value of the vacated spectrum to the PCS licensee). As a solution, Sprint Telecommunications Venture proposes that PCS licensees be responsible for paying only those costs which can be legitimately and reasonably tied to the  X8-relocation process.Cy8 yO#-ԍ STV Reply Comments at 13.C BellSouth suggests that legal and consulting fees be recoverable only if an agreement is reached during the voluntary period, so that incumbents will have an incentive  X -to reach an agreement prior to the mandatory period.Iz : yO&-ԍ BellSouth Reply Comments at 18.I " z0*((d"Ԍ X-ԙ)42. Discussion. We conclude that incumbents should be reimbursed only for legitimate and prudent transaction expenses that are directly attributable to an involuntary relocation,  X-subject to a cap of two percent of the "hard" costs involved (e.g., equipment, new towers, site  X-acquisition). Although we proposed in the CostSharing Notice that PCS licensees should not be required to reimburse incumbents for any "extraneous" expenses, such as fees for attorneys and consultants, we are persuaded by commenters that some reimbursement for outside assistance is necessary, because not all incumbents have expertise in these fields within their  Xc-organizations.a{c yO-ԍ San Diego Comments at 1011; LA County Comments at 56.a We conclude that PCS licensees are not required to pay incumbents for internal resources devoted to the relocation process, however, because such expenses are difficult to determine and would be too hard for a PCS licensee to verify. Moreover, the benefits incumbents receive as a result of relocation, such as superior equipment, are likely to outweigh any internal costs they incur.  X -*43. To prevent abuses, PCS licensees will not be required to reimburse incumbents for  X -transaction costs that exceed two percent of the hard costs associated with an involuntary relocation. Rather than adopt a cap on the dollar amount that can be spent on transaction expenses, we believe that a percentage of the total hard costs, as suggested by Cox & Smith, is  X}-more appropriate.D|}X yO-ԍ Cox & Smith Comments at 4.D Therefore, if complicated and costly actions, such as land acquisition, are required to accomplish relocation, the permissible amount of reimbursement for transaction costs would be higher. We also believe that a twopercent cap is reasonable and strikes a fair balance between the concerns of PCS licensees and microwave incumbents. We derived two  X!-percent from CIPCO's suggested cap of $5,000 per link,>}! yO-ԍ CIPCO Comments at 1.> which is twopercent of $250,000  X -the amount we have determined to be the average cost of relocating a link.h~ x {O3-ԍ CostSharing Notice, 11 FCC Rcd at 1943,  43. h Furthermore, PCS licensees will not be required to pay for transaction costs incurred by incumbents during the voluntary or mandatory negotiation periods once an involuntary relocation is initiated, nor will they be required to pay for fees that cannot be legitimately tied to the provision of comparable facilities, such as consultant fees for determining how much of a premium payment PCS licensees would be willing to pay. We agree with PCS licensees that they should not have to reimburse incumbents for such fees, because it would encourage incumbents to view  Xi-the relocation process as a business opportunity.Ui  {O$#-ԍ See, e.g., AT&T Reply Comments at 13.U Furthermore, requiring PCS licensees to pay such fees does not serve the public interest, because added expenses are likely to be passed on to the public in the form of increased PCS subscriber fees. "$0*(("  X- ` ` d. TwelveMonth Trial Period  X-+44. Background. Our existing rules provide a twelvemonth period for relocated  X-microwave incumbents to ensure that their new facilities are comparable.B yO4-ԍ 47 C.F.R.  94.59(e).B If the new facility is found not to be comparable during the first twelve months of operation, our rules provide that the PCS licensee must either cure the problem, restore the incumbent to its original  Xv-frequency, or relocate it to an equivalent 2 GHz frequency.BvX yO -ԍ 47 C.F.R.  94.59(e).B The purpose of the twelvemonth trial period is to ensure that microwave incumbents have a full opportunity to operate their new systems under realworld operating conditions and to obtain redress from the PCS licensee if the new system does not perform comparably to the old system or pursuant to  X -agreedupon terms. In the CostSharing Notice, we proposed to clarify that this period should  X -begin when the incumbent starts using its new system.a  {O-ԍ  CostSharing Notice, 11 FCC Rcd at 1962,  84.a We also tentatively concluded that the right to a twelve month trial period resides with the incumbent as a function of our relocation rules, regardless of whether the incumbent has previously surrendered its license. If the incumbent has retained its 2 GHz authorization during the twelvemonth trial period, however, it should surrender the license at the conclusion of that period.   X{-,45. Comments. Most commenters agree with our proposals, but suggest that some  Xd-rules need further clarification.zdz {O-ԍ See, e.g., API Comments at 18; GTE Comments at 18; UTC Comments at 2728. z A number of commenters request that we clarify that the twelvemonth trial period only applies if an involuntary relocation occurs and that, during the  X6-voluntary period, the parties may agree to any length trial period or none at all.Z6  {O-ԍ Western Comments at 16. See also BellSouth Comments at 11; GTE Comments at 1819; PCS PrimeCo Comments at 20; UTAM Comments at 1920; Chester Telephone Reply Comments at 5; DCR Reply Comments at 34. PCIA, UTAM, and others also argue that we should not hold PCS providers responsible for the  X-performance of relocated systems which they did not construct.p.  yO-ԍ PCIA Comments at 21; UTAM Comments at 19 é 20; SBMS at 45.p Some PCS licensees argue that our current rules may unduly delay or inhibit the deployment of PCS and, therefore, suggest rule changes such as (1) reducing the trial period to one month, or (2) clarifying that, if the new facilities are not comparable, the PCS licensee may provide comparable service by  X-some means other than relocation back to 2 GHz spectrum.y  {O%-ԍ See, e.g., PrimeCo Comments at 20; PCIA Comments at 2 1.y "P 0*(("Ԍ X--46. Microwave incumbents oppose reduction of the twelvemonth trial period. {Oy-ԍ See, e.g., Cooperative Power Reply Comments at 2; Entergy Reply Comments at 7; Omaha Public Power District Reply Comments at 7. They argue that microwave facilities can be affected by both climate and vegetation, so a full year trial period is necessary to determine whether any foliage or weather changes affect the  X-operation of the replacement system.\" {O-ԍ See, e.g., SoCal Gas Company Comments at 13.\ Incumbents also contend that, if a problem arises, the twelvemonth trial period should either freeze or begin again after the problem is resolved to  X-ensure that the problem does not arise again.Z yO -ԍ Kansas DOT Comments at 1; UTC Comments at 2728.Z In addition, the Kansas Department of Transportation asks that we clarify whether the PCS licensee is obligated to remedy a problem after the twelvemonth period has expired if the problem was reported prior to the end of the  XH-twelvemonth period.CHD yO=-ԍ Kansas DOT Comments at 1.C   X -.47. Discussion. As a preliminary matter, we clarify that the twelvemonth trial period is only automatic if an involuntary relocation occurs. Therefore, if the parties decide that a trial period should be established for relocations that occur during the voluntary and mandatory period, they must provide for such a period in the relocation contract.  X -  X -/48. Because our proposed clarifications to the twelvemonth trial period received broad  X-record support,y {O-ԍ See, e.g., API Comments at 18; GTE Comments at 18; UTC Comments at 2728.y we adopt the following clarifications to Section 94.59(e) of our rules:   Xb-(1)` ` the trial period will commence on the date that the incumbent begins full operation (as opposed to testing) on the replacement link; and s#`  X-(2)` ` an incumbent's right to a twelvemonth trial period resides with the incumbent as a function of our relocation rules, regardless of whether the incumbent has previously surrendered its license. If, however, a microwave licensee has retained its 2 GHz authorization during the trial period, it is required to return  X-the license to the Commission at the conclusion of that period. f  yO!-ԍ In our initial rule, 47 C.F.R.  94.59(c), we stated that we would convert the microwave incumbent to secondary status after the replacement system is built and the microwave incumbent has been provided with a reasonable amount of time to determine comparability. We see no reason, however, for the incumbent to retain its 2 GHz license once it has been relocated. s#`  We decline to adopt the suggestion that the twelvemonth trial period should be extended or"N 0*((o"  X-begin again if a problem arises.Z yOy-ԍ Kansas DOT Comments at 1; UTC Comments at 2728.Z We conclude that incumbents are adequately protected without such an extension because, by the end of the twelve month period, our rules require  X-that they be operating on facilities that are comparable.BX yO-ԍ 47 C.F.R.  94.59(d).B If at the end of the twelve months the PCS licensee has still failed to meet this requirement, it must relocate the incumbent back  X-to its former or equivalent 2 GHz frequencies.B yO= -ԍ 47 C.F.R.  94.59(e).B Thus, the expiration of the twelvemonth period does not leave the incumbent without further recourse.  X_- 049. As a related matter, we clarify that, even after the PCS licensee has initiated the involuntary relocation process, a mutually acceptable agreement will still be permissible. If the parties do sign an agreement specifying their own terms, we will treat the agreement in the same manner as we treat agreements that are consummated during the voluntary and mandatory periods, and the parties will be bound by contract rather than our rules. We agree with commenters that neither incumbents nor PCS licensees are harmed by such a policy, because  X -neither party is obligated to enter into such an agreement. x yO-ԍ Western Comments at 16; BellSouth Comments at 11; Chester Telephone, Reply Comments at 5. If the agreement falls through, however, the incumbent will be subject to involuntary relocation.  X -  X-150. Finally, we decline to reduce the trial period to one month as suggested by PCS  Xy-licensees.hy {O2-ԍ See, e.g., PCS PrimeCo Comments at 19. h We agree with incumbents that twelve months is an appropriate time period, because it gives the incumbent the opportunity to ensure that the facilities function properly  XK-during changes in climate and vegetation.\K {O-ԍ See, e.g., SoCal Gas Company Comments at 13.\ We also take this opportunity to clarify that PCS  X4-licensees are not required to leave the incumbent's former 2 GHz spectrum vacant during the  X-twelvemonth trial period.>,  yO-ԍ PCIA Comments at 25.> We agree with PCIA that requiring PCS licensees to hold this spectrum in reserve would delay the deployment of PCS for at least one year, which does not  X-serve the public interest.]  yO^"-ԍ PCIA Comments at 25; PCS PrimeCo Comments at 1920.] We also clarify that, if the microwave incumbent demonstrates that the new facilities are not comparable to the former facilities, the PCS licensee must remedy the defects or pay to relocate the microwave licensee to one of the following: its former or equivalent 2 GHz channels, another comparable frequency band, a landline system, or any other facility that qualifies as comparable. "~L 0*(("Ԍ X-` ` e. Request for Clarification of Involuntary Relocation Procedures   X-251. Background. In an ex parte letter submitted on April 15, 1996, AT&T Wireless and six other PCS licensees urge the Commission to clarify or amend its rules governing  X-involuntary relocation.OX yO-ԍ Letter from AT&T Wireless Services, Inc., BellSouth Personal Mobile Communications, GTE Mobilnet, PCS Primeco, L.P., Western Wireless Corp., DCR Communications, and Pacific Bell Mobile Services to Michele Farquhar, Chief, Wireless Telecommunications Bureau, April 15, 1996 ("April 15 Letter").O These parties contend that "the Commission's procedures are vague with respect to the procedures to be followed at the end of the mandatory negotiation  Xx-period."9x {O -ԍ Id. at 1.9 They note that under our existing rules, a PCS licensee requesting an incumbent to relocate involuntarily must guarantee payment of relocation costs, complete all activities necessary to place the new facilities into operation, and build and test the replacement system. They further note, however, that the rules do not specify whether the parties must agree on relocation costs, what constitutes an adequate relocation system, or the time frame in which  X -relocation is to occur. AT&T Wireless, et al., express concern that the lack of specific procedures for involuntary relocation may create incentives for microwave incumbents to prolong negotiations beyond the expiration of the mandatory negotiation period and cause  X -further delays in the relocation process.9 z {O-ԍ Id. at 2.9 Therefore, AT&T Wireless, et al., request that the Commission either (1) require microwave incumbents to vacate their 2 GHz frequencies by the end of the mandatory negotiation period, or (2) automatically convert microwave licenses to  X-secondary status immediately upon expiration of the mandatory negotiation period.9  {O<-ԍ Id. at 3.9  Xh-   XQ-352. Discussion. We believe that AT&T Wireless, et al., have raised legitimate issues regarding the procedures for implementing involuntary relocation at the conclusion of the mandatory negotiation period. The issues raised in their letter, however, were not included in  X-the CostSharing Notice, nor were they raised in any of the regularly filed comments or reply  X-comments in this proceeding. Because of the relative lateness of the parties' ex parte filing and the lack of opportunity for other parties to comment, we decline to address these issues at  X-this time. Nevertheless, we encourage the parties to the April 15 letter or any other interested parties to file a petition for rulemaking on the issues raised in the letter. ` `  X- 4. Public Safety Certification  Xq-  XZ-453. Background. In the ET Third Report and Order, we concluded that a select group of public agencies should qualify for extended voluntary and mandatory negotiation periods"E0*(("  X-under our rules. {Oy-ԍ  ET Third Report and Order, 8 FCC Rcd at 661011,  52, as modified on reconsideration by ET  {OC-Memorandum Opinion and Order, 9 FCC Rcd at 1943  3641. On February 16, 1996, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion affirming our decision in ET Docket 929 that  {O-public safety licensees are required to relocate if their 2 GHz spectrum is needed by a PCS licensee. Association  {O-of PublicSafety Communications OfficialsInternational, Inc. v. FCC, 76 F.3d 395 (D.C. Cir. 1996). Ě Section 94.59 of our rules limits the privilege of extended negotiation periods to the following licensees: Part 94 facilities currently licensed on a primary basis under the eligibility requirements of Section 90.19, Police Radio Service; Section 90.21, Fire Radio Service; Section 90.27, Emergency Medical Radio Services; and Subpart C of Part 90, Special Emergency Radio Services, provided that the majority of communications carried on those facilities are used for police, fire, or emergency medical services operations involving  Xv-safety of life and property.Bv yO -ԍ 47 C.F.R.  94.59(f).B Licensees of other Part 94 facilities licensed on a primary basis under the eligibility requirements of Part 90, Subparts B and C, are permitted to request similar treatment upon demonstrating that the majority of the communications carried on those  X1-facilities are used for operations involving safety of life and property.D\1 {O-ԍ Id. Although this sentence of the rule did not appear in the CostSharing Notice, we confirm that this  {O-additional class of licensees might also qualify for public safety status. See, e.g., APCO Comments at 10 (requesting clarification).D  X -554. PCIA requested that we allow PCS licensees access to information essential to confirm that a microwave licensee qualifies for the extended transition period reserved for  X -emergency public safety uses.M 4  yO-ԍ PCIA ExParte Filing, Oct. 4, 1995.M In the CostSharing Notice, we agreed with PCIA that PCS licensees should have a readily available means of confirming a microwave licensee's public  X -safety status for purposes of our relocation rules.g  {O-ԍ CostSharing Notice, 11 FCC Rcd at 1961,  80.g We proposed that the public safety licensee should be required to establish: (1) that it qualifies as a service listed in Section  X{-94.59(f) of our rules (see classifications listed in previous paragraph), (2) that it is a licensee in one or more of these services, and (3) that the majority of communications carried on the  XO-facilities involve safety of life and property.3OV  {OV -ԍ Id.3 We also proposed that the public safety licensee should be required to provide such documentation to the PCS licensee promptly upon  X!-request.3! {O#-ԍ Id.3 If the incumbent failed to provide the PCS licensee with the requisite documentation, we proposed that the PCS licensee would be permitted to presume that special  X-treatment is inapplicable to the incumbent.3z {O'-ԍ Id.3 " 0*(( "Ԍ  X-655. Comments. APCO, which represents numerous public safety incumbents, argues that PCS licensees should not be allowed to force government agencies to meet burdensome  X-reporting requirements regarding the nature of their communications traffic.> yO4-ԍ APCO Comments at 11.> The City of San Diego further states that our proposal is unworkable, because there is no objective, quantitative  X-measure for making a satisfactory public safety demonstration.KX yO-ԍ City of San Diego Comments at 12.K To address these concerns, the City of San Diego suggests that we should allow public safety entities to selfcertify that  X_-they meet the appropriate criteria.\_ {O -ԍ See, e.g., City of San Diego Comments at 13.\ PacBell urges us to reject the selfcertification method, however, because it contends that selfcertification places the determination in the hands of a  X1-party that is biased in favor of claiming public safety status.F1z yO\-ԍ PacBell Reply Comments at 9.F PacBell suggests that a public safety licensee's capacity should be determined by the initial channel loading contained in the incumbent's Form 402 application, and that the incumbent should only qualify for extended relocation if over half of those channels carry communications involving the safety of life or  X -property.6X  yO-ԍ PacBell Comments at 11. As an example, PacBell states that, if the licensee's initial channel loading is for 100 channels, the licensee would only qualify for extended relocation if 51 of those channels carried communications involving the safety of life or property.6 AT&T proposes that we require public safety licensees to petition the Commission immediately to obtain public safety status, and that the public safety licensee be required to  X -certify to the PCS licensee that it has obtained such status as soon as the petition is granted.> *  yO-ԍ AT&T Comments at 14.