WOODLAND PARK, N.J., March 15,
2019 /PRNewswire/ -- pdvWireless, Inc., ("PDV" or the
"Company"), today released a shareholder letter from Morgan E. O'Brien, CEO, providing an overview of
the Company's thoughts on the Notice of Proposed Rulemaking
("NPRM"), as unanimously voted for adoption and released by the
Federal Communications Commission ("FCC") in the 900 MHz
proceeding.
Dear Fellow Shareholders:
The FCC yesterday adopted an NPRM for the 900 MHz band that
endorses PDV's objective of creating a broadband opportunity for
utilities and other enterprise users. The NPRM proposes our
recommended band plan concept and technical rules, raises no
interference concerns, and describes a transition plan that would
allow PDV to move quickly in bringing this broadband option to
market in a number of areas around the country through a voluntary
negotiation process followed by alternative means for addressing
holdout situations. PDV intends to work collaboratively with
the FCC and all affected parties toward adoption of final rules in
a timeframe reflective of this industry's increasingly urgent need
for a private broadband solution.
Background
For almost 35 years, the 900 MHz band has been used exclusively
for narrowband land mobile systems including internal systems
operated by utilities, auto manufacturers, delivery services and
similar enterprises, as well as commercial dispatch service
providers. Neither the rules nor the equipment have evolved
at a pace comparable to that associated with spectrum used for
wireless communications services in other bands. While some
incumbents have transitioned from analog to digital technology, 900
MHz systems operate in 2019 much as they did in 1975, and the band
is markedly underutilized or even not used at all in many parts of
the country.
PDV, which holds the largest spectrum position in this
band,I saw an opportunity to bring the benefits of
broadband technology – high data capacity, low latency, and an
international ecosystem of equipment and applications – to critical
infrastructure and other business enterprise entities, many of
which are 900 MHz band incumbents. In collaboration with the
Enterprise Wireless Alliance, or EWA,ii PDV petitioned
the FCC to modernize its rules and create a 6 MHz broadband service
within the 10 MHz 900 MHz band, while maintaining 4 MHz for
continued narrowband use. We proposed technical, operational,
and licensing rules that would allow broadband and narrowband
operations to co-exist, including a process for clearing the
spectrum needed for broadband deployment by relocating incumbent
licensees to alternative channels in the 4 MHz narrowband
segment.
During the four years that this proposal has been pending at the
FCC, PDV/EWA have given careful consideration to the comments
submitted by interested parties, both opponents and
proponents. For example, we addressed technical concerns
raised by 900 MHz incumbents and by Sensus, whose systems operate
in adjacent bands. The in-band interference analyses prepared
by Pericle Communications and Ericsson confirmed that broadband and
narrowband facilities could co-exist within the 900 MHz band, as
long as the broadband system adhered to the technical criteria
proposed by PDV/EWA. While those same criteria would have
protected Sensus operations, PDV/EWA proposed that the broadband
allocation be shifted down to provide greater separation between
the allocations, an approach endorsed by Sensus. PDV/EWA have
made every effort to consider and respond to all reasonable
concerns and will continue to do so.
The FCC yesterday voted unanimously to adopt an NPRM that, in
its words, is intended to "reconfigure the 900 MHz band to
facilitate the development of broadband technologies and
services…."iii By embracing this repurposing
of the band, the FCC has tentatively rejected the arguments of
those who wish to preserve the status quo and reserve this band for
legacy narrowband operations exclusively.
