Subject: [NEXTEL-1] Preferred Communication Systems, Inc. On WT Docket No. 02-55

From: [email-masked]
Date: Tue, 27 Apr 2004 12:21:42 -0400

April 27, 2004
BY ELECTRONIC FILING

Marlene Dortch, Secretary
Federal Communications Commission
445 Twelfth Street , S.W.
Washington, D.C. 20554

Re:            WT Docket No. 02-55
Ex Parte Presentation

Dear Ms. Dortch:

Preferred Communication Systems, Inc. (“Preferred”) hereby requests that
this filing be associated with WT Docket 02-55, Improving Public Safety
Communications in the 800 MHz Band.

On March 19, 2004, Nextel Communications, Inc. (“Nextel”) filed an Ex
Parte Submission with the Federal Communications Commission (“FCC” or
“Commission”) seeking to respond to Preferred Communication Systems,
Inc.’s (“Preferred”) Ex Parte Comment filed with the FCC on March 2,
2004.  Due to Nextel’s apparent confusion with respect to several of the
major points set forth in Preferred’s Ex Parte Comment and certain
misrepresentations in its Ex Parte submission, we hereby submit a brief
and hopefully clarifying response.

1. Position re Interference Experienced by Public Safety and other
Licensees in the 800 MHz Band.

Preferred Communication Systems, Inc. (“Preferred”) is one of the
founding members of what has become known as the 800 MHz Users Coalition
and continues to support the Coalition’s Balanced Approach, which relies
upon technical solutions and mitigation tactics to minimize, if not
eliminate, intermodulation, out-of-band emissions and desensitization
interference within the 800 MHz Band with Public Safety, Critical
Infrastructure and other systems.  Preferred also strongly supports
Motorola, Inc.’s (“Motorola”) “Toolbox” Proposal.

However, during the past few months, it has become apparent that the FCC
has determined to adopt a version of rebanding as at least one of the
solutions to the interference experienced by Public Safety, Critical
Infrastructure and other licensees within the 800 MHz Band.  During this
period, the Commission also highlighted other long term benefits of
realignment including addressing the shortcomings of haphazard spectrum
allocation decisions and reducing future handset costs for Public Safety
systems.   It also has become apparent to Preferred and other industry
observers that the FCC is inclined to adopt the Consensus Parties’
Rebanding Proposal or at least use it as a guide in formulating an
improved version of such Proposal.  Preferred therefore analyzed the
Consensus Parties’ Proposal and its underlying tenets and sought to
propose improvements to the Commission as suggestions as to how best
address, and perhaps resolve, the considerable criticism of such
Proposal with respect to its (1) discriminatory treatment of Non-Nextel
General Category and Lower 80 EA licensees with respect to rebanding
within the 800 MHz Band; (2) unrealistic estimate of total relocation
costs and lack of full funding; (3) allocation of 1.9 GHz spectrum to
Nextel.

In formulating such Improvements, Preferred kept in mind the FCC’s
directive in the Notice of Proposed Rulemaking  and sought to (1)
maintain the full spectrum rights of all General Category and Lower 80
EA licensees; (2) provide a realistic cost estimate and full funding for
800 MHz rebanding; (3) provide additional spectrum for Public Safety
both in the 800 MHz band and an incentive to UHF broadcasters to move
early from Channels 60, 63-64 and 68 to free up 24 MHz within the 700
MHz Upper Band previously allocated by the Commission for use by Public
Safety licensees.  Preferred also proposes to open up the allocation of
1.9 GHz spectrum to all General Category and Lower 80 EA licensees, who
agree to modify their EA and site-specific licenses by (a) foregoing
reimbursement of their own relocation costs; and/or (b) promising to pay
a portion of total 800 MHz Band relocation costs; and/or (c) returning
800 or 900 MHz spectrum to the FCC; and/or (d) in certain EA markets,
losing 800 MHz frequencies.

2. Specific Responses to Nextel’s Ex Parte Submission.

a. Interference.