> As a related matter, PCIA argues that, in addition to requiring appropriate documentation, the Commission should narrow the definition of public safety by requiring those incumbents  Xb-seeking longer negotiation periods to establish that substantially all rather than a majority of the communications carried on their facilities involve safety of life and property. PCIA claims that narrowing the definition even further is appropriate because the extended relocation  X-periods can delay the deployment of PCS.>  yO -ԍ PCIA Comments at 27.>   X-756. Discussion. We agree with PCS licensees that certification is necessary to ensure that only those public safety incumbents meriting special status are allowed the advantages of  X-extended negotiation periods.mJ  yO%-ԍ AT&T Comments at 14; BellSouth Comments at 12; PCIA Comments at 25.m We also agree with incumbents, however, that selfcertification is appropriate, because selfcertification will not burden public agencies with time"0*(("ԫ X-consuming reporting requirements.Q {Oy-ԍ See, e.g., APCO Comments at 11. Q We decline to adopt the suggestion made by AT&T that all public safety incumbents should be required to apply to the Commission for certification, because such a requirement would be administratively burdensome for the Commission and  X-could delay negotiations.`BZ yO-ԍ AT&T Comments at 14. Note that, prior to the release of this order, South Florida Water Management District ("South Florida") filed a petition for declaratory ruling that its 2 GHz microwave network constitutes a "public safety facility" for purposes of our relocation rules. The Wireless Telecommunications Bureau stated that "[w]hile South Florida's communications are very important, we cannot conclude on balance that a microwave system whose primary function is to monitor and control gates and levees to adjust water levels meets the  {O -Commission's narrow standard for obtaining a longer relocation period." See Petition for Declaratory Ruling Regarding the definition of "public safety facility" for purposes of Section 94.59 of the Commissions Rules, DA 96505 (released April 10, 1996).` Furthermore, we believe that PacBell's concerns about biased public agencies are overstated, because we do not believe public agencies will be inclined to  X-falsify the certification.Fd  yO-ԍ PacBell Reply Comments at 9.F  X_-857. We conclude that, in order for a public safety licensee to qualify for extended negotiation periods under our rules, the department head responsible for system oversight must certify to the PCS licensee requesting relocation that:  e      X -(1) X` ` the agency is a licensee in the Police Radio, Fire Radio, Emergency Medical, Special Emergency Radio Services, or that it is a licensee of other Part 94 facilities licensed on a primary basis under the eligibility requirements of Part 90, Subparts B and C; and `  Xy-(2) X` ` the majority of communications carried on the facilities at issue involve safety of life and property.`    A public safety licensee must provide certification within 30 days of a request from a PCS licensee or the PCS licensee may presume that special treatment is inapplicable to the incumbent. If an incumbent falsely certifies to a PCS licensee that it qualifies for the extended time periods, the incumbent will be in violation of our rules and subject to  X-appropriate penalties.X y {O}"-ԍ See, e.g., 47 U.S.C.  312, 503. X Such an incumbent would also immediately become subject to the nonpublic safety time periods.     X- 5. Dispute Resolution  X|-` `  Xe-958. Because relocations that occur pursuant to agreements arrived at during the"e 0*((" voluntary and mandatory period are relocations pursuant to private contracts, we anticipate that parties will pursue common law contract remedies if a dispute arises. Thus, if parties do not agree to use alternative dispute resolution techniques, we expect that they will file suit in a court of competent jurisdiction.  X-:59. To the extent that disputes arise over violation of the Commission's rules (e.g.,  Xx-the good faith requirement, involuntary relocation procedures), we have stated that parties are  Xa-encouraged to use ADR techniques.ay {O-ԍ ET Third Report and Order, 8 FCC Rcd at 6604,  3839; ET Second Memorandum Opinion and Order,  yO -9 FCC Rcd at 7801,  28.  Information regarding the use of alternative dispute resolution is available from the Commission's Designated ADR Specialist, ADR Program, Office of the General Counsel, Federal  {O4 -Communications Commission, 1919 M Street, N.W., Washington D.C. 20554. See Use of Alternative Dispute  {O -Resolution Procedures in Commission Proceedings and Proceedings in which the Commission is a Party, 6 FCC  {O -Rcd 5669 (1991). See also GTE Comments at 18. Commenters agree that resolution of such disputes  XJ-entirely by our adjudication processes would be time consuming and costly to all parties.NJHy {OC-ԍ See, e.g., GTE Comments at 18.N Therefore, we continue to encourage parties to employ ADR techniques when disputes arise.  X - 6. Ten Year Sunset  X -;60. Background. In the initial Notice of Proposed Rule Making in the Emerging  X -Technologies docket, adopted on January 16, 1992, we proposed to allow unrelocated microwave incumbents to continue to occupy their 2 GHz frequency for a fixed period of  X-time possibly 1015 years at which time they would be converted to secondary status.y {O!-ԍ ET Notice of Proposed Rule Making, 7 FCC Rcd at 1545,  24. See also ET First Report and Order,  7 FCC Rcd at 6886,  4. We suggested a 1015 year time frame, because we estimated that most 2 GHz equipment  Xh-would be completely amortized or need replacement by the time the period expired.4h4 y {OM-ԍ Id. 4 In the  XQ-ET Third Report and Order, we decided not to make incumbent facilities secondary on a  X<-fixed date, but we reserved the option of revisiting the issue in the future.r< y {O-ԍ ET Third Report and Order, 8 FCC Rcd at 6596,  18.r  X-<61. In the CostSharing Notice, we sought comment on whether we should place some  X-time limit on a PCS licensee's obligation to provide comparable facilities.gX y {O$-ԍ CostSharing Notice, 11 FCC Rcd at 1965,  90.g As an example, we cited to our decision in GEN Docket 82334, which gave private operational fixed microwave stations in the 12 GHz band five years to relocate their facilities, after which time" 0*(("  X-they became secondary to the Direct Broadcast Satellite ("DBS") Service.y yOy-ԍ Establishment of a Spectrum Utilization Policy for the Fixed and Mobile Services' Use of Certain Bands  {OA-Between 947 MHz and 40 GHz, First Report and Order, GEN Docket No. 82334, 54 RR 2d 1001. In the Cost X-Sharing Notice, we tentatively concluded that microwave incumbents should not retain primary status indefinitely on spectrum licensed for PCS and, therefore, microwave incumbents that are still operating in the 18501990 MHz band on April 4, 2005, should be made secondary on that date.  Xz-=62. Comments. We received a considerable number of comments on this issue,  Xc-particularly from incumbents with microwave links in rural areas. They argue, inter alia, that such a policy will encourage PCS licensees to "wait out" incumbents, and will increase the  X7-likelihood that incumbents will have to assume the costs of their own relocation.a7"y {O -ԍ See, e.g., AAR Comments at 8; APPA Comments at 5.a Many incumbents point out that the deployment of PCS is likely to be delayed in rural areas and,  X -therefore, the sunset date is likely to penalize those entities with extensive rural networks. y {On-ԍ See, e.g., AAR Comments at 89; AGA Comments at 5; API Comments at 19; UTC Comments at 32. APCO also argues that some incumbents (including public safety licensees) may still be operating links in urban areas after 2005, because 6 GHz and other replacement bands may  X -not be able to accommodate all of the current 2 GHz licensees.> Fy yO-ԍ APCO Comments at 13.> Moreover, incumbents contend that such a policy is not "spectrum efficient," because microwave incumbents might  X-be forced to vacate frequencies that PCS licensees may never need or use.iy yO-ԍ UTC Comments at 32; APCO Comments at 12; APPA Comments at 56. i As an alternative, incumbents suggest that, if clearing the band is a priority, the Commission should modify its proposal by imposing a requirement that all 2 GHz licensees must offer to relocate  XQ-all incumbents in their frequency block before the year 2005.pQf y {Oh-ԍ See, e.g., APPA Comments at 6; SoCal Gas Company Comments at 13.p Assuming that we adopt such a sunset, UTC points out that the 2005 date unfairly impacts those incumbents in the C, D, E, and F bands, which have not yet been licensed for PCS, because those incumbents will have  X -less than ten years to negotiate or plan for relocation.=  y yO -ԍ UTC Comments at 32.=  X->63. One microwave incumbent, CIPCO, agrees that a tenyear period is adequate to  X-complete relocation from 2 GHz.> y yO%-ԍ CIPCO Comments at 2.> CIPCO submits that, even if all paths are not relocated by that time, it should be able to determine potential exposure and schedule any necessary"!0*(("  X-nonreimbursed relocations.3y {Oy-ԍ Id.3 Furthermore, CIPCO anticipates that, given the rural nature of  X-its service territory, it will be able to operate some paths on a secondary basis indefinitely.3Zy {O-ԍ Id.3   X-?64. PCS licensees support our proposal to convert the remaining incumbents operating  X-in the 2 GHz band to secondary status in the year 2005.py {OA -ԍ See, e.g., AT&T Comments at 13; BellSouth Reply Comments at 20. p BellSouth argues that microwave incumbents would not be harmed significantly by such a conversion, because their equipment  Xv-should be fully amortized by the year 2005.v~y {O -ԍ BellSouth Reply Comments at 20 (citing to the Emerging Technologies Notice, 7 FCC Rcd at 1545). UTAM also supports our proposal, arguing (1) that the entire unlicensed spectrum band must be cleared of all microwave incumbents in order to have full deployment of unlicensed PCS devices particularly nomadic devices, and  X1-(2) that ten years is ample time for necessary relocations to take place.>1y yO-ԍ UTAM Comments at 19.> Other PCS licensees agree with the tenyear time period, but assert that incumbents should be converted to secondary status sooner if no agreement is reached by the end of the mandatory negotiation  X -period, or if the incumbent negotiates in bad faith.Q y {O=-ԍ See, e.g.,Western Comments at 16.Q  X -@65. Discussion. As we stated in the CostSharing Notice, we continue to believe that an emerging technology licensee's obligation to relocate 2 GHz microwave incumbents should not continue indefinitely; however, we are also persuaded by incumbents that immediate conversion to secondary status in the year 2005 may not be necessary, especially with respect  Xd-to rural links that would not interfere with any PCS systems.m d2 y yOG-ԍ UTC Comments at 32; APCO Comments at 12; APPA Comments at 56 (stating that the Puerto Rico Electric Power Authority, the Navajo Tribal Utility Authority, and the Farmington, New Mexico Electric Utility System all operate microwave links in the 2 GHz bands that might never pose a problem to emerging technology services). m To strike a fair balance between these competing interests, we conclude that 2 GHz microwave incumbents will retain primary status unless and until an emerging technology licensee requires use of the spectrum, but that the emerging technology licensee will not be obligated to pay relocation costs after  X-the relocation rules sunset, i.e., ten years after the voluntary period begins for the first emerging technology licensees in the service (which is April 4, 2005, for PCS licensees and unlicensed PCS). Once the relocation rules sunset, an emerging technology licensee may require the incumbent to either cease operations or pay to relocate itself to alternate facilities, provided that the emerging technology licensee intends to turn on a system within interference range of the incumbent, as determined by TIA Bulletin 10F or any standard successor""0*((" thereto. Notification must be in writing, and the emerging technology licensee must provide  X-the incumbent with no less than six months to vacate the spectrum. y yOb-ԍ Emerging technology licensees may provide notice prior to the date that the relocation rules sunset, but may not turn on their systems until after that date. For example, if a PCS licensee intends to turn on a base station which will interfere with an incumbent's system on April 4, 2005, the PCS licensee must notify the incumbent of its intent by October 4, 2004.  After the sixmonth notice period has expired, the incumbent will be required to turn its 2 GHz license back into the Commission, unless the parties have entered into an agreement which allows the incumbent to continue to operate on a mutually agreed upon basis. We conclude that our decision promotes spectrum efficiency, because it allows microwave incumbents to continue to operate in the 2 GHz band until their spectrum is needed by an emerging technology licensee. ` `  X1-A66. We believe that a sunset date for our microwave relocation rules serves the public interest, because it provides certainty to the process and prevents the emerging technology  X -licensee from being required to pay for relocation expenses indefinitely. Moreover, we agree with commenters that ten years provides incumbents with sufficient time (1) to negotiate a  X -relocation agreement or (2) to plan for relocation themselves.r y {O6-ԍ See, e.g., CIPCO Comments at 2; BellSouth Reply Comments at 2021.r In fact, well over ten years will have passed since we first announced our intention to reallocate 2 GHz spectrum to foster  X -the introduction of emerging technologies services in 1992. By {O-ԍ See ET First Report and Order, 7 FCC Rcd 6886; see also BellSouth Reply Comments at 20. In other services, we have provided incumbents with even less time to complete relocation. For example, private operational fixed microwave stations in the 12 GHz band received only five years to relocate their facilities before they became secondary to the Direct Broadcast Satellite ("DBS")  XK-Service.Ky yO-ԍ Establishment of a Spectrum Utilization Policy for the Fixed and Mobile Services' Use of Certain Bands  {O-Between 947 MHz and 40 GHz, First Report and Order, GEN Docket No. 82334, 54 RR 2d 1001.  X-B67. We also believe that adopting a sunset date is important, because it will provide 2 GHz microwave incumbents with an incentive to relocate to other bands when it comes time to change or replace their equipment. At the current time, our licensing records indicate that most 2 GHz microwave incumbents use analog equipment. APCO contends that operating 2 GHz analog microwave systems is becoming infeasible, because analog systems are now  X-outdated and replacement parts will soon be difficult, if not impossible, to find.?. y yO#-ԍ APCO Comments at 67.? APCO also states that most incumbents have longterm plans to replace their analog systems with digital systems once the useful life of current equipment has expired and/or adequate funding has"|# 0*((2"  X-been found.y {Oy-ԍ Id.; see also County of LA Comments at 5, n. 1 (stating that the microwave industry is moving to digital technology). As BellSouth points out, by the time the sunset date arrives, much of the microwave equipment operating today at 2 GHz is likely to be either fully amortized or in  X-need of replacement.I"y yO-ԍ BellSouth Reply Comments at 21.I We believe that informing 2 GHz incumbents that they will have to cover their own relocation expenses after ten years will encourage incumbents to relocate to another band when they replace existing equipment. By contrast, if emerging technology licensees are required to pay to relocate incumbents regardless of when the relocation occurs, incumbents will have little incentive to make such a transition to an alternate band voluntarily. For similar reasons, we reject the argument by incumbents that PCS licensees should be required to make relocation offers prior to the sunset date to all incumbents located within  X1-their market area.U1y {O-ԍ See, e.g., Tenneco Comments at 1415.U Again, incumbents would have no incentive to change out their own systems voluntarily if they knew that PCS licensees would be required to cover the expenses for them at a later date. Furthermore, even if we had not reallocated the spectrum, these incumbents would have had to plan ahead for repair costs, replacement equipment, and infrastructure improvement. Given that most incumbents will incur significant expenses in any event when they replace their analog system with digital equipment, we believe that providing an incentive to incumbents to relocate voluntarily at the same time they purchase new equipment serves the public interest. In sum, we believe that the benefits of imposing a sunset date outweigh the burdens, if any, that such a date may impose.   XK-C68. Finally, we believe that six months is a reasonable amount of time for most incumbents to relocate their facilities, especially because they will have been on notice for ten years that they might be requested to move. Nevertheless, we acknowledge that special circumstances might warrant an extension of the sixmonth period in some instances to enable the incumbent to complete relocation activities. If the incumbent is unable to move or cannot complete relocation in time, we encourage the parties to negotiate a mutually acceptable solution. In the event that the parties cannot agree on a schedule or an alternative arrangement, we will entertain extension requests on a casebycase basis. However, we intend to grant such extensions only if the incumbent can demonstrate that: (1) it cannot  X|-relocate within the sixmonth period (e.g., because no alternative spectrum or other reasonable option is available), and (2) the public interest would be harmed if the incumbent is forced to  XP-terminate operations (e.g., if public safety communications services would be disrupted).  X;-  X$- B. CostSharing Plan  X - 1. Overview   X - D69. Background. In the CostSharing Notice, we proposed a costsharing plan that" $D0*((" would allow PCS licensees that relocate microwave links outside their license areas to receive reimbursement from laterentrant PCS licensees that benefit from the clearing of their  X-spectrum.ny {OK-ԍ CostSharing Notice, 11 FCC Rcd at 1933  2067. n Under the proposal, PCS licensees would receive "reimbursement rights" once  X-they sign a relocation agreement with a microwave incumbent.FZy {O-ԍ  Id. at  4649.F Subsequent PCS licensees that would have caused harmful interference to relocated links would be required to reimburse  X-the holder of the reimbursement rights for a pro rata share of the actual cost of relocating  Xx-microwave facilities.3xy {O -ԍ  Id.3 The pro rata share that each new PCS provider pays would be calculated according to a costsharing formula that considers, among other things, the date that the PCS licensee begins service, the amount paid to relocate the link, and the number of  X5-licensees that have previously contributed to paying the relocation cost of the link.F5~y {Od-ԍ  Id. at  2931.F We also  X -proposed that a nonprofit clearinghouse be established to administer the costsharing plan.F y {O-ԍ  Id. at  6365.F ##   X -E70. Comments. Most commenters, including microwave incumbents, A and B block PCS licensees, and potential bidders in future PCS auctions, generally support our proposed costsharing plan, although each group suggested minor modifications. A and B block PCS licensees ask, among other things, that we clarify that private costsharing agreements  X-unrelated to the plan adopted by the Commission are permissible.zy {O-ԍ  See, e.g., PCIA Comments at 37; PacBell Comments at 6; AT&T Comments at 6.z Microwave incumbents request permission to be included in the costsharing plan in order to collect reimbursement  Xf-from subsequent PCS licensees if they choose to relocate their own links.Nf4 y {OK-ԍ See, e.g., API Comments at 17.N A few potential bidders for future PCS licenses argue that the benefit of being first in the marketplace far outweighs the burden of bearing the costs of relocation, and that such costs should not be  X!