The FCC has proposed to classify the 900 MHz broadband service
as flexible-use spectrum. However, it also recognizes that
this particular service is needed to "provide the coverage and
reliability that electric and other utilities require but cannot
obtain from consumer-oriented commercial wireless
carriers."iv Consistent with the PDV/EWA
view of this critical market need, the NPRM states: "High-speed
broadband is essential for robust business growth and providing an
opportunity for broadband in the 900 MHz band could enable a wide
variety of businesses to unlock the full potential of broadband and
its applications. Electric utilities in particular have many
ways to enhance their operations, such as installing smart grid
systems and using dedicated broadband spectrum to improve coverage,
latency, and throughput."v The FCC has concluded
that "realigning the 900 MHz band will create opportunities for
robust broadband networks that fully support critical communication
systems…."vi
The broadband opportunities outlined in the NPRM align with and
support our future plans and goals. By adopting the NPRM, the
FCC has affirmed that the public interest justifies creation of a
broadband service in the 900 MHz band. PDV's focus now will
be on addressing the matters raised in the NPRM in support of final
rules that create a regulatory process and an economically viable
and timely path for fulfillment of the PDV/EWA vision for 900 MHz
broadband.
Summary of NPRM
A. Technical
Issues
Although a primary argument raised by broadband opponents was
the claim that broadband and narrowband services could not co-exist
within the 900 MHz band without interference, the FCC has
incorporated the PDV/EWA band plan and technical recommendations
that set out rules for co-existence. Importantly, the
proposed rules include the recommended equipment specifications
that will enable use of available, globally standardized broadband
LTE equipment. The systems to be used by utilities and others
will enjoy the economic benefits of a well-developed, international
ecosystem of broadband LTE devices. The FCC has asked whether
equipment or software will need to be replaced or added to
incumbent narrowband systems to ensure non-interference.
While PDV believes that will not be necessary in most instances, it
has always understood that as a broadband licensee it would be
responsible for all reasonable costs associated with repurposing
this
band.
B. Band
Realignment
1. Broadband
Eligibility:
The FCC has proposed three criteria for an applicant to secure a
broadband license in a county:vii (i) the
applicant holds all 20 blocks of geographic SMR licenses in the
county; (ii) the applicant reaches agreement to relocate all
incumbents in the broadband segment in a 1:1 voluntary channel
exchange or demonstrates that the incumbents will be
protected;viii and (iii) the applicant agrees to
return to the FCC all rights to geographic and site-based spectrum
in the county in exchange for the broadband license.
PDV holds 20 geographic SMR licenses in a significant number of
counties throughout the United States. If the FCC allows the
broadband applicant to include geographic SMR-allocated channel
blocks held in the FCC's inventory, a possibility raised in the
NPRM, PDV is optimistic that it can satisfy the first eligibility
criterion in additional counties following successful negotiations
with the limited number of other geographic licensees around the
country, some of which are already in discussion with PDV.
PDV believes this approach will allow it to move forward with
implementing its business plans. In considering whether to
make its inventory of geographic SMR-allocated channel blocks
available to the broadband applicant, the FCC has asked whether it
should do so only if the applicant meets a threshold number of its
own geographic licenses. PDV supports such an approach as a
reasonable test that will allow long-fallow spectrum to be placed
into productive use. The FCC also questions how to mitigate a
windfall that might thereby be attributed to such an
applicant. PDV has long recognized that it will need to
address this issue, both in this context and in the context of
exchanging narrowband for broadband spectrum. PDV believes it
has identified powerful public interest arguments to justify such
an action by the FCC, arguments the FCC itself has advanced
recently.
As the FCC has confirmed in any number of proceedings, it has
legal authority to issue licenses outside of the auction process
when it concludes that doing so serves the public interest.
In fact, the Communications Act specifically directs the FCC to
consider other means for awarding licenses and mandates auctions
only when the FCC is presented with mutually exclusive applications
that cannot be resolved through other measures. Thus, while
PDV supports the use of an auction in counties where neither
voluntary negotiations nor alternative approaches produce the
spectrum clearing needed to allow broadband deployment, it is
optimistic that the FCC's preferred voluntary approach will be
successful in many areas.