On page 2 of Nextel’s Ex Parte Submission, it mischaracterizes
Preferred’s position with respect to how to mitigate interference with
Public Safety, Critical Infrastructure and other systems in the 800 MHz
band.  As noted above, Preferred continues to support the use of the
“Best Practices” Guide endorsed by APCO International, Inc., equipment
manufacturers such as Motorola, Inc., Public Safety licensees, as well
as the United Telecom Council, Cellular Telecommunications & Internet
Association and the major cellular and PCS operating companies.
Contrary to Nextel’s assertion that Preferred’s filing “without any
explanation, breaks from that approach,”  in its conclusion to its Ex
Parte Comment filed on March 2, Preferred pointed out that “if the
Commission determines to adopt a version of rebanding as one of the
solutions to interference increasingly experienced by Public Safety,
Critical Infrastructure and other licensees in the 800 MHz band, the
Consensus Parties’ Proposal as presently written fails on several
critical issues to provide a workable model.  Preferred has sought
through its Improvements to address these critical issues and provide
solutions that it believes far better protect the full spectrum rights
of all General Category and Lower 80 EA licensees, is based on realistic
cost assumptions and estimates and provide both Public Safety and
Critical Infrastructure licensees more additional spectrum than does the
Consensus Parties’ Proposal.”   Preferred believes that only adjacent
channel interference can be eliminated by rebanding.  While rebanding
would reduce somewhat intermodulation interference to portable and
mobile radios, it would not eliminate such interference.

Further, because of the wide bandwidth front end of the present portable
and mobile radios, desensitization interference can and will occur when
they need to receive messages and are close to Enhanced Specialized
Mobile Radio transmit sites. “Best Practices” or replacement radios are
necessary to eliminate desensitization.  These measures also will
further reduce intermodulation interference.

In summary, Preferred’s position is that rebanding alone will not solve
the interference experienced by Public Safety, Critical Infrastructure
and other licensees in the 800 MHz band.  Preferred believes that if the
Commission adopts rebanding as a solution to interference with Public
Safety, Critical Infrastructure and other systems in the 800 MHz band,
it also should adopt the technical solutions and mitigation tactics set
forth in the Balanced Approach and Motorola, Inc.’s “Toolbox” Proposal.

b. Relocation Cost Analysis.

With respect to Nextel’s criticism on pages 3-4 of its Ex Parte
Submission of the Relocation Cost Analysis Study prepared by Concepts To
Operations, Inc., a consulting firm with extensive experience in
designing and constructing public safety systems, Preferred would note
the following:

1. The Relocation Cost Analysis Study attached as Exhibit K to
Preferred’s Ex Parte Comment filed on March 2 provides a thorough
analysis based primarily upon the Consensus Parties’ Supplemental
Comment filed on December 24, 2002 and its Appendix A, as modified
through February 25, 2003.  CTO submitted its Report to Preferred on
October 31, 2003.  Contrary to Nextel’s assertions, the assumptions
stated therein are clear, reasonable and amply supported by the major
public safety manufacturers and Public safety licensees in either
written filings in this proceeding or in conversations with CTO or
Preferred.

2. The $100 cost to retune a radio was based upon CTO’s and Preferred’s
conversations with the major public safety equipment vendors and Public
Safety licensees.  Nextel only partially quotes Motorola, Inc. in its
November 3, 2003 letter.  While Motorola, Inc. agrees that $50 is a
reasonable cost assumption, Nextel fails to point out that figure is for
each time the radio is touched and that each radio needs to be touched
twice for a total cost of $100 per radio.  CTO also would note that
simulcast-type systems, which are prevalent in Southern California and
Florida as well as among Public Safety systems utilizing NPSPAC
channels, require more than two touches and thus a higher retune figure
per radio.