-passed on to subsequent licensees.l! y {O -ԍ See, e.g., Iowa L.P. Comments at 56; MEANS Comments at 12.l  X-F71. Discussion. We adopt our proposed plan with a few modifications suggested by commenters. We believe that costsharing serves the public interest because (1) it will distribute relocation costs more equitably among PCS licensees, and (2) it will promote the relocation of entire microwave systems at once, which will benefit microwave incumbents. We also believe that costsharing will accelerate the relocation process for the PCS band as a whole, thus promoting more rapid deployment of service to the public. Furthermore, we"%X 0*((" conclude that the benefits of costsharing outweigh the costs that may be incurred by licensees who become subject to reimbursement obligations. Under the plan, these licensees will be required to pay reimbursement obligations only when they have benefitted from the spectrumclearing efforts of another party. Moreover, as discussed in greater detail below, we are adopting limits on reimbursement to ensure that licensees subject to the plan do not bear a disproportionate cost. We conclude that these provisions amply protect the interests of such licensees.  XH-G72. Under our costsharing plan, a PCS licensee obtains reimbursement rights for a particular link on the date that it signs a relocation agreement with the microwave incumbent operating on the link at issue. Within ten business days of the date the agreement is signed, the PCS licensee submits documentation of the agreement to a nonprofit clearinghouse, which will be selected by the Wireless Telecommunications Bureau ("Bureau") as discussed in  X -Section IV(B)(3), infra. If the clearinghouse has not yet been selected, the PCS relocator will be responsible for submitting documentation of a relocation agreement within ten business days of the date that the Bureau announces that the clearinghouse has been established and has begun operation.  Xd-H73. Prior to commencing commercial operation, each PCS licensee is required to send  XM-a prior coordination notification ("PCN") to all existing users in the area.oMy {O-ԍ 47 C.F.R.  24.237; see also 47 C.F.R.  21.100(d).o At the same time, each PCS licensee shall file a copy of the PCN with the clearinghouse. The clearinghouse will then apply an objective test to determine whether the proposed base station would have  X-posed an interference problem to the relocated link.pZy yO-ԍ The interference test is described in detail in Appendix A, Section B.p If the test shows that the proposed base station is close enough to have posed an interference problem, the clearinghouse will notify the subsequent licensee that it is required to reimburse the PCS relocator under the costsharing formula for a portion of the expenses the relocator incurred to move the link. UTAM will be required to reimburse PCS relocators who relocate microwave links that were operating in the unlicensed PCS band.   Xg-I74. The clearinghouse will determine the amount that the subsequent PCS licensee must pay the relocator through the use of a costsharing formula. The formula takes into consideration such factors as the actual amount paid to relocate the link and the number of PCS licensees that would have interfered with the link. All calculations will be done an a perlink basis. The reimbursement amount also decreases over time to reflect the fact that the initial PCS relocator has received the benefit of being first to market, and to ensure that the PCS relocator pays the largest amount, which we believe will provide an incentive to the relocator to limit relocation expenses. As an additional protection for laterentrants, we have imposed a cap of $250,000 per link, with an additional $150,000 if a new or modified tower is required, on the amount that a PCS relocator may recoup for the relocation of each  X#-individual microwave link.  PCS relocators are entitled to full reimbursement, up to the cap,"#&0*(("" for relocating noninterfering links fully outside their market area or licensed frequency band. Also, costs that are incurred prior to the selection of a clearinghouse will be reimbursable after a clearinghouse is established.  X-J75. Once a PCS licensee receives written notification from the clearinghouse of its  X-reimbursement obligation, it must pay the entire amount owed within thirty days,py yO-ԍ The thirty day requirement refers to calendar days, not business days.p with the exception of those small businesses that qualify for installment payments under our auction  X_-rules.J_Xy {Oh -ԍ See 47 C.F.R.  24.711.J UTAM will be required to reimburse a PCS relocator once a county is cleared of enough microwave links to enable unlicensed PCS devices to operate. Because UTAM receives its funding in small increments over an extended period of time, UTAM will be permitted to satisfy its reimbursement obligation by making quarterly installment payments to the PCS relocator over a period of five years, at an interest rate of prime plus three percent. The following time line provides an overview of the costsharing process: y!?0 1dddddddd0* dd'?0 y $(#(# : : (#(#!!4: $ "!4:  "!4:  "!4:  "!4:  "!4:  "!4:  "!4:  "!4:  "!4:  "!4:  "!4:  "!4:  "!4: "" $!4:  : : (#(#e(#(#  XN-K76. A detailed discussion of the mechanics of our costsharing plan is attached as  X7-Appendix A, which is incorporated by reference into this First Report & Order. The costsharing plan will sunset for all PCS licensees ten years after the date that voluntary negotiations commenced for A and B block licensees, on April 4, 2005. However, the sunset date will not eliminate the existing obligations of PCS licensees that are paying their portion of relocation costs on an installment basis. Those licensees must continue their payments  X -until the obligation is satisfied. Finally, while we conclude that the costsharing plan is in the public interest, we are conditioning our adoption of these rules on a approval of an entity or  X"-organization to administer the plan, as discussed further in Section IV(B)(3), infra. Once an administrator is selected, the costsharing rules will take effect.X#'0*(("34: !'1XԌ X- ęL77. Participation in CostSharing Plan. By this Report and Order, we mandate that all PCS licensees benefitting from spectrum clearance by other PCS licensees must contribute  X-to such relocation costs. As we emphasized in the CostSharing Notice, however, PCS  X-licensees remain free to negotiate alternative costsharing terms.ay {O8-ԍ CostSharing Notice, 11 FCC Rcd at 1936,  29.a We also agree with commenters that allowing PCS licensees to enter into such private agreements serves the public interest, because it adds flexibility to the costsharing process and may enable such parties to save both time and the administrative expense of seeking reimbursement from a  Xc-clearinghouse.cZy {On -ԍ  See, e.g., AT&T Comments at 6; GTE Comments at iii; PacBell Comments at 6. We therefore conclude that licensees are not required to participate in our costsharing plan if they enter into alternative costsharing agreements. We also agree with commenters that all parties to a separate agreement will still be liable under the costsharing  X -plan to other PCS licensees that incur relocation expenses.l y {O-ԍ  See, e.g., UTAM Reply Comments at 1213; AT&T Comments at 6.l Finally, we conclude that parties to a private costsharing agreement may also seek reimbursement through the clearinghouse  X -from PCS licensees that are not parties to the agreement.   X -  X -  2. Dispute Resolution Under the CostSharing Plan   X- M78. Background. In the CostSharing Notice, we proposed that disputes arising out of the costsharing plan should be brought, in the first instance, to the clearinghouse for  Xh-resolution.ah~y {O-ԍ CostSharing Notice, 11 FCC Rcd at 1954,  67.a To the extent that disputes cannot be resolved by the clearinghouse, we stated that parties should be encouraged to use ADR procedures, such as binding arbitration,  X:-mediation, or other ADR techniques.3:y {O-ԍ Id.3 We also asked whether parties should be required to submit independent appraisals of the incumbent's system to the clearinghouse at the time such  X -disputes are brought to the clearinghouse for resolution.3 y {O_-ԍ Id.3 Finally, we sought comment on  X-the appropriate penalty for failure to comply with costsharing obligations.34 y {O -ԍ Id.3  X-N79. Comments. Commenters offer different views concerning the appropriate method of dispute resolution. Some licensees believe that the clearinghouse should resolve disputes to  X-the extent possible and, if the dispute cannot be resolved, ADR should be required.Q y {O&-ԍ See, e.g., Sprint Comments at 30.Q However, BellSouth disagrees that the clearinghouse should be required to attempt to resolve"(X 0*(("  X-disputes and argues instead that all disputes should proceed immediately to ADR.Dy yOy-ԍ BellSouth Comments at 13. D US Airwaves believes that dispute resolution should be flexible: first, use of the clearinghouse  X-should be required, then use of ADR, and finally use of the court system.DXy yO-ԍ US Airwaves Comments at 8.D Also, US Airwaves argues that failure to comply with costsharing obligations should not be considered  X-by the Commission when deciding renewal and/or transfer and assignment cases.3y {O= -ԍ  Id.3   Xv-O80. Discussion. We agree with those commenters who argue that disputes arising out of the costsharing plan, such as disputes over the amount of reimbursement required, should  XH-be brought to the clearinghouse first for resolution.WHzy {Os-ԍ See, e.g., Sprint Comments at 30.W At the time the dispute is brought to  X1-the clearinghouse, the parties will be required to submit appropriate documentation, e.g., an independent appraisal of the equipment expenses at issue, to support their position. To the extent that disputes cannot be resolved by the clearinghouse, we encourage parties to use expedited ADR procedures, such as binding arbitration, mediation, or other ADR techniques. At this time, we do not designate a specific penalty for failure to comply with costsharing requirements; however, we emphasize that we intend to use the full realm of enforcement mechanisms available to us in order to ensure that reimbursement obligations are satisfied.   X{- 3. Administration of the CostSharing Plan  Xd-  XM-P81. Background. In our proposal, we recommended that an industrysupported  X6-clearinghouse be established to administer the costsharing proposal.g6 y {O-ԍ CostSharing Notice, 11 FCC Rcd 1953 at  6364.g The clearinghouse would maintain all of the cost and payment records related to the relocation of each link and  X-would determine the costsharing obligation of subsequent PCS licensees.:y {OW-ԍ Id. at 10.: We sought comment on such issues as how the clearinghouse should be funded and whether records should be kept confidential.  X-Q82. Comments. A number of microwave incumbents support the establishment of a nonprofit clearinghouse, but voice concerns about the confidentiality of the information filed with the clearinghouse. AAR believes that all microwave incumbents should be allowed to  Xg-inspect and verify information pertaining to their systems,=g0 y yOH&-ԍ AAR Comments at 13.= but SoCal argues that unless strict limitations are placed on access to the information filed with the clearinghouse, the"P) 0*((0"  X-confidentiality of PCS relocation agreements will be breached.By yOy-ԍ SoCal Comments at 1011.B AAR suggests that initial rules concerning the clearinghouse should be established in an open process, which  X-incorporates the comments and balances the needs of all interested parties.=Xy yO-ԍ AAR Comments at 13.= PCS licensees  X-also generally support the concept of an industrysupported clearinghouse.jy {OT-ԍ See, e.g. US Airwaves Comments at 67; SBMS Comments at 8.j BellSouth recommends that the organization selected as clearinghouse should present a viable business plan for equitably securing startup expenses and ongoing funding, that it should have demonstrable experience with spectrum management, and that it should be fully operational  X_-90 days from the date of selection.F_zy yO -ԍ BellSouth Comments at 1415.F Sprint agrees with the concept of a clearinghouse, provided that the entity does not make any engineering decisions and serves only an  X1-administrative function.A1 y yO-ԍ Sprint Comments at 30. A Some commenters suggest that PCS licensees with private agreements should not be required to fund the clearinghouse's activities, except to the extent that they use the clearinghouse to obtain reimbursement from licensees that are not parties to  X -the private agreement.f y {O7-ԍ See, e.g., AT&T Comments at 6; GTE Comments at 12. f  X -R83. On September 6, 1995, PCIA first stated its desire to serve as the clearinghouse  X -administrator, , y {O-ԍ See PCIA's Proposal for a PCS Microwave CostSharing Clearinghouse, RM8643, (filed Sept. 6, 1995). a desire which it reiterated in comments filed on November 30, 1995.> y yO-ԍ PCIA Comments at 40.> PCIA states that it has the necessary qualifications and resources, and that it has extensively  Xy-explored the structure and functions of the clearinghouse.>yN y {Ox-ԍ  Id. at 3942. > Chester Telephone, et al.,  Xd-PacBell, and Sprint support designation of PCIA as the clearinghouse.dy yO -ԍ Chester Telephone, Reply Comments at 3; PacBell Reply Comments at 7, Sprint Reply Comments at 16. UTC opposes PCIA as the clearinghouse, stating that a PCS trade industry association is not a neutral third  X6-party.C6py yOW$-ԍ UTC Reply Comments at 14.C In an ex parte presentation, filed April 18, 1996, ITA states that it also stands  X!-willing and able to serve as the designated clearinghouse administrator.a!y {O&-ԍ ITA ex parte presentation (filed April 18, 1996).a ITA urges the"!*0*((" Commission to solicit proposals from all entities having an interest in serving as the clearinghouse administrator, which would provide organizations with the opportunity to propose innovative procedures and safeguards that would promote the reimbursement  X-process.<y yO4-ԍ ITA Comments at 8.<  X-S84. Discussion. We agree with those commenters who suggest that the clearinghouse  Xv-administrator should be selected through an open process.avXy {O -ԍ See, e.g., ITA Comments at 8; AAR Comments at 13.a We also believe it is essential for the plan to be administered by industry to the fullest extent possible. Therefore, before we implement the plan, we will seek specific proposals from parties who wish to act as administrator and will request public comment on any such proposals.  X -T85. We delegate to the Wireless Bureau the authority to select one or more entities to create and administer a neutral, notforprofit clearinghouse. Selection shall be based on criteria established by the Bureau. The Bureau shall publicly announce the criteria and solicit proposals from qualified parties. Once such proposals have been received, and an opportunity has elapsed for public comment on them, the Bureau shall make its selection. When the Bureau selects an administrator, it shall announce the effective date of the costsharing rules.  X{- C. Licensing Issues  X6- U86. Background. In the CostSharing Notice, we stated that allowing additional primary site grants in the 2 GHz band now that relocation negotiations are ongoing will unnecessarily impede negotiations and may add to the relocation obligations of PCS  X-licensees."y {O-ԍ As we stated in the ET Third Report and Order, our goals in reallocating 2 GHz for emerging technologies were to provide for reaccommodation of existing 2 GHz fixed operations in a manner that would be advantageous to the incumbent licensee, not disrupt those communications services, and foster introduction of new services and devices. 8 FCC Rcd at 6590,  4. Nevertheless, we recognized that some minor technical changes to existing microwave facilities may be necessary for incumbents' continued operations. We also stated that we do not believe that these minor technical modifications will significantly increase the cost to a PCS licensee of relocating a particular link. Thus, while the rulemaking proceeding was pending, we continued to accept applications for primary status; however, we processed only minor modifications that would not add to the relocation costs of PCS licensees. Specifically, we granted primary status for the following limited number of minor technical changes: decreases in power, minor changes in antenna height, minor coordinate corrections (up to two seconds), reductions in authorized bandwidths, minor changes in structure heights,  X$-changes in ground elevation (but preserving centerline height), and changes in equipment.$y {O&-ԍ CostSharing Notice, 11 FCC Rcd at 1964,  89. Note: this list is more limited than the acceptable  {Os'-modifications listed in Public Notice, Mimeo No. 23115, May 14, 1992. "$+0 0*((z" Any other modifications were permitted only on a secondary basis, unless (1) a special  X-showing of need justified primary status, and (2) the incumbent was able to establish that the  X-modification would not add to the relocation costs of PCS licensees.y yOK-ԍ In light of the limited circumstances under which we will grant primary status, the Commission does not believe that it will receive mutually exclusive applications. In addition, we stated that we would carefully scrutinize any applications for transfer of control or assignment to establish that our microwave relocation procedures are not being abused, and that the public interest would be served by the grant.  X_-V87. Comments. PCS licensees generally agree with our licensing policy, although some continue to argue that we should not grant any more 2 GHz licenses to incumbents  X1-either on a primary or a secondary basis.V1 y yO -ԍ AT&T Comments at 13, PrimeCo Comments at 19.V By contrast, microwave incumbents argue that our licensing policy is too restrictive, and that all modifications that do not add to the  X -relocation costs of PCS licensees should receive primary status.T y yOd-ԍ API Comments at 18, UTC Comments at 2829.T Commenters also request clarification regarding how licenses with secondary status will be treated for purposes of  X -relocation.X @y {O-ԍ See, e.g., AT&T Comment at 13 and n. 42.X PacBell suggests that we establish a procedure for dealing with secondary microwave incumbents who fail to cease operations on their secondary links at the appropriate  X -time.G y yO*-ԍ PacBell Reply Comments at 15.G  Xy-W88. Discussion. As of the effective date of the new rules, we will grant pending and newly filed applications for all major modifications and all extensions to existing 2 GHz microwave systems on a secondary basis. We will grant primary status for the following limited number of technical changes: decreases in power, minor changes in antenna height, minor location changes (up to two seconds), any data correction which does not involve a change in the location of an existing facility, reductions in authorized bandwidths, minor changes in structure heights, changes in ground elevation (but preserving centerline height), and changes in equipment. All other modifications will be permitted on a secondary basis, unless (1) the incumbent affirmatively justifies primary status, and (2) the incumbent establishes that the modification would not add to the relocation costs of PCS licensees. We decline to adopt the suggestion made by PCS licensees that no modifications should be allowed even on a secondary basis, because some incumbents might not need to relocate for several years, and they should be permitted to make modifications to their systems during that  XN-time period.VNb y yOa&-ԍ AT&T Comments at 13, PrimeCo Comments at 19.V We also disagree with incumbents that our licensing policy should be expanded, because we believe that limiting primary site grants is necessary to protect the"7, 0*((" interests of PCS licensees. In sum, we believe that granting secondary site authorizations serves the public interest, because it balances existing licensees' need to expand their systems with the goal of minimizing the number of microwave links that PCS licensees must relocate.  