2. Relocation
Process
The NPRM proposes a market-driven, voluntary exchange process
for clearing the broadband spectrum. An entity seeking the
broadband license in a county will need to demonstrate that it has
entered into agreements with incumbents or that it can protect
their narrowband operations. All incumbents must be accounted
for before the broadband application may be filed. Because
the proposal assumes entirely voluntary negotiations, it does not
reference the concept of comparable facilities that the FCC has
used successfully in other relocation processes. PDV has
consistently acknowledged its obligation to assume all reasonable
relocation costs incurred by incumbents and will follow the
comparable facilities guidelines in the negotiation
process.
The challenge is achieving the appropriate balance between
protecting incumbents' rights to a minimally disruptive relocation
and the urgency of addressing the escalating broadband needs of
utilities and other critical users. PDV/EWA had proposed a
voluntary negotiation period followed by a mandatory period, a
staged process that has been used in a number of FCC band
repurposings, including in several realignments of the 800 MHz
band. PDV believes, based on the experience in other bands,
that voluntary agreements will be achievable with the great
majority of incumbents. However, as the FCC has recognized in
the NPRM, without some mechanism for preventing holdouts, even a
single incumbent with a license for a single channel could thwart
the FCC's objective of creating a broadband opportunity for
business enterprise entities with needs that are not met on
commercial networks. PDV has argued that incumbents should
not be permitted to block broadband deployment for an indefinite
period as long as they can be provided with comparable
facilities.
The FCC has requested comment on different approaches to
addressing the holdout situation. One suggestion is a
threshold for voluntary negotiations after which the remaining
incumbent(s), except those with complex systems, tentatively
defined as systems with 65 or more integrated 900 MHz sites, would
be subject to mandatory relocation, presumably with the right to
comparable facilities. The NPRM queries whether that approach
could include a sliding scale such that the percentage of
incumbents with which the broadband applicant would need to reach
voluntary agreement before triggering mandatory rights would
decrease over time. Alternatively, as discussed below,
the NPRM also proposes a follow-up auction in counties that have
not been cleared. PDV is not opposed to auctions conceptually
but, like the FCC, recognizes that the delays inherent in them
could undermine the FCC's desire to bring broadband spectrum to
market expeditiously, consistent with its 5G FAST plan.
In response to the FCC's request for comments on this critical
issue, PDV will reaffirm its support for and commitment to good
faith voluntary negotiations and also will endorse a threshold
success measurement or similar approach as a more expedient way of
clearing this spectrum for its intended broadband use.
3. Overlay
Auction
As noted above, the NPRM recognizes that its preferred
market-driven voluntary approach may not result in clearing
sufficient contiguous spectrum to permit the timely introduction of
a 900 MHz broadband service. It questions whether this
consequence could be remedied by an auction of overlay 900 MHz
broadband licenses with mandatory relocation rights.
Overlay auctions, whereby a successful bidder acquires the right
to a defined amount of encumbered spectrum in a specific geographic
area, typically with mandatory rights to relocate incumbents to
comparable facilities at the auction winner's expense, have been
used successfully in converting a number of encumbered bands to
allow for the introduction of more advanced and efficient
technologies. While PDV supports the concept of overlay
auctions, as discussed above, it also will be recommending
alternative solutions to the holdout problem in order to address
the increasingly urgent broadband needs of utilities and other
critical business enterprises.
The NPRM suggests that the FCC is contemplating auctions of
either a 6 or 10 MHz overlay license approach. In evaluating
a 10 MHz overlay approach, PDV will need to understand what such an
auction would involve and what spectrum the FCC is considering for
relocating incumbent licensees.
4. Incentive
Auction
The NPRM also requests comment on using an incentive auction
rather than an overlay auction if good faith voluntary negotiations
fail to clear sufficient usable spectrum for a 6 MHz broadband
service in a given county. Incentive auctions are
complicated. Broadly, they involve incumbents agreeing to
relinquish their spectrum rights in exchange for a consideration
that they agree to accept while those wishing to acquire that
spectrum, possibly including incumbents, determine what they are
willing to pay for the potentially relinquished spectrum.
This alternative has been used successfully in other bands and
should not be discounted. However, it is less certain that an
incentive auction would be an optimal approach in a band with a
relatively small number of incumbents in each geographic area whose
spectrum holdings have greater value collectively than
individually. PDV intends to explore this alternative in more
detail as the proceeding progresses.