3. The number of Public Safety replacement radios (or those radios
requiring upgrade to provide “Best Practices”) is based upon percentages
varying from 1% to 30%.  The 30% replacement figure was used to indicate
the maximum cost that may be incurred given the line items presented.
Although Nextel indicates that Motorola, Inc. offered no analysis or
survey of the existing population of 800 MHz public safety systems to
support the 30% figure,  in its November 3, 2003 Ex Parte letter
Motorola, Inc. estimates that 30% of the Motorola, Inc. NPSPAC radios
sold by it during the past ten years could fall in the replacement
category.  In conversations with Motorola, Inc. officials, the 30%
figure for such radios was given as a minimum figure.  As noted in
Preferred’s Ex Parte Comment, such estimate increases the Consensus
Parties’ total relocation cost estimate from $850 million to $2.391
billion.

4. Even if a lower than maximum retuning and/or “Best Practices”
modifications are required, the minimum cost still would be considerably
higher than the $850 million offered to be contributed by Nextel.  As
noted in the Relocation Cost Analysis Study, use of correct FCC license
database figures and the Consensus Parties’ own assumptions set forth in
Appendix A to its December 24, 2002 Supplemental Comment results in a
total 800 MHz band relocation cost of $1.120 billion, an increase of
$270 million over the $850 million offered by Nextel to fund all of the
“reasonable” costs of the Consensus Parties’ Proposal.
5. Preferred’s Improvements recognize this higher cost and provide for
additional funding through Preferred’s promise to contribute up to $150
million over seven years toward total 800 MHz band relocation costs.

In Preferred’s Ex Parte Comment, we suggested that the Commission
contact all of the major public safety equipment vendors and Public
Safety, Critical Infrastructure and other 800 MHz licensees and seek
detailed information concerning the various relocation costs items to
obtain the most accurate costs figures possible before embarking on
realignment of the 800 MHz band.   We repeat that recommendation here.

c. Spectrum Holdings Analysis.

According to Nextel’s Ex Parte Submission, Preferred uses an
“unintelligible mixture of license data and therefore significantly
misrepresents the state of 800 MHz licensing both from December 2002 and
today.”   Due to the Consensus Parties’ failure to (1) analyze the
spectrum holdings of Nextel and other 800 MHz band licensees according
to the 175 Economic Area (“EA”) markets used by the Commission to
allocate the Upper 200, General Category and Lower 80 Channels’
authorizations in three separate auctions conducted during 1997-2000 and
(2) base their Proposal upon a comprehensive and accurate 800 MHz
license database made a part of the public record of this proceeding,
Preferred was required to develop its own such 800 MHz license
database.  As explained in the Ex Parte Comment, Preferred initially
retained CTO to develop such license database in preparation for its
participation in FCC Auction #34.  In early 2003, Preferred requested
that CTO update such database in preparation for an Ex Parte filing in
this proceeding.  To account for the geographic and population coverage
of 800 MHz SMR, Business and Industrial/Land Transportation and Public
Safety site-specific licenses, CTO initially sought to employ 2003
license data from the Commission’s license databases.

However, as noted, in its Ex Parte Comment, CTO determined that due to
Nextel’s extensive improper short-spacing
or “daisy chaining” of its General Category site-specific licenses in EA
markets in which Preferred had won one or more Frequency Block licenses
in FCC Auction #34 during 2000-2003, it would use the 2003 FCC license
database but include only General Category and Lower 80 secondary sites
constructed as of June 2000.   Preferred would maintain that its
comprehensive 800 MHz SMR license database not only is accurate as of
January 2003 but in certain EA markets probably conservative in
overstating Nextel’s site-specific licenses’ geographic and population
coverage by its inclusion of short-spaced or secondary sites.

Further, Preferred would contend that such approach not only is
desirable but required if the FCC is to determine
accurately the number of channels Nextel, or any other EA or Site
licensee is to receive in the new Cellular Block in exchange for its
respective site-specific licenses.  According to the Consensus Parties’
Proposal such calculation was unnecessary since it exchanged all of the
Nextel Control Group’s EA- and Site-Licensed Spectrum on a 1:1 Clean
basis while moving the Non-Nextel Control Group to the Upper 200
Channels in the new Cellular Block on a geographic “footprint” basis
only.  However, CTO and Preferred quickly determined that a legally
permissible, practical and mathematical movement proposal necessarily
would be based both upon an accurate and comprehensive license
database.  For the reasons set forth in Preferred’s Ex Parte Comment,
such proposal moved the Nextel Control Group’s and all other licensees’
Site-Licensed Spectrum on a MHz/Pops Equivalent basis only.  Otherwise,
as CTO and Preferred found when it tested the Consensus Parties’
Proposal against actual EA market license data, more site-specific
channels needed to be moved to the new Cellular Block than could be
accommodated.  The Consensus Parties’ approach simply fails on the
numbers.