X-X89. Furthermore, we clarify that secondary operations may not cause interference to operations authorized on a primary basis, and they are not protected from interference from  Xv-primary operations.Uvy {O-ԍ See, e.g., 47 C.F.R.  90.7.U Thus, an incumbent operating under a secondary authorization must  X_-cease operations if it poses an interference problem to a PCS licensee.2Z_Zy {Oj -ԍ 47 C.F.R.  94.59(c). See generally P&R Temmer v. FCC, 743 F 2d 918, 928 (1984)(a licensee whose right to the use of a frequency is contingent on satisfying specified conditions has no right to use of the frequency when the conditions are not met).2 However, prior to commencing operations, PCS licensees are obligated to provide all incumbents that are operating within interference range, regardless of whether an incumbent is operating under a primary or a secondary site authorization, with thirty days notice that they will be  X -commencing operations in the vicinity.Y |y {O0-ԍ See 47 CFR  24.237(c), 21.100(d).Y Finally, PCS licensees are under no obligation to pay to relocate secondary links that exist within their market area and frequency block.  X - D. Application to Other Emerging Technology Licensees  X -   X-Y90. Background. The microwave relocation rules that we adopted in the Emerging  X{-Technologies proceeding apply to all emerging technologies services.Z{y {O:-ԍ ET First Report and Order, 7 FCC Rcd 6886.Z In the CostSharing  Xf-Notice, we requested comment on whether the changes and clarifications we proposed should  XQ-also apply to all emerging technology services, including nonPCS services (e.g., 21102150  X<-and 21602200 GHz) that have not yet been licensed.`<y {O-ԍ CostSharing Notice, 11 FCC Rcd at 1925,  3.`  X-Z91. Comments. AT&T contends that the rules that we adopt in this proceeding should also apply to other emerging technology licensees, even though the services in the  X-21102.150 and 21602200 GHz have not yet been licensed.H2 y yO!-ԍ AT&T Comments at 11 and n. 30.H Other commenters argue that each service should have a servicespecific rulemaking proceeding to take into account the  X-unique technical, financial, and other considerations presented by each service. y {O%%-ԍ PacBell Reply Comments at 10; see also ComSat Reply Comments at 2; Duke Power Reply Comments at 3. "-0*(("Ԍ X-[92. Discussion. We agree with AT&T that the costsharing plan and rule clarifications adopted in this proceeding should apply to all emerging technology services, including those services in the 21102150 and 21602200 GHz band that have not yet been licensed, because the microwave relocation rules already apply to all emerging technology  X-services.Hy yO-ԍ AT&T Comments at 11 and n. 30.H For the same reasons that these changes will facilitate the deployment of PCS, we believe these changes will also facilitate the deployment of other emerging technology services. For example, these changes and clarifications will provide additional guidance and help to accelerate negotiations between the parties. However, as new services develop, we  XH-may review our relocation rules and make modifications to these rules where appropriate.\HXy yOQ -ԍ For example, we have proposed relocation rules for incumbents in the bands allocated to the Mobile  {O -Satellite Service (MSS). See Amendment of Section 2.106 of the Commission's Rules to Allocate Spectrum at 2  {O -GHz for Use by the MobileSatellite Service, Notice of Proposed Rule Making, ET Docket No. 9518, 10 FCC Rcd 3230 (1995). Our decision today does not preclude us from tailoring our MSS relocation rules to the specific needs and requirements of MSS licensees and incumbents operating in the MSS band. \ In addition, while we conclude that costsharing should apply to all emerging technology services, we do not adopt specific costsharing rules for new services at this time, but will develop such rules in future proceedings.  X -    X -  V. FURTHER NOTICE OF PROPOSED RULE MAKING  X -  X -\93. In this Further Notice of Proposed Rule Making, we seek comment on whether to shorten the voluntary negotiation period and lengthen the mandatory negotiation period for the D, E, and F blocks. We also seek comment on whether the negotiation periods for the C block should be subject to the same adjustment. Finally, we propose that microwave incumbents be permitted to relocate some of their own links and obtain reimbursement rights  X6-pursuant to the costsharing plan adopted in the First Report and Order.  X!-  X -A. Voluntary and Mandatory Negotiation Periods For C, D, E, and F Blocks   X-]94. Background. As noted in Section IV(A)(1), supra, many PCS licensees have  X-urged the Commission to shorten or eliminate the voluntary negotiation period. In the First  X-Report and Order, we decline to alter the negotiation timetable currently applicable to the A and B Block licensees, because these licensees were on notice of the current rules when they bid for their licenses, and because negotiations between microwave incumbents and A and B  Xo-block licensees are ongoing.Ro y {O,#-ԍ See Section IV(A)(1), supra.R   XA-^95. Discussion. We agree with commenters, however, that changing the negotiation timetable for PCS blocks other than the A and B blocks may not raise the same concerns. In the case of the D, E, and F blocks, bidding has not commenced and there are no ongoing".0*(([" negotiations between PCS licensees and incumbents. Therefore, we believe it is appropriate to consider whether the relocation process in these blocks would benefit from adjusting the negotiation periods. Specifically, we seek comment on whether to adjust the negotiation periods for the D, E, and F blocks by shortening the voluntary negotiation period by one year and lengthening the mandatory period by one year. Under this approach, nonpublic safety incumbents would have a oneyear negotiation period instead of the twoyear negotiation period provided under current rules, and the mandatory negotiation period would be lengthened from one to two years. Similarly, public safety incumbents would have a twoyear voluntary negotiation period instead of a threeyears period, and a threeyear mandatory negotiation period instead of a twoyear period .  X -_96. This approach could potentially accelerate the development of PCS in the D, E, and F blocks by speeding up the negotiation process and creating additional incentives for incumbents to enter into early agreements. At the same time, while incumbents would be required to commence mandatory negotiations sooner than under the existing rules, they would have the same total amount of time for negotiations provided under the existing rules before they become subject to involuntary relocation. We seek comment on whether this adjustment would effectively balance the interests of PCS licensees in bringing service to the public quickly and the interest of microwave incumbents in making a smooth transition to relocated facilities.  X-`97. Finally, we seek comment on whether to make the same changes discussed above to the voluntary and mandatory negotiation periods applicable to C block. We note that C block is in a different posture from the D, E, and F blocks because the C block auction is ongoing and possibly near conclusion, and bidding has been based on the current rules. At the same time, the voluntary negotiation period for C block has not yet commenced, so unlike A and B blocks, there are no ongoing negotiations currently taking place in reliance on the current rules. We seek comment on whether shortening the voluntary period and lengthening the mandatory negotiation period for C block would facilitate the development of PCS in this band and what effect it would have on negotiations between C block licensees and microwave incumbents.  X - B. Microwave Incumbent Participation in CostSharing Plan  X -   X-a98. Background. Several commenters to our CostSharing Notice suggest that microwave incumbents who relocate links themselves should be permitted to collect  X -reimbursement in accordance with our costsharing plan.X y {O?#-ԍ  See, e.g., API Reply Comments at 1718.X They argue that microwave incumbents may wish to pay to relocate some of their own links so that they can relocate their entire system at once, instead of waiting for PCS licensees to relocate links one at a time as  X#-the need arises.3#Zy {O'-ԍ  Id.3 Thus, commenters urge the Commission to allow microwave incumbents to"#/0*((e"" participate in the costsharing plan and obtain the reimbursement rights for their respective  X-links.3y {Ob-ԍ  Id.3  X-b99. Discussion. We tentatively conclude that microwave incumbents that relocate themselves should be allowed to obtain reimbursement rights and collect reimbursement under the costsharing plan from laterentrant PCS licensees that would have interfered with the  Xv-relocated link. We agree with incumbents that allowing incumbent participation might facilitate systemwide relocations and could potentially expedite the deployment of PCS. We are concerned, however, about what the incentive would be for an incumbent to minimize costs, if the incumbent knows in advance that it may be able to recover some of its expenses from PCS licensees. We seek comment, therefore, on how subsequent PCS licensees could be protected from being required to pay a larger amount to an incumbent that relocates itself than to another PCS licensee who has an incentive to minimize expenses. In addition, we also question whether a large number of incumbents would avail themselves of such an option, given that our rules require PCS licensees to pay for the entire cost of providing incumbents  X -with comparable facilities.E Zy yO-ԍ 47 C.F.R.  94.59(c)(1).E Assuming we allow incumbent participation, we seek comment on whether, for purposes of the costsharing formula, we should treat incumbents as if they were the initial PCS relocator.  Xb-  XK-` ` }K VI. CONCLUSION ă  X-c100. We believe that the rules adopted in this Report and Order and Further Notice  X-of Proposed Rule Making will promote the public policy goals set forth by Congress. The costsharing formula adopted herein will facilitate the rapid relocation of microwave facilities operating in the 2 GHz band, and will allow PCS licensees to offer service to the public in an expeditious manner.   X-.$ VII. PROCEDURAL MATTERS ă   Xi- A. Regulatory Flexibility Act  X;-d101. As required by Section 603 of the Regulatory Flexibility Act, an Initial  X$-Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rule  X-Making in WT Docket No. 95157, RM8643. The Commission has prepared a Regulatory Flexibility Analysis of the expected impact on small entities of the proposals suggested in this document. Written comments were requested. The Commission's final analysis is as follows:  X!-e102. Need for and purpose of the action: This rulemaking proceeding has implemented Congress' goal of encouraging emerging technologies and bringing innovative commercial wireless services to the public in an efficient manner. The costsharing plan will"#00*(("" promote the efficient relocation of microwave licensees by encouraging PCS licensees to relocate entire microwave systems rather than individual microwave links. A costsharing plan is necessary to enhance the speed of relocation and provide an incentive to PCS licensees to negotiate systemwide relocation agreements with microwave incumbents. This action will result in faster deployment of PCS and delivery of service to the public. We have also clarified some terminology regarding certain aspects of the Commission's rules for microwave  Xv-relocation contained in the Commission's Emerging Technologies proceeding, Docket No. 929.  X3-f103. Issues raised in response to the IRFA: The American Public Power Association  X -("APPA") states that conversion of 2 GHz microwave systems to secondary status in the year 2005 would have a particularly severe impact on the limited budgets of small, nonprofit  X -public utility systems.?  y yOg -ԍ APPA Comments at 67.?  X -  g104. Significant alternatives considered and rejected: Although we have decided not to convert microwave incumbents to secondary status automatically as we proposed in the  X-CostSharing Notice, they will be required to pay for their own relocation costs after the sunset date. We have considered the impact of the ten year sunset date, and we have determined that the benefits of imposing a sunset date outweigh the burdens such a date may  XO-impose on these incumbents. For further discussion, see Section IV(A)(6), supra.  X#-h105. With respect to this Further Notice of Proposed Rule Making, an Initial Regulatory Flexibility Analysis is contained in Appendix D. As required by Section 603 of the Regulatory Flexibility Act, the Commission has prepared an IRFA of the expected impact on small entities of the proposals suggested in this document. Written public comments are requested on the IRFA. These comments must be filed in accordance with the same filing  X-deadlines as comments on the rest of the Further Notice, but they must have a separate and distinct heading designating them as responses to the Initial Regulatory Flexibility Analysis.  X-The Secretary shall send a copy of this Further Notice, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with paragraph  XZ-603(a) of the Regulatory Flexibility Act.u ZXy {Oc-ԍ Pub. L. No. 96354, 94 Stat. 1164, 5 U.S.C.  601 et seq. (1981).u  XC-  X,- B. Ex Parte Rules NonRestricted Proceeding  X- i106. This is a nonrestricted notice and comment rulemaking proceeding. Ex parte presentations are permitted except during the Sunshine Agenda period, provided they are  X -disclosed as provided in Commission rules.o  y {Om&-ԍ See generally 47 C.F.R.  1.1202, 1.1203, and 1.1206(a).o "!1| 0*(( "Ԍ X- C. Comment Period  X- j107. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the  X-Commission's rules, interested parties may file comments on or before May 28 , 1996 , and  X-reply comments on or before June 7 , 1996 .W y {O-ԍ See 47 C.F.R.  1.415 and 1.419.W To file formally in this proceeding, you must file an original and four copies of all comments, reply comments, and supporting comments. If you want each Commissioner to receive a personal copy of your comments, you must file an original plus nine copies. You should send comments and reply comments to Office of the Secretary, Federal Communications Commission, Washington, D.C. 20554. Comments and reply comments will be available for public inspection during regular business hours in the Reference Center of the Federal Communications Commission, Room 239, 1919 M Street, N.W., Washington, D.C. 20554. A copy of all comments should also be filed with the Commission's copy contractor, ITS, Inc., 2100 M Street, N.W., Suite 140, (202) 8573800.  X -  X - D. Authority  X -  X-k108. Authority for issuance of this Report and Order and Further Notice of Proposed  X{-Rule Making is contained in the Communications Act, Sections 4(i), 7, 303(c), 303(f), 303(g),  Xf-303(r), and 332, 47 U.S.C.  154(i), 157, 303(c), 303(f), 303(g), 303(r), 332, as amended.  X8- E. Ordering Clauses  X -l109. Accordingly, IT IS ORDERED that Part 15 of the Commission's rules is amended as set forth in Appendix B and will become effective 60 days after publication in the Federal Register.  X-m110. IT IS FURTHER ORDERED that Part 22 of the Commission's rules is amended as set forth in Appendix B and will become effective 60 days after publication in the Federal Register.  XR-n111. IT IS FURTHER ORDERED that Part 24 of the Commission's rules is amended as set forth in Appendix B.  X -o112. IT IS FURTHER ORDERED that the costsharing plan is conditioned on approval by the Wireless Telecommunications Bureau of an entity (or entities) to administer  X-the plan, as described in Section IV(B)(3), supra.  X!-p113. IT IS FURTHER ORDERED that Part 24 rule changes will become effective on the date that the Wireless Telecommunications Bureau selects a clearinghouse to administer the costsharing plan. "n$2Z 0*((U#"Ԍ X-q114. IT IS FURTHER ORDERED that Part 94 (new Part 101, effective August 1, 1996) of the Commission's rules is amended as set forth in Appendix B and will become effective 60 days after publication in the Federal Register.   X-r115. IT IS FURTHER ORDERED that rules requiring Paperwork Reduction Act approval shall become effective upon approval by the Office of Management and Budget  Xv-pursuant to the Paperwork Reduction Act of 1995, Pub. L. No. 10413;  XH-s116. IT IS FURTHER ORDERED THAT, as of the effective date of the new rules,  X1-the Commission will only grant primary status to applications for minor modifications that  X -would not add to the relocation costs of PCS licensees, as described in Section IV(C) supra.  X -t117. IT IS FURTHER ORDERED THAT, as of the effective date of the new rules,  X -the Commission will grant applications for major modifications and extensions to existing 2  X -GHz microwave systems only on a secondary basis, as described in Section IV(C) supra.  X-u118. IT IS FURTHER ORDERED that the Regulatory Flexibility Analysis, as  X}-required by Section 604 of the Regulatory Flexibility Act, and as set forth in Section VII(A) is ADOPTED.  X8-v119. IT IS FURTHER ORDERED that the Secretary shall send a copy of this First  X#-Report and Order and Further Notice of Proposed Rule Making to the Chief Counsel for Advocacy of the Small Business Administration.  X-  X-F. Further Information  X-w120. For further information concerning this proceeding, contact Linda Kinney, Legal Branch, Commercial Wireless Division, Wireless Telecommunications Bureau at (202) 4180620.  Xm-  ` `  FEDERAL COMMUNICATIONS COMMISSION  ` `  William F. Caton ` `  Acting Secretary" 3 0*(("  X- 2 @A-@ ]#Xj\  P6G;yoXP#APPENDIX A ă   X-  MECHANICS OF THE COSTSHARING PLAN ă  X-  X-Contents` `  hhCqpp  )xxX Paragraph A. Reimbursement Rightsp"(#1 1. Pro Rata Reimbursement Under the CostSharing Formulap"(#1 2. Depreciationp"(#8 3. Full Reimbursementp`"(#13 4. Compensable Costsp`"(#18 5. Reimbursement Capp`"(#24 B. Triggering a Reimbursement Obligationp`"(#29 1. Licensed PCSp`"(#29 2. Unlicensed PCSp`"(#35 C. Payment Issuesp`"(#37 1. Timingp`"(#37 2. Eligibility for Installment Paymentsp`"(#40 D. Termination of CostSharing Obligationsp`"(#45  X4- A. Reimbursement Rights  X-  X- 1. Pro Rata Reimbursement Under the CostSharing Formula  X- I. 1. 1. a.(1)(a) i) a)x I. A. 1. a.(1)(a) i) a) I. A. 1. a.(1)(a) i) a) 1. a. i.(1)(a)(i) 1) a)  X- 1. a. i.(1)(a)(i) 1) a) 1 1. i.