C. Licensing and
Operating Rules
The NPRM's proposed licensing and operating rules for the
broadband service are generally consistent with PDV's
expectations. It tentatively agrees with the FCC that this
service should be regulated with like broadband services under Part
27 of the FCC rules, Miscellaneous Wireless Communications
Services, rather than under Part 90. Recent rule changes
allow licensees in such services to identify themselves as either
common carriers or private carriers, depending on their operations,
and the other regulatory obligations appear reasonable.
The most significant operating rules are the performance
(build-out) requirements. The NPRM has proposed a 15-year,
rather than the typical 10-year, license term for 900 MHz broadband
systems with performance requirements that resemble those applied
to commercial broadband networks. 900 MHz broadband licensees
would be required to provide service with a reliable signal
coverage to at least 45% of the population in each county within 6
years, and 80% within 12 years. A failure to satisfy the
6-year obligation would accelerate the second deadline from 12 to
10 years. A failure to meet the second deadline would result
in license cancellation.
PDV is considering whether these requirements are consistent
with the FCC's expectation that this spectrum could be used to
address the very particularized coverage requirements of utilities
and other business enterprises, not ubiquitous consumer-oriented
needs. It expects to address this issue in its filings in
this proceeding.
In partnership with the Enterprise Wireless Alliance, PDV has
accomplished its primary objective. The NPRM agrees that the
public interest would be well-served by creating a 6 MHz 900 MHz
broadband service. It suggests that there are no significant
technical issues associated with adjacent broadband and narrowband
allocations and includes a range of opportunities to move spectrum
to broadband. PDV will continue to work collaboratively with 900
MHz incumbents, both those who wish to maintain narrowband
facilities and those who have identified a broadband
requirement. As part of that commitment, PDV intends to focus
on a regulatory approach to ensure that the voluntary exchange
process does not delay delivery of a long-awaited broadband
solution for entities whose communications needs grow only more
urgent with the passage of time.
Sincerely,
Morgan E. O'Brien
CEO
i The great majority of PDV's 900 MHz spectrum was
purchased by Nextel through the FCC's auction process. Nextel
acquired additional 900 MHz channels from existing licensees.
PDV then purchased Sprint's entire 900 MHz spectrum inventory
following Sprint's acquisition of Nextel.
ii EWA is a pre-eminent land mobile trade
association whose members include a broad range of enterprise users
such as: utilities, pipelines, manufacturers, airlines, overnight
delivery services and other entities, as well as equipment vendors
and commercial service providers.
iii NPRM at 1. .
iv Id. at 5.
v Id. at 7.
vi Id. at 8.
vii 900 MHz licenses today authorize either geographic
MTA operations for spectrum purchased at auction or site-based
authority acquired through a frequency coordination process.
In response to the operational needs of business enterprise
users such as utilities and manufacturing facilities with defined
coverage requirements, PDV/EWA proposed that broadband licenses be
issued by MSAs (multiple counties) in urban areas and by counties
outside those areas. The FCC has proposed counties as the
basis for 900 MHz broadband licenses.
viii There are instances when different types of systems
can share the use of a band through avoidance techniques that allow
disparate technologies to operate in different portions of the band
at different times. While sharing will be an important tool
for maximizing the use of the increasingly broad swathes of
spectrum in higher bands, it is not possible for broadband and
narrowband systems to share/co-exist in the 6 MHz broadband
allocation proposed at 900 MHz.
ix Any perceived gain also would be offset by the costs
incurred in relocating incumbents to comparable facilities.