As Preferred discovered when it tested the Consensus Parties’ Proposal
in many EA markets, contrary to the repeated assertions of Nextel and
the Consensus Parties in their respective filings,  the allocation of a
minimum of 5.5 MHz of 1.9 GHz Band spectrum to Nextel under the
Consensus Parties' Proposal is based solely upon their 800 MHz band
movement methodology.   The remaining 4.5 MHz or less of such spectrum
allocation is attributable to Nextel's return of 700 MHz Guard Band and
900 MHz SMR spectrum unrelated to any reorganization of the 800 MHz band
and its promise to pay up to $850 million toward defraying the total
relocation costs of the Consensus Parties' Proposal.  In formulating an
alternative approach to rebanding that (1) treats all General Category
and Lower 80 EA licensees similarly and protects their full spectrum
rights and (2) retains an incentive for at least some of them to
contribute significant funds toward the payment of 800 MHz band total
relocation costs, Preferred maintains that the Commission's expansion of
eligibility to participate in the allocation of 1.9 GHz spectrum to all
General Category and Lower 80 EA licensees not only would be beneficial
practically and as a matter of policy, but also legally required.

d. Allocation of 1.9 GHz Band Spectrum.

In footnote 2 on page 1 of Nextel’s Ex Parte Submission, Nextel refuses
to address Preferred’s contention that since a minimum of 5.5 MHz of 1.9
GHz band spectrum is allocated under the Consensus Parties’ Proposal due
solely to its “squeezing” of 11.5-19 MHz of EA- and Site-Licensed
Spectrum into 6 MHz of new Cellular Block Spectrum comprised of the
former NPSPAC Channels and “some other spectrum” and the FCC is without
constitutional and statutory authority to adopt the Consensus Parties’
Proposal, which without any offered or discernible rationale
discriminates among similarly situated EA licensees, if the Commission
determines to allocate 1.9 GHz band spectrum as part of this proceeding,
it is legally required to make such spectrum available to all General
Category and Lower 80 EA licensees and Site licensees electing to be
treated as ESMR licensees in the future.  Nowhere do the Consensus
Parties or Nextel, either in the Ex Parte Submission or in any other
filing, provide a rationale for denying other EA licensees and Site
licensees participation in the FCC’s allocation of such spectrum other
than to suggest that only Nextel would be exchanging 700 MHz Guard Band,
800 MHz SMR and Business and Industrial/Land Transportation and 900 MHz
SMR on a “kHz-for-kHz” basis for 10 MHz of 1.9 GHz band spectrum.
Interestingly enough, Nextel chose not to repeat that argument following
Preferred’s filing of its Ex Parte Comment.

Based upon several press reports, we understand that the WTB draft
Report and Order excludes the return of Nextel’s 700 MHz Guard Band and
900 MHz SMR spectrum from any purported exchange of Nextel’s spectrum
for an allocation of 1.9 GHz band spectrum.   If such is the case,
Preferred certainly can understand why Nextel chose not to provide any
rationale for its exclusive allocation of 1.9 GHz band spectrum in its
March 19 Ex Parte Presentation.

In its Ex Parte Comment, Preferred pointed out that in many EA markets,
Nextel would receive an exclusive allocation of 1.9 GHz band spectrum
despite its not holding:

(1) the majority of General Category EA-Licensed Spectrum; and/or
(2) the majority of Lower 80 EA-Licensed Spectrum; and/or
(3) any 800 MHz band spectrum.