(1)(a)(i) 1) a)1. Background. Under the plan proposed in our CostSharing Notice, PCS licensees  X-would be entitled to reimbursement based on a costsharing formula.t y {O<-ԍ CostSharing Notice, 11 FCC Rcd at 19351937,  2531. t The formula is derived by amortizing the cost of relocating a particular microwave link over a tenyear period, to reflect the total number of PCS licensees that benefit from the microwave  X~-relocation and the relative time of market entry.N~Zy {O-ԍ  Id. at 19351937,  2531.N The proposed formula takes into consideration the amount paid to relocate the link, the number of PCS licensees that would have posed an interference problem to the link, and the number of months that have passed  X9-since the relocator obtained its reimbursement rights.79y {O!-ԍ Id. 7  X -2. Comments. The overwhelming majority of the commenters support adoption of the proposed formula, although some commenters suggest minor modifications. BellSouth suggests combining two factors into one, as discussed in more detail below, which will render"4~0*(("  X-the same result but simplify the calculation.By yOy-ԍ BellSouth Comments at 4.B Only a few commenters expressed opposition to our proposal. UTC states that mandating the use of the proposed formula would be  X-inflexible and inequitable, because it will be difficult to apply in certain situations.BXy yO-ԍ UTC Comments at iv; 89.B For example, UTC states that some parties are negotiating compensation packages that include noncash items, such as participation in a jointventure, that do not fit easily into the  X-formula.3y {O& -ԍ Id.3 Also, UTC contends that some parties are negotiating relocation agreements for  Xv-multilink systems that do not designate a perpath amount.3vzy {O -ԍ Id.3 Thus, UTC suggests that the proposed costsharing formula should be used as a guideline for determining compensation,  XH-but its use should not be mandated.3H y {O-ԍ  Id.3   X -3. Discussion. Because the formula we proposed in the CostSharing Notice received widespread support from commenters, we adopt the proposed formula along with a few minor modifications. We believe that the formula provides an effective and straightforward means of determining a subsequent PCS licensee's reimbursement obligation. This formula is essential to make costsharing administratively feasible, particularly in light of the number of links that will require relocation and the number of PCS licensees potentially involved. We also believe that the formula strikes an appropriate balance between equitable allocation of relocation costs and ease of administration. The new formula is:  XMiԠ RN =  C  x [120(Tm)] N 120   XiRN ` ` equals the amount of reimbursement.pp  X-C ` ` equals the actual cost of relocating the link (up to the reimbursement cap).(#`  X-N ` ` equals the number of PCS licensees that would have interfered with the link. For the PCS relocator, N = 1. For the next PCS licensee that would have interfered with the link, N = 2, and so on.(#`  X~iTm ` ` equals the number of months that have elapsed between the month the PCS relocator obtains reimbursement rights and the month that the clearinghouse notifies a laterentrant of its reimbursement obligation.(#` ` `  X"-4. This formula is derived by amortizing the cost of relocating a particular microwave""50*((j"  X-link over a 10year period, which is represented by the value 120.py yOy-ԍ Twelve (12) months per year multiplied by ten (10) years equals 120. p As suggested by  XiBellSouth, we have eliminated the T1 variable proposed in the CostSharing Notice, which  Xirepresented the month that the first PCS licensee obtained reimbursement rights, and the Tn  Xivariable, which represented T1 plus the number of months that have passed since the PCS  Xirelocator obtained its reimbursement rights.gXy {O-ԍ CostSharing Notice, 11 FCC Rcd at 1930,  13.g Instead of the Tn T1 calculation, we  Xisubstitute a Tm variable, which represents the number of months that have passed since the  Xx-PCS relocator obtained its reimbursement rights. xy yO -ԍ The PCS relocator obtains reimbursement rights on the date that the relocation agreement between the  {O -microwave incumbent and the PCS relocator is signed, as discussed in Appendix Section A(2), infra.   We agree with BellSouth that combining  Xa-two variables into one renders the same result but simplifies the calculation.BaDy yOV-ԍ BellSouth Comments at 4.B  X3-5. The following is an example of how the formula will work: In January 1996, PCS  X -Licensee A pays $210,000 to relocate microwave Link X and obtain reimbursement rights.  X -Thus, C = $210,000, which is the amount paid to relocate the link.  y yO-ԍ This example assumes that Licensee A did not pay any relocation premium, so that the full $210,000  {OR-reflects actual relocation costs. Compensable costs are discussed in Appendix Section A(4), infra.  In January 1997, PCS Licensee B files a copy of its PCN with the clearinghouse for a system that would have  X icaused interference to Link X. . y yO-ԍ This determination is based on the Proximity Threshold test, which is discussed in detail in Appendix  {O~-Section B(1), infra.ľ As a result, Tm = 12, because twelve months have elapsed between the month the PCS relocator obtained reimbursement rights and the month that a  X -laterentrant's reimbursement obligation attaches. Because Licensee B is the second PCS provider to commence operations that benefit from the relocation of Link X, N = 2. The calculation of Licensee B's reimbursement payment is as follows:   XMi` `  R2 =  210,000 x [120 12] = $ 94,500  X6-  2 120 Thus, Licensee B pays $94,500 to Licensee A, while Licensee A remains unreimbursed for $115,500 of its original cost. The $21,000 difference is due to the depreciation factor in the formula, and reflects the fact that Licensee A benefited from the relocation of Link X a year before Licensee B.  X-6. In January 1998, Licensee C files a copy of its PCN with the clearinghouse for a system that would have caused interference to Link X. Twentyfour months have elapsed  Xgisince the PCS relocator obtained its reimbursement rights, so Tm = 24. Because Licensee C is"g6 0*((" the third licensee to benefit from the relocation of Link X, N now increases to 3. Licensee C pays $56,000 under the formula as follows:   Xi` `  R3 = 210,000 x [120 24] = $ 56,000 ` `   3 120 The $56,000 payment is divided equally between Licensees A and B. Thus, the net payment by Licensee A is now reduced by $28,000 to $87,500 and the net payment by Licensee B is similarly reduced to $66,500. Licensee C's share is lower than either because of the additional year of depreciation that has occurred before Licensee C entered the market. The formula can be applied in the same manner to subsequent PCS licensees that interfere with Link X.  X -  X - 7. All calculations must be done on a perlink basis. Therefore, if PCS relocators agree to move a multilink system, they must do an accounting for each individual link if they  X -want to collect reimbursement under our costsharing plan.  y yO -ԍ Those expenses that qualify as compensable are discussed in further detail in Appendix Section A(4),  {M-infra.į We believe that calculating reimbursement on a perlink basis is the most equitable way to distribute reimbursement obligations, and that the benefits outweigh the difficulties UTC believes parties will  Xb-experience in allocating certain costs to certain links.>b y yO3-ԍ UTC Comments at 89.> Furthermore, as we proposed in the  XK-CostSharing Notice, PCS licensees remain free to negotiate alternative costsharing terms or  X6-agreements.6y {O-ԍ See CostSharing Notice, 11 FCC Rcd at 1936,  29; see also Section IV(B)(1), supra.ğ Therefore, if PCS relocators enter into unique relocation agreements that cannot be easily converted into monetary terms, they may choose to negotiate an alternative costsharing agreement with subsequent PCS licensees. We believe that such flexibility  X-addresses UTC's concerns about rigid application of the formula.>By yO-ԍ UTC Comments at 89.>  X- 2. Depreciation  X- 8. Background. Because the formula is derived by amortizing the cost of relocating a link over a tenyear period, the amount that the PCS relocator receives in reimbursement  Xg-"depreciates" over time. In the CostSharing Notice, we proposed that the date from which the reimbursement amount begins to depreciate should be the date that the PCS relocator  X;-receives its reimbursement rights.n;y {O%-ԍ  CostSharing Notice, 11 FCC Rcd at 1937,  3031.n Reimbursement rights would be created on the date that a relocation agreement is signed. We also sought comment on whether depreciation should start on a uniform date for all licensees, such as the date the voluntary negotiation period" 7d 0*(("  X-began for the A and B block licensees.3 y {Oy-ԍ Id.3  X-9. Comments. Many commenters agree with our proposal that depreciation should start on the date that the PCS relocator obtains reimbursement rights, which should be the  X-date that a relocation agreement is signed.!&Zy {O-ԍ  See, e.g., PacBell Reply Comments at 67; SBMS Reply Comments at 89; Western Reply Comments at  yOy-9. Note that our costsharing proposal advocated the use of the term "reimbursement rights" for costsharing  {OA -purposes, rather than "interference rights," which is a change from PacBell's original proposal. See CostSharing  {O -Notice, 11 FCC Rcd at 1932,  18. BellSouth, however, recommends that reimbursement rights be acquired on the day that the microwave incumbent ceases operations, because reliance on a contract execution date would overlook the practicality of a phasedin  X_-approach to relocation.D"_Hy yOX-ԍ Bell South Comments at 11.D Other PCS licensees argue that depreciation should begin on the date that a PCS licensee places its systems in operation, rather than the date it obtains reimbursement obligations via the clearinghouse, because many months may pass between the time a PCS licensee registers with the clearinghouse and the date when service is actually  X -offered.R# y {O-ԍ See, e.g., AT&T Comments at 910. R Furthermore, AT&T argues that depreciation begins for the initial PCS relocator when it acquires reimbursement rights from the clearinghouse, but that the depreciation clock stops for laterentrant PCS licensees when they place their facilities into operation, and that  X -this disparity should be eliminated.3$ j y {O-ԍ  Id.3 Several commenters contend that the date a licensee commences operations may be difficult to ascertain, and that requiring confirmation of such  X-date may add to the administrative burden of the clearinghouse.% y {O=-ԍ  PacBell Reply Comments at 67; see also SBMS Reply Comments at 89; Western Reply Comments at 9. PacBell suggests that costsharing rights and obligations should go into effect 60 days after the clearinghouse assigns  Xb-reimbursement obligations to the PCS licensee, because such a date is easy to confirm.&bV y {Oi-ԍ PacBell Comments at 23. See also SBMS Reply Comments at 89; BellSouth Reply Comments at 89. On the other hand, a few small businesses that anticipate bidding for future PCS licenses support a uniform, early date from which depreciation would be calculated, rather than the variable  X-one suggested.i'y {O#-ԍ See, e.g., GO Comments at 23; US Airwaves Comments at 3.i These commenters argue that the depreciation start date should be an early date to ensure that later entrants, such as designated entities, pay lower relocation costs due to"8z'0*((F"  X-their limited financial assets.(y {Oy-ԍ  See GO Comments at 23; see also DCR Comments at 3. Another small business, Western, supports a  {OC-uniform date for depreciation for reasons of uniformity and simplicity.  See Western Comments at 3.  X- 10. Discussion. We agree with those commenters that suggest that tying depreciation  X-to the acquisition of reimbursement rights is administratively simple and easy to confirm.)$y {O-ԍ See, e.g.,Pacific Bell Comments at 23, SBMS Reply Comments at 89; Bell South Reply Comments at 89. Therefore, depreciation shall begin on the date that the PCS relocator signs a relocation agreement with a microwave incumbent. Within ten business days of the date the agreement is signed, the PCS licensee shall submit documentation of the agreement to the clearinghouse. If the clearinghouse has not yet been selected, the PCS relocator will be responsible for submitting documentation of a relocation agreement within ten business days of the date that the Wireless Bureau issues a public notice announcing that the clearinghouse has been  X -established and has begun operation.`* ~y {OI-ԍ See discussion in Section IV(B)(1), supra.`  X - 11. We disagree with those commenters who argue that depreciation should begin  X -when the PCS relocator begins operations.m+ y {O-ԍ  See, e.g., AT&T Comments at 910; SBMS Reply Comments at 89.m As we stated in the CostSharing Notice, we are concerned that, in some instances, a PCS relocator might place its system in operation after a subsequent licensee has started service, as a result of delays in construction, inadequate  X-equipment supplies, technical difficulties, etc.a,y {O-ԍ CostSharing Notice, 11 FCC Rcd at 1937,  30.a Such a scenario would make the costsharing  X{iformula difficult to administer, because the Tm variable would become a negative number. Furthermore, starting depreciation on the date that the PCS relocator signs a relocation agreement will mean that the PCS relocator will always pay the largest portion of relocation costs associated with the link. We believe that PCS relocators will therefore have an  X-additional incentive to negotiate the lowest possible relocation costs.K-4 y {O-ԍ Id. at 1937,  31.K We also agree with those commenters who point out that the date a relocation agreement is signed is easier to  X-identify than the date that the PCS relocator actually begins service.L. y {Oh"-ԍ See, e.g., GO Comments at 3.L  X- 12. Finally, we are not persuaded by those commenters who argue that a uniform, early start date, such as the date that the voluntary negotiation period began for A and B  X-block licensees, is preferable./X y {O'-ԍ See, e.g., GO Comments at 23; see also DCR Comments at 3; Western Comments at 3. Although a uniform date may be the simplest alternative"9/0*((" from an administrative perspective, we believe that it will distort the amount of reimbursement that PCS licensees would be entitled to receive. For example, if a PCS licensee decides not to relocate a microwave system in a rural part of its market area until five years after it receives its license, then it would be entitled to only a portion of the reimbursement it would be entitled to if depreciation begins on the date that the relocation agreement is signed. In sum, we believe that starting depreciation on the date that parties sign the relocation agreement for a particular link balances the interests of both current and future PCS licensees.  X1- 3. Full Reimbursement  X -  13. Background. In the CostSharing Notice, we tentatively concluded that, under some scenarios, PCS relocators should be entitled to full reimbursement of compensable costs, up to the cap, for relocating links that do not pose an interference problem to their own  X -systems and which benefit other PCS licensees.90\ y {O9-ԍ CostSharing Notice, 11 FCC Rcd at 1938,  33. Full reimbursement is different from reimbursement pursuant to the costsharing formula, because all of the PCS relocator's reimbursable costs are paid, instead of  {O-just a pro rata portion.9 Links can be noninterfering in the following two ways: (1) the link is fully outside of the PCS relocator's geographic market area, or (2) the link is fully outside of its licensed frequency band. We tentatively concluded that a PCS relocator should be entitled to full reimbursement, subject to the reimbursement  Xd-cap, for relocating links with both endpoints outside of its licensed service area.31dy {O-ԍ Id.3 We expressed concern, however, about allowing full reimbursement for all links that are fully outside a PCS relocator's frequency band, because such links might pose an adjacentchannel  X-interference problem to the PCS relocator, and therefore would not be truly noninterfering.32~y {ON-ԍ Id.3  X- 14. Comments. Most commenters agree that PCS relocators should be entitled to full  X-reimbursement for relocation of links outside of their geographic market area.3y {O-ԍ See, e.g., UTAM Comments at 9; Western Comments at 4; Omnipoint Comments at 4; Southern Comments at 67. However, several commenters propose the following modification: in a situation where a link is located fully within the relocator's channel block, but with an endpoint in each of two geographic markets, one of the PCS licensees should relocate the link and then split the cost equally with  X~-the other PCS licensee.~4~j y {O$-ԍ  See, e.g., API Comments at 910; PCIA Comments at 33; BellSouth Comments at 8.~ With respect to links fully outside of the PCS relocator's licensed frequency band, a majority of commenters argue that full reimbursement is appropriate"g: 40*(("  X-whether or not the link is truly noninterfering.5y {Oy-ԍ See, e.g., Southern Comments at 67; UTC Comments at 7; Omnipoint Comments at 4. They assert that determining whether the link posed an adjacent channel interference problem may be difficult and would unduly  X-complicate the costsharing plan.36Zy {O-ԍ Id.3  X-15. Additionally, several commenters suggest that, when a PCS provider relocates a link wholly outside its service area and/or spectrum block, it should be entitled to 100 percent reimbursement, up to the cap, but such costs should not be subject to depreciation, as  X_-proposed in the CostSharing Notice.A7_y yO -ԍ PCIA Comments at 3034.A These commenters argue that this policy is advisable because applying depreciation to this situation might encourage PCS providers to delay their required relocations in the hope that other PCS entities in their block will relocate links before them, because the longer they delay the relocations, the higher the amount of  X -reimbursement.8 |y {O2-ԍ  See, e.g., PCIA Comments at 33, BellSouth Reply Comments at 9; PacBell Reply Comments at 4.   X -16. Discussion. We agree with the majority of commenters that PCS relocators should be entitled to full reimbursement of compensable costs, up to the cap, for relocating noninterfering links that are either fully outside their market area or their licensed frequency  X-band.~9y {OQ-ԍ  See, e.g., UTAM Comments at 9; Western Comments at 4; Omnipoint Comments at 4.~ Even though a PCS licensee might be relocating a link because it poses an adjacent channel interference problem, we agree with commenters that trying to determine whether the  Xd-link is truly noninterfering would be administratively burdensome.h:dy {O-ԍ See, e.g., Omnipoint Comments at 4; PCIA Comments at 33.h For administrative convenience, therefore, we will allow full reimbursement of compensable costs, up to the cap, if the PCS relocator relocates a link that is fully outside its licensed frequency band. In addition, we do not agree with commenters that, in situations in which a PCS licensee relocates a microwave link with only one endpoint in its market on its frequencies, the relocation costs for both ends of the link should be aggregated and then split between the  X-relocator and the cochannel adjacent market PCS licensee.i;2 y {O!-ԍ  See, e.g., API Comments at 910; BellSouth Comments at 8.i We believe that this suggestion would unduly complicate the costsharing plan. U 1  1  Reimbursement, therefore, works as follows  X-(changes from our original proposal are shaded): Figure 1  Figure 1 "; ;0*(("  X- !