About pdvWireless, Inc.
pdvWireless, Inc. (NASDAQ: PDVW) is focused on developing and
offering solutions that leverage its spectrum assets for the
deployment of next generation private broadband networks designed
to meet the needs of critical infrastructure and enterprise
customers. We are the largest holder of licensed nationwide
spectrum in the 900 MHz spectrum band throughout the contiguous
United States, plus Hawaii, Alaska and Puerto
Rico. On average, we hold approximately 60% of the channels
in the Part 90 portion of the 900 MHz band in the top 20
metropolitan market areas in the United
States. We are currently pursuing a regulatory proceeding at
the Federal Communications Commission that seeks to modernize and
realign a portion of the 900 MHz band to increase its usability and
capacity and accommodate the future deployment of broadband
technologies and services. At the same time, we are expecting to
enable private broadband network solutions, leveraging our
spectrum, that address the growing and unmet needs of our targeted
critical infrastructure and enterprise customers. Our Chairman,
Brian McAuley, and CEO, Morgan O'Brien, were the co-founders of Nextel
Communications and have over 60 years of combined experience in
telecom operations and successfully developing regulatory driven
spectrum initiatives to address the unmet wireless communications
needs of businesses. pdvWireless is headquartered in Woodland Park,
New Jersey.
Forward-Looking Statements
Any statements contained in this press release that do not
describe historical facts are forward-looking statements as defined
under the Federal securities laws. These forward-looking statements
include statements regarding: (i) the final NPRM issued by the FCC
will be consistent with the NPRM; (ii) the FCC will issue a Report
and Order that supports the deployment of broadband services and
technologies in the 900 MHz band on a timely and economically
viable basis; (iii) the Company's ability to successfully respond
to the FCC's questions and the comments filed by incumbents and
other interested parties in the 900 MHz proceeding; (iv) the
Company's ability to meet the FCC's future requirements to qualify
for broadband licenses in a sufficient number of counties to
implement its business plans; (v) the Company's ability to obtain
additional SMR licenses and to negotiate agreements to relocate
incumbents, on timely and economically viable basis, or at all; and
(vi) the Report and Order will enable the Company to implement and
successfully pursue its business initiatives and plans.
Any forward-looking statements contained herein are based on the
Company's current expectations but are subject to a number of risks
and uncertainties that could cause its actual future results to
differ materially from its current expectations or those implied by
the forward-looking statements. These risks and uncertainties
include, but are not limited to: (i) the Company's spectrum
initiatives, including its FCC proceedings aimed at modernizing and
realigning the 900 MHz spectrum band to increase its usability and
capacity, which contemplates the utilization of such spectrum for
the future deployment of broadband technologies and services, may
not be successful on a timely basis or at all, and may continue to
require significant time and attention from its senior management
team and the expenditure of significant resources; (ii) the Company
may not be successful in identifying, developing and
commercializing network and mobile communication solutions
utilizing its current and future spectrum and commercially
available technologies; (iii) the Company has had net losses each
year since its inception and may not achieve or maintain
profitability in the future; (iv) the Company's ability to control
the costs and to achieve the expected operational benefits and
long- term cost savings of its restructuring plans, including the
transfer of its TeamConnect and pdvConnect businesses; (v)
the wireless communications industry is highly competitive and the
Company may not be able to compete successfully; and (vi)
government regulation could adversely affect the Company's business
and prospects. These and other factors that may affect the
Company's future results of operations are identified and described
in more detail in its filings with the Securities and Exchange
Commission (the "SEC"), including its Annual Report on Form 10-K/A
for the fiscal year ended March 31,
2018, filed with the SEC on August 9,
2018. Modifications to those factors and/or additional
factors are described in the Company's Quarterly Report on Form
10-Q for the quarter ended December 31,
2018, filed with the SEC on February
8, 2019. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. Except as required by applicable law, the Company
does not intend to update any of the forward-looking statements to
conform these statements to actual results, later events or
circumstances or to reflect the occurrence of unanticipated
events.
Contacts
Natasha Vecchiarelli
Director of Corporate Communications
pdvWireless, Inc.
973-531-4397
nvecchiarelli@pdvwireless.com
Phil Sgro
Raffetto Herman Strategic Communications
202-585-0210
psgro@rhstrategic.com
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