Based upon Chairman Powell’s letter to Congress in response to the
letter signed by twenty-three (23) members of Congress, it appears that
the WTB draft Report & Order exclusively allocated 10 MHz of 1.9 GHz
band spectrum to Nextel.  According to Chairman Powell’s letter, the FCC
is relying upon its inherent authority under Section 316 to modify
licenses and its authority under Section 309(j)(6)(E) to avoid the
competitive bidding requirements of Section 309(j) where it finds
subsection’s methods to be “in the public interest.”   However, as noted
in Preferred’s Ex Parte Comment and immediately above, the Consensus
Parties’ Proposal and the WTB’s draft Report and Order seek to allocate
1.9 GHz band spectrum exclusively to Nextel in EA markets where it lacks
any 800 MHz band spectrum to modify.  In those EA markets, Preferred
would maintain that the Commission clearly lacks any authority under
Section 316 for such exclusive allocation.  Moreover, Preferred would
question whether the FCC has the authority to use Section 309(j)(6)(E)’s
methods to exclusively allocate 1.9 GHz band spectrum to Nextel in the
EA markets in which holds 800 MHz spectrum where such allocation clearly
would violate the Commission’s statutory mandates to (1) maintain
regulatory parity and (2) promote diversity of license ownership and
promote competition.  Preferred would contend that the FCC’s reliance
upon Section 309(j)(6)(E) in these circumstances and its public interest
determination could not withstand judicial review.

Unlike other commenters in this proceeding which chose only to criticize
the Consensus Parties’ allocation of 1.9 GHz band spectrum, Preferred
offered a recommended Improvement that would provide Nextel the
opportunity to acquire most of the 1.9 GHz band allocation it sought,
provide additional funding to defray total 800 MHz band relocation
costs, and afford the FCC much stronger legal authority for its
allocation of 1.9 GHz band spectrum as part of its realignment of the
800 MHz band.  By opening up the allocation of 1.9 GHz band spectrum to
all General Category and Lower 80 EA licensees and Site licensees
electing in the future to be treated as ESMR licensees, the Commission
could rely upon its modification authority under Section 316 in every EA
market, avoid violating the statutory mandates of maintaining regulatory
parity and promoting diversity of license ownership and competition.  In
our view, adoption of Preferred’s Improvement by the Commission likely
would assure judicial approval of the FCC’s public interest
determination under Section 309(j)(6)(E).

Preferred, as do many commenters in this proceeding, realizes that
certain cellular and PCS companies will challenge any allocation of 1.9
GHz band spectrum as part of an 800 MHz ban rebanding.  Such challenges
may take as long as 2-3 years to resolve.  During such period, Preferred
believes that it is unlikely that any rebanding would be possible due to
the need of Nextel, Preferred and other EA licensees in certain EA
markets to receive an allocation of 1.9 GHz band spectrum to afford them
sufficient spectrum capacity to expand or even maintain their respective
ESMR systems.

Instead of addressing these issues in its Ex Parte Submission, Nextel
sought in footnote 2 to characterize Preferred’s Improvement on this
issue as a “perplexing, ill-conceived notion that it too should receive
replacement spectrum in the 1.9 GHz band based on its Economic Area
(“EA”) license holdings, its willingness to forego its own retuning
costs, and its ‘offer’ to contribute $150 million to incumbent
retuning.”  Nextel initially questions Preferred’s forbearance of its
own relocation costs due to its lack of presently constructed and
operating systems.  Preferred is committed to constructing its EA- and
Site-Licensed Spectrum in all of its EA markets. As it noted in its Ex
Parte Comment, the uncertainty with respect to the future status of its
licenses created by Nextel’s filing of the White Paper in November 2001,
a scant eleven (11) months after Preferred fully paid its net winning
bids in FCC Auction #34 and the Commission’s release of its Notice of
Proposed Rulemaking in this proceeding in March 2002, to date has
precluded Preferred and other Non-Nextel EA licensees from constructing
many of their authorizations.  Upon the FCC’s release of a Report and
Order following its NPRM directive and Preferred’s Improvements,
Preferred and other Non-Nextel EA licensees would be positioned to
approach the private equity market and  financing arms of certain major
equipment vendors commercial banks to raise the equity capital and
arrange the debt financing necessary to launch their respective ESMR
systems.   During the 2-3 years probably required to resolve all of the
expected challenges to any allocation of 1.9 GHz band spectrum,  and
perhaps other issues, Preferred will construct and be operating major
ESMR systems in its EA markets within three years of the release of the
Commission’s Report and Order.  Based upon its conversations with CTO on
this matter, Preferred believes that it will incur a minimum of $20
million in relocation costs.  As set forth in its Ex Parte Comment,
Preferred is willing to forbear recovery of these costs even though it
is not legally required to do so.  Moreover, Preferred repeats its offer
to pay $150 million over a seven year period commencing upon the date
the Commission’s Report and Order becomes final (all challenges
successfully resolved) and its share of BAS licensee relocation costs
estimated at an additional $30 million.  Given the factual background,
Preferred finds nothing, to use Nextel’s words, “ironic” or “curious”
about its suggested Improvement.