- 6n# ddhY<- Y ddx !ddx, Y         aE#G\  P6G; لP#Fully Within Relocator's  aENBlock# Xj\  P6G;yoXP#   aE#G\  P6G; لP#Partly Within Relocator's  aENBlock# Xj\  P6G;yoXP#   aE#G\  P6G; لP#Outside of Relocator's  aENBlock# Xj\  P6G;yoXP# { P     aE|#G\  P6G; لP#Both endpoints inside  aE"Relocator's MTA/BTA# Xj\  P6G;yoXP#  aE|#G\  P6G; لP#No reimbursement# Xj\  P6G;yoXP#  bE|#G\  P6G; لP#Pro rata reimbursement under the cost sharing  aEformula# Xj\  P6G;yoXP#ov  aE| #G\  P6G; لP#100 percent reimbursement  aE(up to the cap) # Xj\  P6G;yoXP#{ P{ P    aE#G\  P6G; لP#One endpoint inside  aERelocator's MTA/BTA# Xj\  P6G;yoXP#C  bE#G\  P6G; لP#Pro rata reimbursement under the cost sharing  aEDformula# Xj\  P6G;yoXP#v  bE#G\  P6G; لP#Pro rata reimbursement under the cost sharing  aEDformula# Xj\  P6G;yoXP##Xj\  P6G;yoXP#v  aE #G\  P6G; لP#100 percent reimbursement  aEC(up to the cap) # Xj\  P6G;yoXP#{ P  o    aEr#G\  P6G; لP#No endpoints inside  aERelocator's MTA/BTA# Xj\  P6G;yoXP#  aEr#G\  P6G; لP#100 percent reimbursement  aE(up to the cap)# Xj\  P6G;yoXP#  aEr#G\  P6G; لP#100 percent reimbursement (up to the cap) 100 percent reimbursement (up to the cap)   aE  # Xj\  P6G;yoXP#  $(#(#(#(#!"$  Xb-17. In addition, we also agree with PCIA that when a PCS provider relocates a link wholly outside its service area and/or spectrum block which would entitle it to full reimbursement of compensable costs up to the cap that such reimbursement should not be  X-depreciated under the costsharing plan.>< yO-ԍ PCIA Comments at 33.> We believe that this addition to our original proposal will encourage PCS licensees not to delay relocations in the hope that other PCS entities will relocate these links.  X-  X-4. Compensable Costs  X-18. Background. Relocation costs fall into roughly two categories: (1) the actual cost  X|-of relocating a microwave incumbent to replacement facilities, and (2) payments above the  Xe-cost of providing comparable facilities, also referred to as "premium payments."a=eX {On-ԍ CostSharing Notice, 11 FCC Rcd at 1932,  18.a We  XN-proposed in the CostSharing Notice that premium payments should not be reimbursable, because such payments are likely to be paid by PCS licensees to accelerate relocation so that  X"-the PCS relocator can be first to market.3>" {O"-ԍ  Id.3 Therefore, we tentatively concluded that only  X -actual relocation costs should be compensable.3? | {O8%-ԍ  Id.3  X-19. Comments. Many PCS licensees agree with our tentative conclusion thatX<?0*((3n"!<6hX  X-premium payments should be excluded from reimbursement under the costsharing plan.@ {Oy-ԍ See, e.g., BellSouth Comments at 13; DCR Comments at 4; Omnipoint Comments at 45. Furthermore, commenters generally approve of the list of compensable costs proposed in the  X-CostSharing Notice, which are discussed in more detail below.aAZ {O-ԍ CostSharing Notice, 11 FCC Rcd at 1940,  37.a However, microwave incumbents suggest that such a list be illustrative, not exhaustive, due to their concern that legitimate expenses incurred to date will not be included in such calculations and that  X-limitations on reimbursement will ultimately affect them.TB {O, -ԍ See, e.g., East River Comments at 2.T They also argue that attorney and consultant fees are a necessary part of a seamless and smooth microwave relocation, and that  Xa-such costs should qualify as reimbursable.cCa~ {O -ԍ See, e.g., AAR Comments at 8; API Comments at 56. c CIPCO states that reasonable legal costs should  XJ-be eligible for reimbursement, but capped at $5,000 per link.>DJ yO -ԍ CIPCO Comments at 1.> AT&T believes that PCS relocators should be eligible for costsharing with respect to any payments made to or on behalf of a microwave incumbent, subject to the reimbursement cap, without regard to the  X -"reasonableness" of such payment.AE  yOV-ԍ AT&T Comments at 1011.A  X - 20. Discussion. We adopt our proposal that premium payments should not be reimbursable, because such payments are likely to be paid by PCS licensees to accelerate relocation in order to be the first licensee in the market area to offer PCS services. We agree with commenters that later market entrants should not be required to contribute to premium payments, because they will not receive the corresponding advantage of being first to  Xd-market.gFd0  {OE-ԍ  See, e.g., GTE Comments at 15; PacBell Comments at 34.g Therefore, we limit reimbursable costs to actual relocation costs. Because our proposed list of compensable costs received broad record support, we conclude that the PCS relocator may seek reimbursement for items such as: radio terminal equipment (TX and/or RX antenna, necessary feed lines, MUX/Modems); towers and/or modifications; backup power equipment; monitoring or control equipment; engineering costs (design/path survey); installation; systems testing; FCC filing costs; site acquisition and civil works; zoning costs; training; disposal of old equipment; test equipment (vendor required); spare equipment; project management; prior coordination notification under Section 21.100(d) of the Commission's rules; site lease renegotiation; required antenna upgrades for interference control; power plant upgrade (if required); electrical grounding systems; Heating Ventilation and Air Conditioning (HVAC) (if required); alternate transport equipment; and leased facilities. We also agree with those commenters who suggest that this list should be illustrative, not exhaustive, because some actual relocation expenses might not fit neatly into"P= F0*((0"  X-one of these categories.TG {Oy-ԍ See, e.g., East River Comments at 2.T   X-21. For administrative convenience and simplicity, we believe that the bulk of compensable costs should be tied as closely as possible to actual equipment costs, such as those listed in the previous paragraph. Based on this goal, we conclude that subsequent PCS licensees should only be required to reimburse PCS relocators for incumbent transaction expenses that are directly attributable to the relocation, subject to a cap of two percent of the "hard" costs involved. This restriction on the reimbursement of transaction fees corresponds to the restriction we adopted with respect to PCS reimbursement of incumbent transaction  X1-expenses during an involuntary relocation, as discussed in Section IV(3), infra. For purposes of costsharing, however, such transaction expenses would be reimbursable for relocations that occur during any time period voluntary, mandatory, or involuntary.  X -22. Additionally, several commenters stated that they have made lumpsum payments to microwave incumbents so that the incumbents may design and construct their own  X -replacement systems.NH Z {O-ԍ See, e.g., AT&T Comments at 9.N PCS licensees request that such payments be reimbursable under our  X-costsharing plan.3I {O/-ԍ Id.3 We agree with commenters that they should be entitled to some reimbursement for such payments; however, we conclude that only those costs attributable to the cost of purchasing a replacement system will be reimbursable. Therefore, the PCS relocator will be required to submit a cost allocation, which itemizes the approximate cost of replacement facilities based on the allowable compensable expenses listed above. If the entire lump sum either cannot be accounted for, or exceeds the reimbursement cap discussed in  X-Section A(5), infra, the remaining amount will not be eligible for reimbursement.  X-23. We also tentatively concluded in the CostSharing Notice that PCS licensees should be permitted to seek reimbursement for any relocation costs incurred after the voluntary negotiation period for A and B block licensees began on April 5, 1995, but prior to  X-the adoption of a costsharing plan.aJ~ {O-ԍ CostSharing Notice, 11 FCC Rcd at 1939,  35.a Commenters concurred with our tentative conclusion.gK {OZ!-ԍ  See, e.g., GTE Comments at 15; PacBell Comments at 34.g We agree with commenters that PCS licensees who have already relocated microwave links should receive the same reimbursement benefit as those PCS licensees who relocate  XT-microwave systems after adoption of the costsharing plan.gLT {O%-ԍ See, e.g., GTE Comments at 15; PacBell Comments at 34.g Therefore, once the new rules are effective and a clearinghouse is established, receipts or expenses for compensable microwave relocation costs incurred since April 5, 1995 should be submitted to the"&>4 L0*((" clearinghouse for accounting purposes.  X- 5. Reimbursement Cap  X-24. Background. In the CostSharing Notice, we proposed a $250,000 cap on the reimbursement amount that a PCS licensee may obtain from subsequent licensees for the  Xx-relocation of each individual microwave link.jMx {O-ԍ Cost Sharing Notice, 11 FCC Rcd at 1943,  4243. j We also proposed a supplemental reimbursement cap of $150,000 for situations in which a licensee is required to pay for a new  XJ-tower to effectuate the relocation of the microwave incumbent.3NJZ {OU -ԍ Id.3  X -25. Comments. Many microwave incumbents oppose the imposition of a reimbursement cap. They argue that the cap would place an artificial ceiling on the price of relocating a link, force them to contribute to the cost of their own relocation, and reduce their  X -ability to obtain comparable facilities.xO  {Ot-ԍ  See, e.g., AGA Comments at 4; APCO Comments at 79; NRECA Comments at 5.x Some incumbents also assert that a reimbursement  X -cap may force microwave incumbents to bear some of the cost of relocation themselves.OP ~ {O-ԍ See, e.g., AAR Comments at 56.O  X -AAR disputes whether relocation costs will average $250,000,TQX  yOj-ԍ AAR Comments at 7, citing a 1992 study by the Commission's Office of Engineering and Technology which concluded that some relocation costs could be as high as $814,000, depending on the number of links required to cover the distance of a 2 GHz link when the facility converts to a higher frequency.T although CIPCO states that  X-the proposed cap is reasonable and adequate.>R0  yOs-ԍ CIPCO Comments at 1.> By contrast, most PCS licensees approve of  X{-the caps.S{  {O-ԍ  See, e.g., DCR Comments at 4; GO Comments at 3; PCIA Comments at 29; US Airwaves Comments at 2. Some PCS licensees suggest, however, that the cap should only be a cap on  Xd-premium payments, assuming such payments are reimbursable under the costsharing plan.Td {O/ -ԍ See, e.g., Sprint Comments at 27; AT&T Comments at 5, n.11; PCS PrimeCo Comments at 89. They argue that, if reasonable relocation costs exceed the cap, then the cap should be flexible  X6-enough to allow reimbursement of such costs.3U6 {O#-ԍ Id.3 Other PCS licensees oppose flexible caps.[V6> yO%%-ԍ BellSouth Reply Comments at 13; GO Comments at 5.[ They contend that it is difficult to differentiate between actual costs and premiums, and that a"?V0*(("  X-cap will help to keep costs down.CW yOy-ԍ BellSouth Comments at 14.C Moreover, they argue that rigid caps are likely to reduce  X-the number of disputes that arise over which costs are "actual" relocation costs.3XX {O-ԍ Id.3 Several commenters express concern that PCS licensees will average costs over numerous relocated links in order to receive the maximum reimbursement allowed per link, regardless of actual  X-costs incurred.`Y {O? -ԍ See, e.g., GO Comments at 5; AAR Comments at 10.`  Xv-26. In addition, some commenters suggest that the $150,000 cap for new towers should also apply to tower modifications, because such modifications can be very costly and may require that a large portion of the proposed $250,000 cap be allocated to structural  X1-reinforcement, and so on.qZ1| {O^-ԍ See, e.g., BellSouth Comments at 1819; AT&T Comments at 4, n.8.q They argue that failure to include tower modifications as part of the additional $150,000 cap may discourage modifications, even though modifications may be simpler, more economical, and may face fewer local zoning challenges than new  X -construction.W[  {O-ԍ See, e.g., BellSouth Comments at 1819.W BellSouth also requests us to specify that the $150,000 cap applies to the construction and modification of all towers related to the link, and that it is not a separate cap  X -of $150,000 for each tower associated with a link.J\  yO-ԍ BellSouth Comments at 19, n. 29.J  X-27. Discussion. We adopt a cap of $250,000 on the actual cost of relocating the link (represented by variable C in the costsharing formula), with an additional $150,000 if a new or modified tower is required. We believe that a reimbursement cap enables participants in future PCS auctions to assess the value of a license more accurately, because these applicants would be able to determine in advance the maximum amount they may be required to contribute towards relocation costs. In addition, we believe that such a cap protects future PCS licensees, who have no opportunity to participate in the negotiations, from being required to contribute to excessive relocation expenses. We agree with those commenters who argue that a rigid cap will reduce disputes over relocation expenses, because we believe that such a cap will prevent subsequent licensees from being forced to contribute to astronomical  X-expenses that may include hidden premiums.T]0  {O#-ԍ See, e.g., BellSouth Comments at 14.T We also agree with those incumbents who  X-suggest that raising the cap will result in a larger number of disputes.3^  {O&-ԍ Id.3 As we stated in the  X|-CostSharing Notice, we believe that a $250,000 cap plus $150,000 for towers is sufficient to"|@T ^0*(("  X-cover the average cost of relocating a link.g_\ {Oy-ԍ CostSharing Notice, 11 FCC Rcd at 1943,  43 (citing the study conducted by the FCC Office of  {OC-Engineering and Technology); see also CIPCO Comments at 1 (stating that, in its experience as the operator of a 2 GHz microwave system, the proposed cap is reasonable and adequate).g Furthermore, we emphasize that the cap does not limit payments to microwave incumbents, because it is a cap on the amount that subsequent licensees must pay to the PCS relocator, not a cap on the amount the PCS  X-relocator may pay to the microwave incumbent to vacate the spectrum.` {OX-ԍ See, e.g., AT&T Reply Comments at 7; Chester Telephone et al. Reply Comments at 4; GO Reply Comments at 45. The cap does not relieve PCS licensees from the responsibility of providing incumbents with replacement systems, so adopting a cap should not force incumbents to pay for their own relocation expenses. We also emphasize that PCS licensees will not be permitted to average costs over numerous links; rather, they must submit verification and receipts for actual expenses incurred  XH-for each individual relocated link, as discussed in Appendix Section A(4), supra.`aHF {O?-ԍ  See, e.g., GO Comments at 5; AAR Comments at 10.`  X -28. Finally, we agree with BellSouth that the additional $150,000 cap permitted for  X -new towers should also encompass costs associated with modifications to existing towers.Fb  yO-ԍ BellSouth Comments at 1819.F Thus, PCS licensees that modify an existing tower may claim them under the $150,000 tower cap. We believe that adding such flexibility will promote tower modifications, which may be simpler, more economical, and result in fewer local zoning challenges than new tower  X -construction.Wc h  {O-ԍ See, e.g., BellSouth Comments at 1819.W We also agree with BellSouth that the $150,000 cap should apply to the construction and modification of all towers related to the link, and that it is not a separate cap  X{-of $150,000 for each tower associated with a link.Jd{  yO&-ԍ BellSouth Comments at 19, n. 29.J  XM- B. Triggering a Reimbursement Obligation   X- 1. Licensed PCS  X-29. Background. In the CostSharing Notice, we proposed that laterentrant PCS licensees would be obligated to contribute to the cost of relocation if their PCS link would have caused interference to a microwave link previously relocated by another PCS licensee.  X-To determine whether interference would have occurred to a link that no longer exists, we proposed to use the criteria set forth in the TIA Telecommunications Systems Bulletin 10F,"A d0*((o"  X-"Interference Criteria for Microwave Systems," May 1994 ("Bulletin 10F"),-eX yOy-ԍ TIA is currently working with industry representatives to modify the parameters of Bulletin 10F. These new parameters and requirements may better represent PCStomicrowave interference standards and could be utilized in applying the costsharing mechanism.- or some other industryaccepted standard. However, we stated that, because the procedures set forth in Bulletin 10F permit the use of different propagation models and allow alternative technical parameters to be employed, Bulletin 10F may not provide a clear standard for determining  X-interference in some situationsaf {O= -ԍ CostSharing Notice, 11 FCC Rcd at 1947,  52.a Thus, we asked for comment on whether Bulletin 10F  X-should be limited in scope for reimbursement purposes.3gz {O -ԍ Id.3 We also asked for comment on whether another standard could be more easily applied for determining interference for  X_-reimbursement purposes.3h_  {O-ԍ Id.3  X1-30. Comments. A number of commenters support the use of Bulletin 10F for  X -determining interference which then triggers a costsharing obligation.i  {Oi-ԍ  See, e.g., BellSouth Comments at 1618, PCIA Comments at 3035; PacBell Comments at 5; UTC Comments at 11. However, some commenters allege that Bulletin 10F does not address propagation loss due to irregular  X -terrain, and thus is an inaccurate measure of interference.ij  {O-ԍ See, e.g., BellSouth Comments at 17; PCIA Comments at 35.i SBMS states that Bulletin 10F does not address adjacent channel interference or differences in terrain, but it supports the use  X -of Bulletin 10F for lack of a better standard.=k  yO-ԍ SBMS Comments at 6.= BellSouth and PCIA argue that the Commission should adopt the LongleyRice Irregular Terrain Model to determine propagation  X-loss.Xl yO[-ԍ BellSouth Comments at 17; PCIA Comments at 35.X  Xb-31. On the other hand, a number of A and B block PCS licensees who have entered into their own private costsharing agreement suggest that we use an alternative method for  X4-determining interference, which they call the "Proximity Threshold" test.m4 {O#-ԍ  See, e.g. GTE Comments at 45; PCS PrimeCo Comments at 1213; Sprint Comments at 24. Supporters of the Proximity Threshold test, which is described in more detail below, argue that it provides a brightline test to determine when the costsharing reimbursement is triggered, which"B<m0*((d"  X-simplifies the process of determining when an obligation to share costs arises.n {Oy-ԍ See, e.g. GTE Comments at 45; PCS PrimeCo Comments at 1213; Sprint Comments at 24. In reply  X-comments, many commenters express support for the use of the Proximity Threshold test as a  X-method for determining costsharing obligations.oZ {O-ԍ  See, e.g., BellSouth Reply Comments at 23; PacBell Reply Comments at 23; Sprint Comments at 2425; Chester Telephone Co. Reply Comments at 2; Comsearch Reply Comments at 2. Several of the supporters stress that if adopted, we should clarify that the Proximity Threshold test would not be used to determine actual PCStomicrowave interference, but rather would only be used to determine when a  X-PCS licensee has an obligation to participate in the costsharing plan.3p {O -ԍ  Id.3 A few commenters  Xv-oppose the Proximity Threshold test.qvF {Om -ԍ  See, e.g., GO Reply Comments at 7; SBMS Reply Comments at 6; Tenneco Reply Comments at 45. SBMS opposes the Proximity Threshold test because it is contrary to standard engineering practice for determining actual interference, and it monetarily disadvantages PCS providers whose innovative system technologies are designed to  X1-work around microwave incumbents.Cr1 yO-ԍ SBMS Reply Comments at 6.C GO also opposes the Proximity Threshold standard as being too broad in imposing reimbursement obligations, because it is based solely on  X -geographic location.As h  yO-ԍ GO Reply Comments at 7.A GO and Omnipoint both claim that licensees should not have to pay  X -for unnecessary relocations when interference could be avoided.jt  {O-ԍ Id.; see also Omnipoint Reply Comments at 57.j Tenneco opposes the Proximity Threshold test because it believes such a test will change the actual interference  X -protection afforded microwave incumbents.Hu  yO-ԍ Tenneco Reply Comments at 45.H  X-32. Discussion. We agree with the majority of commenters that the Proximity Threshold test is an acceptable alternative to Bulletin 10F to determine interference for purposes of our costsharing plan, and we adopt its use. Under the Proximity Threshold test, cost sharing obligations are triggered if, for any microwave link, (1) all or part of the microwave link was initially cochannel with the PCS band(s) of any subsequent PCS entity; (2) a PCS relocator has paid the relocation costs of the microwave incumbent; and (3) the subsequent PCS entity is preparing to turn on a fixed base station at commercial power and the fixed base station is located within a rectangle described as follows: XThe length of the rectangle shall be x where x is a line extending through both nodes of the microwave link to a distance of 48 kilometers (30 miles) beyond each node. The width of the rectangle shall be y where y is a line perpendicular to x and extending for a distance of 24 kilometers (15 miles) on both sides of x. Thus, the"|Cu0*((" rectangle would be represented as follows:(# yA T6ddddddddT0*ddD y $(#(#!A8$ "A8 "A8 "A8 "A8 "A8 "A8 "A8 "A8 "A8 "A8 "A8 $A8  (#(#  X- 33. We agree with those commenters that argue that this test will be less expensive  Xy-and easier to administer than Bulletin 10F.vy {O-ԍ See, e.g., BellSouth Reply Comments at 23; PacBell Reply Comments at 23; Sprint Comments at 2425. The Proximity Threshold test does not require extensive engineering studies or analyses, and it yields consistent, predictable results by eliminating the variations which can be associated with the use of Bulletin 10F. A PCS base station will either fall inside the reimbursement "box" or out of it. Additionally, use of the Proximity Threshold test will permit existing and prospective PCS providers to project their cost sharing obligations more accurately. We are cognizant of concerns raised by a few commenters that use of the Proximity Threshold test may limit a licensee's ability to engineer around the transmission of the former microwave link to avoid relocation reimbursement  X-obligations.lw" {O-ԍ See, e.g., GO Reply Comments at 7; SBMS Reply Comments at 6.l However, we believe that the benefits that the Proximity Threshold provides in terms of ease of administration outweigh any harm that use of the test will impose on laterentrant PCS licensees. We also believe that many fewer disputes will arise over application of the Proximity Threshold than if we mandated use of Bulletin 10F for costsharing purposes.  XN-  X7-!34. As noted above, we also conclude that only cochannel interference will be considered for purposes of determining a costsharing obligation, which is what we proposed  X -in the CostSharing Notice.wx  {On$-Ѝ CostSharing Notice, 11 FCC Rcd at 19481949,  5456.w We exclude adjacentchannel interference as a trigger for costsharing, because we agree with those commenters who argue that excluding adjacentchannel interference for costsharing purposes greatly simplifies our costsharing plan and eliminates many possible disagreements over whether a PCS system would have caused or experiencedX DFx0*((38ADT6X  X-adjacent channel interference.Sy {Oy-ԍ  See, e.g., Omnipoint Comments at 4.S We emphasize, however, that the exclusion of adjacentchannel interference for costsharing purposes will not affect the way that PCStomicrowave  X-interference is determined, as some incumbents fear.XzZ {O-ԍ See, e.g.,Tenneco Reply Comments at 45.X Rather, microwave incumbents remain  X-protected from both adjacent and cochannel interference under Section 24.237 of our rules.@{ yOX-ԍ 47 C.F.R.  24.237.@  Xv- 2. Unlicensed PCS  XH-"35. Comments. UTAM points out that the trigger for costsharing obligations should be different for unlicensed PCS services, because their services and procedures are different  X -than licensed PCS services.>| | yOG-ԍ UTAM Comments at 30.> UTAM suggests that, for unlicensed PCS services, reimbursement obligations should be linked to its deployment plan for unlicensed PCS devices. UTAM designates individual areas, usually counties, as Zone 1 or Zone 2 areas,  X -depending on the number of microwave links yet to be relocated.~}  {O-ԍ ET Fourth Memorandum Opinion and Order, 10 FCC Rcd at 795859,  1213.~ In Zone 1 areas, early unlicensed PCS deployment is allowed, because few microwave incumbent systems still  X -operate.3~  {O-ԍ Id.3 As the aggregate power level is approached in which interference would be caused to incumbent microwave licensees, UTAM restricts further unlicensed PCS device deployment  Xy-until the affected microwave link is relocated.3y0  {OZ-ԍ  Id.3 In Zone 2 areas, it is necessary to coordinate the site of each unlicensed PCS systems to a relatively large number of stilloperating  XK-microwave links.3K  {O-ԍ Id.3 UTAM proposes that its reimbursement obligation should be triggered when a county is cleared of microwave links in the unlicensed allocation, and UTAM invokes a Zone 1 power cap as a result of third party relocation activities; or a county is cleared of microwave links in the unlicensed allocation and UTAM reclassifies a Zone 2 county to a  X-Zone 1 status, which could not have been done without third party relocation activities.4T  {O#-ԍ  Id. 4  X-Those commenters that discuss UTAM's costsharing obligations agree with its proposal.t {Oo&-ԍ See, e.g., PCIA Reply Comments at 17; PacBell Reply Comments at 78.t "Ex0*((%"Ԍ X-#36. Discussion. We agree with UTAM that the trigger for costsharing obligations should be different for unlicensed PCS, because their services and procedures are different  X-than licensed PCS services.> yOK-ԍ UTAM Comments at 30.> We therefore adopt UTAM's suggestion that, for unlicensed PCS, reimbursement obligations should be linked to its deployment plan for unlicensed PCS devices. UTAM's reimbursement responsibilities will be triggered when (1) a county is cleared of microwave links in the unlicensed allocation, and UTAM invokes a Zone 1 power cap as a result of third party relocation activities, or (2) a county is cleared of microwave links in the unlicensed allocation and UTAM reclassifies a Zone 2 county to Zone 1 status,  XH-which could not have been done without third party relocation activities.4HX {OQ -ԍ  Id. 4   X - C. Payment Issues  X -  X - 1. Timing  X -$37. Background. We proposed in the CostSharing Notice that a PCS licensee entering a previouslycleared band would be responsible for reimbursement payment under the costsharing proposal at the time the PCS licensee initiates service and such service would  X{-have interfered with the microwave link that has been relocated.h{ {O-ԍ  CostSharing Notice, 11 FCC Rcd at 1950,  5758.h Alternatively, we requested comment on whether fulfillment of the costsharing obligation should be treated as part of the frequency coordination process, and that licensees should not be permitted to  X6-initiate service until their payments are made in full.;6| {Oc-ԍ Id. ;  X-%38. Comments. PCS licensees generally agree that costsharing obligations should attach when the PCS licensee offers service that would have interfered with the relocated  X-microwave link.?X yO-ԍ DCR, GTE, Omnipoint, PacBell, and PCIA all agree that a costsharing obligation should commence only when the subsequent PCS operator begins a commercial operational system that would have caused interference to the microwave link, had the link not previously been relocated. ? DCR requests that we clarify that the costsharing obligation begins when  X-commercial service is offered, not during the twelvemonth trial period.>.  yO"-ԍ DCR Comments at 78.> Western opposes this proposal and advocates a payment date of at least 10 days after the clearinghouse notifies  X-the PCS licensees that a payment obligation exists.@  yO&-ԍ Western Comments at 9.@ UTAM suggests that the trigger mechanism for unlicensed PCS providers should occur when (1) UTAM imposes a Zone 1"~FN 0*((n" power cap as a result of third party relocation activities, or (2) a county is cleared of microwave links in the unlicensed allocation and UTAM reclassifies a Zone 2 county to Zone  X-1 status.> yOK-ԍ UTAM Comments at 11.>  X-&39. Discussion. We agree with the majority of commenters that payment should be due when a subsequent licensee commences commercial operation, but we modify our proposal slightly for administrative convenience. Thus, on the day that a PCS licensee files  X_-its PCN,i_X {Oh -ԍ 47 C.F.R.  24.237; see also 47 C.F.R.  21.100(d).i it must file a copy of the PCN with the clearinghouse. Once the clearinghouse  XH-receives the PCN, it will determine if any reimbursement obligation exists. The clearinghouse will then notify the PCS licensee in writing of its repayment obligation, if any. Once the PCS licensee receives a written copy of such obligation, it must pay directly to the PCS relocator the amount owed within thirty days, with the exception of those businesses that qualify for  X -installment payments, as discussed in Appendix Section C(2), infra. A business that qualifies for an installment payment plan must make its first installment payment within thirty days of notice from the clearinghouse. This procedure will thus require PCS licensees to satisfy their repayment obligations at approximately the same time that service is commenced, without requiring the clearinghouse to actually ascertain or confirm that service has begun. We also concur with UTAM that procedures for unlicensed PCS need to be different. We therefore adopt UTAM's suggestion that its first payment will be due thirty days after (1) UTAM imposes a Zone 1 power cap as a result of third party relocation activities, or (2) a county is cleared of microwave links in the unlicensed allocation and UTAM reclassifies a Zone 2  X-county to Zone 1 status.> yO-ԍ UTAM Comments at 11.>  X-X 2  . Eligibility for Installment Payments. (#  X-'40. Background. Under our proposal, PCS licensees that are entitled to make installment payments under our auction rules would also be allowed to pay their share of  X-relocation costs in installments.mz {O-ԍ  CostSharing Notice, 11 FCC Rcd at 1951,  61.m Under our auction rules for the PCS C block, three different installment payment plans are currently available to C Block licensees. The first installment payment plan is available to applicants with gross revenues in excess of $75  XP-million but less than $125 million.FP  yO $-ԍ 47 C.F.R.  24.711(b)(1).F This plan provides for the payment of interest based on the tenyear U.S. Treasury rate, plus 3.5 percent with payment of principal and interest amortized over the term of the license. The second installment plan is available to those""G0*(("  X-applicants with gross revenues between $40 and $75 million.F yOy-ԍ 47 C.F.R.  24.711(b)(2).F This plan provides for the payment of interest equal to the tenyear Treasury rate plus 2.5 percent. The applicants eligible for this plan may pay interest only for one year, with the principal and interest amortized over the remaining nine years of the license term. The third installment plan is  X-available to small businesses with gross revenues under $40 million.LX yO-ԍ 47 C.F.R.  24.711(b)(3).L Under the third plan, small businesses are permitted to pay for their licenses in installments at the rate for tenyear U.S. Treasury obligations applicable on the date the license is granted. Small businesses may make interestonly payments for the fist six years, with payments of principal and interest amortized over the remaining four years of the license term. We also proposed that UTAM be allowed to utilize installment payments, because UTAM will be funding relocation costs  X -with fees that will be collected over time.3  {O-ԍ  Id.3  X -(41. Comments. Most PCS licensees that commented on this proposal supported the adoption of installment payments for any costsharing obligation incurred by entities eligible  X -for installment payments under our rules.[  z yO-ԍ BellSouth Comments at 19; Carolina PCS I Comments at 1; DCR Comments at 9; GO Comments at 5; Iowa L.P. Comments at 67; PacBell Comments at 5; PCIA Comments at 1718; Sprint Comments at 30; US Airwaves Comments at 78; Omnipoint Reply Comments at 5; SRI Reply Comments at 3; and WTCA Reply Comments at 1. [ The one exception came from Iowa L.P., a potential bidder in a future PCS auction, who suggests that small businesses be exempt from all microwave relocation requirements and all potential costsharing obligations, due to small  Xy-businesses' limited financial resources.Dyb  yO-ԍ Iowa L.P. Comments at 57.D Many commenters also approve of some type of special provision for UTAM, but several argue that UTAM should not receive preferential interest rates. BellSouth argues that UTAM should have a separate payment plan that requires quarterly payments over a period of five years at an interest rate equivalent to prime plus  X-three percent.C  yO-ԍ BellSouth Comments at 19.C PacBell argues that UTAM should be permitted to make installment payments under the costsharing plan, but that UTAM financing should be done at its  X-underlying cost of funds.@  yO"#-ԍ PacBell Comments at 5.@ PCIA suggests that UTAM payments be spread out over a five year period, with payments due on a quarterly basis and interest applied to UTAM's share of  X-the relocation costs.3 {O&-ԍ  Id.3 Western argues that UTAM should not be entitled to pay its costsharing obligations under an installment plan that was tailored to C and F block license"H0*(("  X-holders because it has not been accorded special treatment by Congress.A yOy-ԍ Western Comments at 6. A Western argues that if the Commission does allow UTAM the benefit of an installment plan, any such plan should have a much shorter time frame than ten years, and be at an interest rate based on  X-commercial money markets.3X {O-ԍ  Id.3  X-)42. In its reply comments, UTAM points out that its revenues are completely dependent on the sales of unlicensed PCS products, and thus its ability to pay relocation  X_-agreements is dictated by the timing and success of its members' equipment sales.C_ yO -ԍ UTAM Reply Comments at 8.C UTAM proposes two different payment plans: under the Commission's proposal, UTAM could pay interest only for the first six years of its costsharing obligation, and principal and interest  X -amortized over the next four years.< z {OE-ԍ  Id. at 910.< Alternatively, if upon incurring a cost sharing obligation, UTAM does not believe it has sufficient funds to meet this schedule, it could have the option of choosing to dedicate the clearing fees raised from the additional product deployment enabled by the third party's relocation activities to pay its costsharing  X -obligation.:  {O{-ԍ Id. at 10.: Additionally, UTAM suggests that its trigger mechanism for costsharing  X -obligations should be modified, as discussed in Appendix Section (B)(2), supra. API asks that we clarify that UTAM must pay microwave incumbents immediately for all relocation costs, or as stipulated in its agreement with the incumbent, and that only the costsharing  Xd-reimbursement be remitted on an installment basis.=d yO-ԍ API Comments at 11.=  X6-*43. Discussion. We conclude that PCS licensees that are allowed to pay for their licenses in installments under our designated entity rules should have the same option available to them with respect to payments under the costsharing formula, because allowing such payments will significantly ease the burden of costsharing for these entities. The specific terms of the installment payment mechanism, including the treatment of principal and interest, would be the same as those applicable to the licensee's auction payments described above. Thus, if a licensee is entitled to pay its winning bid in quarterly installments over ten years, with interestonly payments for the first year, it would pay relocation costs under the same formula. We also specify that if an entity is allowed installment payments but such payments extend beyond the life of the clearinghouse, the entity must continue to make such payments directly to the PCS licensee that holds the reimbursement rights pursuant to the costsharing plan specified by the clearinghouse. If, for any reason, the entity eligible for installment payments is no longer eligible for such installment payments on its license, that""I. 0*(("  X-entity is no longer eligible for installment payments under the costsharing plan.X {Oy-ԍ  See also 47 C.F.R. 24.709(d), 24.711(c).X  X-+44. UTAM, a notforprofit corporation, exists only to assist with relocation and  X-spectrum management issues of the 19101930 MHz band.}Z {O-ԍ See ET Fourth Memorandum Opinion and Order, 10 FCC Rcd at 7957,  9.} Most of its revenues will be received through clearing fees collected from manufacturers for each unlicensed PCS  X-transmitter.4 {O* -ԍ  Id. 4 Because UTAM exists only to assist with spectrum management and receives its funding in small increments over an extended period of time, we conclude that it should also be allowed to pay for its costsharing obligations in installments over a period of time. Based on the comments received, we therefore adopt the proposal suggested by several commenters that UTAM be allowed to make quarterly payments over a fiveyear period with  X -an interest rate of prime plus 2.5 percent.T ~ {OI-ԍ See, e.g., BellSouth Comments at 19.T We note that such rate is consistent with other  X -Commission regulations, in which we have used the rate for U.S. Treasury Obligations.p\  {O-ԍ See, e.g., In the Matter of American Personal Communications, Cox Cable Communications, Inc., and  yO-Omnipoint Communications, Inc. For Initial Authorizations in the Broadband Personal Communications Service,  {OV-Order, FCC 9694, 61 Fed. Reg. 14,672 (Apr. 3, 1996),  910.p  X -Our general installment payment rules are also based on U.S. Treasury Notes.P 4  {O-ԍ  See 47 C.F.R.  24.711(b)(3).P Assuming that the prime rate is what UTAM would be able to obtain if private financing is sought, this rate will benefit UTAM, which will avoid the higher interest rates and other transactional costs associated with using private sources to finance their repayment obligation. We note that UTAM may negotiate separate arrangements with other parties.  