Nextel is seeking an allocation of 1.9 GHz band spectrum so that it
might increase its spectrum capacity, improve the cost efficiency of its
network and offer a fixed high-speed broadband wireless service
utilizing Flarion Technologies, Inc.’s OFDM technology.   Preferred has
made a similar determination and is seeking comparable treatment that
the Commission is legally required to provide.  Preferred would maintain
that in order to meet its statutory requirements under the
Communications Act to maintain regulatory parity and promote diversity
of license ownership and competition, the FCC must open up participation
in the allocation of 1.9 GHz band spectrum to all General Category and
Lower 80 EA licensees and Site licensees electing to be treated in the
future as an ESMR licensee as suggested in its Ex Parte Comment to avoid
the competitive bidding provisions of Section 309 of the Communications
Act.

3. Conclusion.

In its Ex Parte Comment filed on March 2, 2004, Preferred sought not
only to point out the critical flaws in the
Consensus Parties’ Proposal, but also to recommend Improvements based
upon its development of an accurate and comprehensive 800 MHz license
database and total 800 MHz band relocation costs analysis.  As pointed
out in considerable detail, the Consensus Parties’ Proposal is based
upon spectrum holdings and relocation cost assumptions that fail to
withstand scrutiny.  Moreover, such Proposal’s movement methodology is
based upon a discriminatory intent that necessarily produces an
impermissible result upon constitutional and statutory grounds.
Preferred’s Improvements set forth in its Ex Parte Comment sought not to
“defeat” rebanding or the Consensus Parties’ Proposal but rather to
propose modifications that would render such proposal legally,
practically and mathematically sound and acceptable to the vast
majority, if not all of the Non-Nextel 800 MHz EA and Site licensees.
Preferred would submit that if the Commission is seeking to craft a
rebanding proposal that is in Chairman Powell words is “defensible and
ironclad” it will take additional time to revise the present WTB draft
Report and Order to incorporate most, if not all, of Preferred’s
Improvements.  Given the importance of the issues in this proceeding,
Preferred believes that the FCC should get this right the first time and
not adopt a legally questionable approach likely not to withstand
judicial scrutiny.

Sincerely,

/s/Charles M. Austin
Charles M. Austin

Attachments

cc: Chairman Michael K. Powell
Commissioner Kathleen Q. Abernathy
Commissioner Jonathan S. Adelstein
Commissioner Michael J. Copps
Commissioner Kevin J. Martin
John A. Rogovin, Chief Counsel
Edmond J. Thomas, Chief Engineer, Office of Engineering and Technology
Jennifer A. Manner, Senior Counsel to Commissioner Abernathy
R. Paul Margie, Legal Advisor to Commissioner Copps
Samuel L. Feder, Legal Advisor to Commissioner Martin
Barry Ohlson, Senior Legal Advisor to Commissioner Adelstein
John B. Muleta, Chief, Wireless Telecommunications Bureau
Aaron N. Goldberger, Legal Counsel, Wireless Telecommunications Bureau
Michael J. Wilhelm, Deputy Chief, Public Safety and Critical
Infrastructure Division of the Wireless
Telecommunications Bureau

 http://gullfoss2.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6516089160

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