Xy-  Xb- 4. Termination of CostSharing Obligations  X4- ,45. Background. In the CostSharing Notice, we proposed that the costsharing plan should sunset for all PCS licensees ten years after the date that voluntary negotiations commenced for A and B block licensees, which means that costsharing would cease on April  X-4, 2005.a  {Oh"-ԍ CostSharing Notice, 11 FCC Rcd at 1941,  39.a We stated that we believe that it is important to set a date certain on which the  X-clearinghouse will be dissolved.3X  {O$-ԍ  Id.3  X--46. Comments. Most commenters agree that the costsharing proposal should sunset on April 4, 2005, ten years after the start date of the A and B block voluntary negotiation"J0*(("  X-period. yOy-ԍ AT&T Reply Comments at 12; PacBell Comments at 4; PCIA Comments at 38; TIA Comments at 9; UTAM Comments at 1112; and Western Comments at 9. However, BellSouth argues that the industry, not the Commission, should determine  X-when the clearinghouse should be dissolved.C  yO-ԍ BellSouth Comments at 16.C API argues that such a sunset provision unfairly penalizes those entities involved in subsequent negotiations, because it shortens the  X-period during which parties may secure reimbursement.< yO -ԍ API Comments at 9.< Finally, commenters request us to clarify that, if the clearinghouse is dissolved, any subsequent licensees that are paying their portion of relocation costs on an installment basis must continue the payments until the  Xv-obligation is satisfied.qv@ {Og -ԍ See, e.g., PacBell Comments at 4; BellSouth Reply Comments at 20.q  XH-.47. Discussion. Because most commenters expressed support for our proposal, we conclude that the costsharing plan should sunset for all PCS licensees on April 4, 2005, which is ten years after the date that voluntary negotiations commenced for A and B block  X -licensees.  yO-ԍ AT&T Reply Comments at 12; PacBell Comments at 4; PCIA Comments at 38; TIA Comments at 9; UTAM Comments at 1112; and Western Comments at 9. We believe that a sunset date is necessary, because the clearinghouse will operate as a nonprofit entity that exists for a limited purpose and should be dissolved on a date certain. Furthermore, we conclude that this time period is sufficient for all licensees to complete most relocation agreements, including those in the C, D, E, and F blocks licensees which will be licensed in the near future. This tenyear period also roughly coincides with the initial PCS license terms and the tenyear depreciation period built into the costsharing formula. We also believe that the vast majority of links will need to be relocated before the tenyear sunset date in order for PCS licensees to meet their coverage requirements. However, the sunset date will not eliminate the existing obligations of PCS licensees that are paying their portion of relocation costs on an installment basis. We agree with those commenters who argue that such licensees should be required to continue making payments  X-directly to the PCS relocator until the obligation is satisfied.q*  {O-ԍ See, e.g., PacBell Comments at 4; BellSouth Reply Comments at 20.q Finally, we clarify that  X-reimbursement obligations will be subject to the same formula, i.e., depreciation will not be accelerated, even if the link is relocated shortly before the sunset date."K 0*(("   @A-B-@  А X-] APPENDIX B Đ\  X- 1. Part 15 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows:  X_- PART 15 RADIO FREQUENCY DEVICES  X1- 2. The authority citation for Part 15 is revised to read as follows:  X - Authority: Secs. 4, 302, 303, 304, 307 and 624A of the Communications Act of 1934, as  X -amended, 47 U.S.C.  154, 302, 303, 304, 307 and 544A. 3. Section 15.307 is amended by revising paragraphs (a), (f) and (g) to read as follows:  Xy- 15.307 Coordination with fixed microwave service.  XK- (a) UTAM, Inc. is designated to coordinate and manage the transition of the 19101930 MHz band from the Private OperationalFixed Microwave Service (OFS) operating under Part 101 of this chapter to unlicensed PCS operations, * * * Ko* * * * * (f) At such time as the Commission deems that the need for coordination between unlicensed PCS operations and existing Part 101 Private OperationalFixed Microwave Services ceases to exist, the disabling mechanism required by paragraph (e) of this section will no longer be required. (g) Operations under the provisions of this subpart are required to protect systems in the Private OperationalFixed Microwave Service operating within the 18501990 MHz band until the dates and conditions specified in  101.69 through 101.73 of this chapter for termination of primary status. Interference protection is not required for Part 101 stations in this band licensed on a secondary basis. lp* * * * * ""L0*((f!" 4. Part 22 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows:  X- PART 22 PUBLIC MOBILE SERVICES  X- 5. The authority citation for Part 22 is revised to read as follows:  X_- Authority: 47 U.S.C.  154, 303, unless otherwise noted. 6. Section 22.602 is amended to read as follows:  X -` ` \ 22.602Transition of the 2110-2130 and 2160-2180MHz channels to emerging  X -technologies. (#` The microwave channels listed in 22.591 have been allocated for use by emerging technologies (ET) services. No new systems will be authorized under this part. The rules in this section provide for a transition period during which existing Paging and Radiotelephone Service (PARS) licensees using these channels may relocate operations to other media or to other fixed channels, including those in other microwave bands. For PARS licensees relocating operations to other microwave bands, authorization must be obtained under Part101 of this chapter. (a) Licensees proposing to implement ET services may negotiate with PARS licensees authorized to use these channels, for the purpose of agreeing to terms under which the PARS licensees would ` ` (1) Relocate their operations to other fixed microwave bands or other media, or alternatively, ` ` (2) Accept a sharing arrangement with the ET licensee that may result in an otherwise impermissible level of interference to the PARS operations. (b) PARS operations on these channels will continue to be coprimary with other users of this spectrum until two years after the FCC commences acceptance of applications for ET services, and until one year after an ET licensee initiates negotiations for relocation of the fixed microwave licensee's operations.  X#-(c) Voluntary Negotiations. During the two year voluntary negotiation period, negotiations are strictly voluntary and are not defined by any parameters. However, if the parties have not reached an agreement within one year after the commencement of the voluntary period, the PARS licensee must allow the ET licensee (if it so chooses) to gain access to the existing facilities to be relocated so that an independent third party can examine"#'M0*((%" the PARS licensee's 2 GHz system and prepare an estimate of the cost and the time needed to relocate the PARS licensee to comparable facilities. The ET licensee must pay for any such estimate.  X-(d) Mandatory Negotiations. If a relocation agreement is not reached during the two year voluntary period, the ET licensee may initiate a mandatory negotiation period. This mandatory period is triggered at the option of the ET licensee, but ET licensees may not invoke their right to mandatory negotiation until the voluntary negotiation period has expired. Once mandatory negotiations have begun, a PARS licensee may not refuse to negotiate and all parties are required to negotiate in good faith. Good faith requires each party to provide information to the other that is reasonably necessary to facilitate the relocation process. In  X -evaluating claims that a party has not negotiated in good faith, the FCC will consider, inter  X -alia, the following factors:  X -` ` (1) whether the ET licensee has made a bona fide offer to relocate the PARS licensee to comparable facilities in accordance with Section 101.75(b); ` ` (2) if the PARS licensee has demanded a premium, the type of premium  Xh-requested (e.g., whether the premium is directly related to relocation, such as systemwide relocations and analogtodigital conversions, versus other types of premiums), and whether the value of the premium as compared to the cost of providing comparable facilities is  X%-disproportionate (i.e. whether there is a lack of proportion or relation between the two) ; ` ` (3) what steps the parties have taken to determine the actual cost of relocation to comparable facilities; ` ` (4) whether either party has withheld information requested by the other party that is necessary to estimate relocation costs or the facilitate the relocation process. Any party alleging a violation of our good faith requirement must attach an independent estimate of the relocation costs in question to any documentation filed with the Commission in support of its claim. An independent cost estimate must include a specification for the comparable facility and a statement of the costs associated with providing that facility to the incumbent licensee.  X-(e) Involuntary period. After the periods specified in paragraph (b) of this section have expired, ET licensees may initiate involuntary relocation procedures under the Commission's rules. ET licensees are obligated to pay to relocate only the specific microwave links to which their systems pose an interference problem. Under involuntary relocation, a PARS licensee is required to relocate, provided that: ` ` (1) The ET applicant, provider, licensee or representative guarantees payment of relocation costs, including all engineering, equipment, site and FCC fees, as well as any legitimate and prudent transaction expenses incurred by the PARS licensee that are directly"-'N0*((%" attributable to an involuntary relocation, subject to a cap of two percent of the hard costs involved. Hard costs are defined as the actual costs associated with providing a replacement system, such as equipment and engineering expenses. ET licensees are not required to pay PARS licensees for internal resources devoted to the relocation process. ET licensees are not required to pay for transaction costs incurred by PARS licensees during the voluntary or mandatory periods once the involuntary period is initiated or for fees that cannot be legitimately tied to the provision of comparable facilities; ` ` (2) The ET applicant, provider, licensee or representative completes all activities necessary for implementing the replacement facilities, including engineering and cost analysis of the relocation procedure and, if radio facilities are involved, identifying and obtaining, on the incumbents behalf, new channels and frequency coordination; and, ` ` (3) The ET applicant, provider, licensee or representative builds the replacement system and tests it for comparability with the existing 2 GHz system.  X-(f) Comparable Facilities. The replacement system provided to an incumbent during an involuntary relocation must be at least equivalent to the existing PARS system with respect to the following three factors:  X4-` ` (1) Throughput. Communications throughput is the amount of information transferred within a system in a given amount of time. If analog facilities are being replaced with analog, the ET licensee is required to provide the PARS licensee with an equivalent number of 4 kHz voice channels. If digital facilities are being replaced with digital, the ET licensee must provide the PARS licensee with equivalent data loading bits per second (bps). ET licensees must provide PARS licensees with enough throughput to satisfy the PARS licensee's system use at the time of relocation, not match the total capacity of the PARS system.  Xe-` ` (2) Reliability. System reliability is the degree to which information is transferred accurately within a system. ET licensees must provide PARS licensees with reliability equal to the overall reliability of their system. For digital data systems, reliability is measured by the percent of time the bit error rate (BER) exceeds a desired value, and for  X -analog or digital voice transmissions, it is measured by the percent of time that audio signal quality meets an established threshold. If an analog voice system is replaced with a digital voice system, only the resulting frequency response, harmonic distortion, signaltonoise ratio and its reliability will be considered in determining comparable reliability.  X"-` ` (3) Operating Costs. Operating costs are the cost to operate and maintain the PARS system. ET licensees must compensate PARS licensees for any increased recurring  Xh$-costs associated with the replacement facilities (e.g. additional rental payments, increased utility fees) for five years after relocation. ET licensees may satisfy this obligation by making a lumpsum payment based on present value using current interest rates. Additionally, the maintenance costs to the PARS licensee must be equivalent to the 2 GHz system in order for"%'O0*((%" the replacement system to be considered comparable. (g) The PARS licensee is not required to relocate until the alternative facilities are available to it for a reasonable time to make adjustments, determine comparability, and ensure a seamless handoff.  Xv-(h) TwelveMonth Trial Period. If, within one year after the relocation to new facilities, the PARS licensee demonstrates that the new facilities are not comparable to the former facilities, the ET applicant, provider, licensee or representative must remedy the defects or pay to relocate the PARS licensee to one of the following: its former or equivalent 2GHz channels, another comparable frequency band, a landline system, or any other facility that satisfies the requirements specified in paragraph (f) of this section. This trial period commences on the date that the PARS licensee begins full operation of the replacement link. If the PARS licensee has retained its 2 GHz authorization during the trial period, it must return the license to the Commission at the end of the twelve months. (i) After April 25, 1996, all major modifications and extensions to existing PARS systems operating on channels in the 2110-2130 and 2160-2180MHz bands will be authorized  Xb-on a secondary basis to future ET operations. All other modifications will render the modified PARS license secondary to future ET operations unless the incumbent affirmatively justifies primary status and the incumbent PARS licensee establishes that the modification  X-would not add to the relocation costs of ET licensees. Incumbent PARS licensees will maintain primary status for the following technical changes: ` ` (1) decreases in power; ` ` (2) minor changes (increases or decreases) in antenna height; ` ` (3) minor location changes (up to two seconds); ` ` (4) any data correction which does not involve a change in the location of an  X7-existing facility; ` ` (5) reductions in authorized bandwidth;  X-` ` (6) minor changes (increases or decreases) in structure height;  X!-` ` (7) changes (increases or decreases) in ground elevation that do not affect centerline height; ` ` (8) minor equipment changes.   X:&-(j) Sunset. PARS licensees will maintain primary status in the 2110-2130 and 2160-2180 MHz bands unless and until an ET licensee requires use of the spectrum. ET"#'P0*((%"  X-licensees are not required to pay relocation costs after the relocation rules sunset (i.e. ten years after the voluntary period begins for the first ET licensees in the service). Once the relocation rules sunset, an ET licensee may require the incumbent to cease operations, provided that the ET licensee intends to turn on a system within interference range of the incumbent, as determined by TIA Bulletin 10F or any standard successor. ET licensee notification to the affected PARS licensee must be in writing and must provide the incumbent with no less than six months to vacate the spectrum. After the sixmonth notice period has expired, the PARS licensee must turn its license back into the Commission, unless the parties have entered into an agreement which allows the PARS licensee to continue to operate on a mutually agreed upon basis. If the parties cannot agree on a schedule or an alternative arrangement, requests for extension will be accepted and reviewed on a casebycase basis. The Commission will grant such extensions only if the incumbent can demonstrate that:  X -` ` (1) it cannot relocate within the sixmonth period (e.g., because no alternative spectrum or other reasonable option is available), and; ` ` (2) the public interest would be harmed if the incumbent is forced to terminate  X}-operations (e.g., if public safety communications services would be disrupted).   X:- X01Í ÍX01Í Í7. Part 24 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows:  X- PART 24 PERSONAL COMMUNICATIONS SERVICES  X- 8. The authority citation for Part 24 is revised to read as follows:  X- Authority: 47 U.S.C.  154, 301, 302, 303, 309 and 332, unless otherwise noted. 9. Section 24.5 is amended by adding the definitions for "PCS Relocator" and "UTAM" in alphabetical order to read as follows:  X&-  Definitions.  V-Ko* * * * *  X -  X!-PCS Relocator. A PCS entity that pays to relocate a fixed microwave link from its existing 2 GHz facility to other media or other fixed channels.  Xp$-UTAM. The Unlicensed PCS Ad Hoc Committee for 2 GHz Microwave Transition and Management, which coordinates relocation in the 19101930 MHz band. 10. Section 24.237 is amended by revising paragraph (c) to read as follows:"-'Q0*((%"Ԍ X-ԙ  24.237 Interference protection.  X-ll* * * * * ă (c) In all other respects, coordination procedures are to follow the requirements of  101.103(d) of this chapter to the extent that these requirements are not inconsistent with those specified in this part. lp* * * * * 11. Subpart E is amended by adding a new heading following Section 24.238 to read as follows:  X -  X - POLICIES GOVERNING MICROWAVE RELOCATION FROM THE 18501990 MHz  X -BAND 12. A new Section 24.239 is added to Subpart E to read as follows:  Xb-  24.239 CostSharing Requirements for Broadband PCS . Frequencies in the 18501990 MHz band listed in  101.147(c) have been allocated for use by PCS. In accordance with procedures specified in  101.69 through 101.81, PCS entities (both licensed and unlicensed) are required to relocate the existing Fixed Microwave Services (FMS) licensees in these bands if interference to the existing FMS operations would occur. All PCS entities who benefit from spectrum clearance by other PCS entities must contribute to such relocation costs. PCS entities may satisfy this requirement by entering into  X-private costsharing agreements or agreeing to terms other than those specified in  24.243. However, PCS entities are required to reimburse other PCS entities that incur relocation costs and are not parties to the alternative agreement. In addition, parties to a private costsharing agreement may seek reimbursement through the clearinghouse (as discussed in  24.241) from PCS entities that are not parties to the agreement. The costsharing plan is in effect during all phases of microwave relocation specified in  101.69. 13. A new Section 24.241 is added to Subpart E to read as follows:  X-  24.241 Administration of the CostSharing Plan.  X!- The Wireless Telecommunications Bureau, under delegated authority, will select an entity to operate as a neutral, notforprofit clearinghouse. This clearinghouse will administer  X#-the costsharing plan by, inter alia, maintaining all of the cost and payment records related to the relocation of each link and determining the costsharing obligation of subsequent PCS entities. The costsharing rules will not take effect until an administrator is selected. 14. A new Section 24.243 is added to Subpart E to read as follows:"%'R0*((%"Ԍ X-ԙ  24.243 The CostSharing Formula.  X- A PCS relocator who relocates an interfering microwave link, i.e. one that is in all or part of  X-its market area and in all or part of its frequency band, is entitled to pro rata reimbursement based on the following formula:  XziX` hp x (#%'0*,.8135@8: