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The Lost Trunking License

It was 1979 when the FCC granted the very first licenses for operating a trunked radio system.  The trunked radio system was a completely new concept which was a major revolution in land mobile radio.  Before these systems, all mobile radio systems were conventional which meant that the radio system did not have any automated method of sharing frequencies so the use of conventional channels were more like a party line phone.  The trunked radio system allowed the radio users in a crowded area such as Los Angeles to experience the equivalent of private communications instead of having a party line in which one would share the radio channel with many other radio users.  This could cause considerable delays in sending one’s message whenever the channel was in use by others which would often happen when one needed to use the radio.

800MHz Spectrum AllocationSome radio users were sufficiently large enough to be able to purchase a sufficient number of radios that they could license a radio channel for their own exclusive use.  Under the FCC rules, it took 70 radios to qualify for an exclusive channel which cost a considerable amount of money.  Trunking radios cost about $2K per radio so a company had to figure upon spending $150K to purchase a radio system to qualify for an exclusive channel.  However exclusive channels were only available during certain timing windows which tended to be short lived due to the demand for a higher quality communications and the lack of a large quantity of exclusive channels to be made available.

These radio systems were defined in the FCC Rules as Specialized Mobile Radio (SMR) systems in the 800MHz band which offered perfectly clean virgin spectrum.  The channels that these systems used for operation was previously UHF TV channels 70-83 on your TV set.  Most of these channels never had a TV station operating on any of the channels, but if there were a TV station, it was moved to a lower UHF TV channel to make the spectrum totally clean.  The other advantage of this radio spectrum was that it had a significant separation between transmit and receive frequencies which would allow for ease of operating in a full duplex mode.  Although this was somewhat important to the land mobile industry, it was essential to the cellular phone industry which was sharing part of the 800MHz frequency band.  The ability to build a small full duplex hand held portable radio was essential to the future of cellular phone industry which was being developed by Motorola and E.F. Johnson Company under a contract from Bell Laboratories.

The FCC enacted new rules in the 1970s establishing the 800MHz band for land mobile use.  The frequencies of 806-821MHz which were paired with 851-866MHz were established for the use of land mobile radio systems.  The frequency range of 825-845MHz and 870-890MHz was set aside for the future cellular radio systems.  Originally, the FCC released 50 channels for conventional use in the 806-807.25MHz / 851-852.25MHz range which were quickly gobbled up by the many companies desiring exclusive channels along with the many radio entrepreneurs who wanted exclusive channels to sell airtime to their customers.  In short, it took very little time for the available spectrum to be issued with no more available.  After several years, the FCC decided to release another 50 channels which included the 807.25-808.50MHz / 852.25-853.50MHz which were all issued within a few weeks of being released.

At this point, the FCC vowed not to release any more channels for conventional use until after the trunked radio service was established and flourishing.  Trunking radio channels offered a higher quality service along with more efficient use of the radio spectrum.  Many users could share the radio channels and a far greater number of users could use the radio channels in the trunked mode than in conventional operation, so the FCC felt strongly that it needed to force the industry to adopt and develop trunking technology sooner rather than later.

Many radio manufacturers raced to develop trunking technology and bring it to market.  Motorola being the largest and dominant radio manufacturer of the land mobile radio industry was first to market with their Privacy Plus® which went on the air in 1979 after the FCC started issuing the original trunking licenses.  These licenses were issued in the highest 200 channels of the 800MHz land mobile band which include the frequencies of 816-825MHz / 861-866MHz.  General Electric was the second manufacturer to deliver a working trunked radio system utilizing the GE Mark V technology which was a revamped version of IMTS; the old “Improved Mobile Telephone Service” that provided automated phone calling prior to the cellular revolution.  The GE Mark V product entered the market just a few months after Motorola delivered its Privacy Plus product.

The next manufacturer to deliver a trunked radio system was E.F. Johnson Company who developed the Logic Trunked Radio (LTR) product. This came out in the middle of 1980 and quickly became the best trunking format on the market.  The Motorola Privacy Plus worked well, but was unreliable due to constant controller failures which occurred due to static discharge, chip failures and software issues.  With some time, Motorola resolved all of these issues and Privacy Plus became a powerhouse of the radio industry while the GE Mark V product sunk almost into oblivion because it had so many problems with the format.  It was slow to operate and suffered from the fatal flaw that it could not allow a late system entry to a conversation, thus irritating the user base of the product.

The big question is what does this have to do with a lost license?  It sets up the situation for the competition for the acquisition of the trunked radio licenses.  Another factor was that the FCC was requiring proof of a factory order for the equipment because they wanted to prevent people from “warehousing” frequencies so that the frequencies would actually be placed into use and “loaded” with customers.

In the late 1970s, MRA decided that we wanted to enter the trunking market by applying for an FCC license to operate a trunked radio system.  The thought was daunting since it required a huge investment in repeaters which was way beyond our financial ability.  However, the ability to pay for the system seemed like a small problem compared to acquisition of the license to operate the trunked radio system.

MRA lacked the knowledge of how to fill out the license application to apply for the license.  However, the FCC had issued a public notice bulletin about obtaining licenses for operating trunked radio systems, so I decided to call Steve Markendorf at the number in the bulletin.  After a few tries, I finally managed to get Mr. Markendorf on the phone.  I explained that I wanted to apply for a license for a trunked SMR system.  He asked me if I was planning to install a Motorola trunked radio system and I replied that I was not associated with Motorola.  He then asked me if I was planning to purchase a GE trunked radio system.  I told Mr. Markendorf that we were not a GE dealer and did not plan to purchase a GE trunked radio system but we were an E.F. Johnson radio dealer and that we had planned to purchase the new Johnson trunked radio system that was currently being developed and soon to be on the market.  Mr. Markendorf replied that Motorola and GE were the only two type accepted trunking systems and that I had to purchase one of those two systems or the application would not be granted and that MRA could not apply for the license.  I said that Johnson would have their radio system type accepted prior to the license being granted and that we planned to install the Johnson trunked radio system.  At that point, Mr. Markendorf became a bit belligerent and told me that I could not apply for the license without a valid factory order for a type accepted trunked radio system.  He further told me that he had my name and the company name and if I applied for the license without a valid purchase order, he would personally see to it that MRA would not receive a license grant and that MRA would never obtained a license at any time in the future.  Being a neophyte in the radio business and lacking the experience to know better, I was shaking in my boots after that conversation and shelved the idea of applying for the license any time soon.  Strike one.

A few months went by after my conversation with the FCC when I was talking to Stuart Meyer from the Johnson FCC licensing liaison office.  I explained my experience with the FCC and he indicated that Mr. Markendorf had exceeded his authority and there was nothing to worry about regarding the license application.  He would handle the issue of the acknowledgement of the purchase of the trunked repeaters and that I needed to fill out the license application and send it to the Johnson liaison office.  This was a significant relief to my dilemma of how to proceed with the license application.  Unfortunately, the time delay between the call with Stuart Meyer and the one with the FCC was at least 2 months which placed MRA in a significantly inferior position to obtaining a license to operate a trunking system.  Being in the Los Angeles area which is the #1 or #2 radio market in the country (and the world) placed us in a position that we may not ever obtain a license due to the delay, but I still moved forward with the application.  I learned a long time ago that if you do not apply, you will never get a license so it was imperative to get moving on the application right away.

I prepared the license application to the best of my ability leaving some items blank on the form so that it could be completed by the Johnson liaison office.  The license application was FCC form 400 which was 7 copies with carbon paper on the upper half of the form, so fixing typos on the upper portion of the form was difficult at best.  The lower half of the form was single page so corrections were far easier.  I sent the form to the Johnson liaison office who filled in the missing items and submitted the application to the FCC.  It was too late for an original license grant because too many others were ahead of me with their license applications, but it was expected that there would be several “take backs” where people would not build the system and place customers on the system in time.  The FCC had vowed to be very aggressive at taking back licenses that were not built in time by verifying the system construction with the tower owners and verifying the customers on the system.  So that meant that MRA was in a good position to get “take back” frequencies which would take another year after the original licenses were granted.  The FCC returned the license application after about 30 days for some corrections to the Johnson liaison office.  They sent the application to MRA which I corrected and resubmitted a few days later to the liaison office.  They resubmitted the application to the FCC.

Another 2-3 months went by and the FCC returned the MRA application to the Johnson liaison office for additional issues.  They returned the application to MRA which we handled the requested corrections within another few days.  We sent the application back to the Johnson liaison office to be returned to the FCC.

Many months went by and license “take backs” were occurring at the FCC.  They were following through with their promise to be aggressive with “take backs” from people who were not in strict compliance with the rules and had started reissuing licenses to new applicants.  It was now time to check with the Johnson liaison office to find out the status of our license application and when we could expect our license grant, so I called the liaison office to inquire as to the status of the application.  They did not seem to be able to give me an immediate answer, so they said that they would call back the next day to let me know of the current status.  It took them two days to get back to me when I received a call from Stuart Meyer with a sheepish voice to inform me that the license application was just found in a drawer in their office and had not been returned to the FCC after we had completed the second set of corrections.  Under the FCC rules in force at the time, we had 30 days to handle any corrections and return the application to the FCC or the application would be dismissed.

I was furious, but I maintained my cool.  Yelling and screaming at him would not fix anything and would prevent me from obtaining the information and cooperation from him to fix the problem, assuming that there was a fix to the problem.  I had a few moments of silence to think about what had just happened and contemplate in my mind what was needed to fix the problem.  After the silence, I started discussing what could be done to fix the problem.  Stuart indicated that he would file a petition with the FCC to have the application reinstated based upon the argument that it was not MRA’s fault that the application was not returned to the Commission on time.  So the Johnson liaison office filed the petition with the FCC to have the MRA application reinstated.

Months went by as we patiently waited for the FCC to make a decision on the matter.  We were cautiously optimistic that the FCC would reinstate the application because it was truly not MRA’s fault, but a mistake made by a third party.  Technically, the people who made the mistake had no stake in the outcome, but it could be argued that the grant of a license to MRA would benefit them because they worked for Johnson who would benefit from the purchase of their product should MRA win the case.  This cast some doubt on the impartiality of the statements of the liaison office which we considered to be a weakness in our case.  So as we patiently waited for a decision, the FCC continued their “take back” program and reissuing licenses.  This meant that the likelihood of MRA receiving a grant was diminishing as the clock was ticking because each “take back” meant that there was one less license available.  Licenses are a finite resource which means that each license that goes to someone else means a license that MRA cannot have for its use.

Finally after many months the FCC released the decision in the case of reinstating the MRA application.  All decisions are public documents so it is released to the general public at the same time, so we did not have any advance notice of how or when the decision would be made.  I had received a call from Stuart Meyer to tell me that he received the decision.  I held my breath as I listened to the summary of the FCC decision from Stuart and immediately my anticipation turned to sadness and despair.  The FCC had denied our petition for reinstatement.  I continued to listen to Stuart’s summary of the decision to know the reason for the denial and if there were any ground for appealing the decision.  The FCC made it clear that they considered the Johnson liaison office’s failure to follow through with the requirements be the same as if MRA had made the mistake itself.  They explained that it was MRA’s choice to use the Johnson liaison office verses using another licensing service or handling the matter completely in house without the benefit of an outside party.  Even if we had hired an attorney, we would be responsible for the failure of the attorney because that was MRA’s choice.  So we lost our bid to be reinstated and with it, we lost all hope of being able to obtain a SMR trunked license.  I showed this to an FCC attorney who felt that an appeal would be a waste of time, money and resources as it would be highly unlikely to succeed.

Now we had to evaluate where we would go from here.  This was a serious blow to our future business.  It was clear that the future of two-way radio was highly dependent upon being able to own and operate a trunked radio system.  Customers were frustrated with the conventional radio systems that worked like a party line phone which lacked privacy and lacked the ability to be used whenever it was needed.  When sharing a radio channel, one has to wait until any other party who is using the channel is finished before one has the right to key the transmitter to use the channel.  Cellular phones were only a pipe dream at this time as the Chicago cellular test system was still 2 years away and the need for mobile communications was only growing with time.  Therefore, we had to figure out a game plan to be able to continue selling wide area mobile communications.  We gathered all of the Johnson radio entrepreneurs to have a meeting regarding how we could work this for everyone’s benefit.  Each trunking format developed by a manufacturer was unique to that manufacturer which meant that the Motorola Privacy Plus, GE Mark V, Johnson LTR and the other formats which were developed by other radio manufacturers basically died a quick death and all were all incompatible with each other.  So the Johnson dealers decided to band together to make the Johnson LTR systems available to all Johnson dealers and not accept customers from non-Johnson dealers who wanted to two-step Johnson radio onto the system by purchasing Johnson radios wholesale from existing Johnson dealers.  This provided MRA an avenue to sell and service Johnson LTR radios even though we could not own and operate a system ourselves.

It was time to plan for the future.  The FCC still had 300 of the 600 radio channels still in reserve due to them not releasing those frequencies for use immediately.  They wanted to see how the trunked radio systems would play in the marketplace and found that they achieved massive acceptance in a relatively short period of time.  The FCC started planning on how they could move forward by releasing additional channels for use by the land mobile industry and MRA started planning on how we could obtain our fair share of the licenses once they became available.  However, that is another story that you can read on the MRA website titled “A Trip to Washington DC and Gettysburg”.

The economic realization was that this was still a disaster to MRA.  We had applied for a 10 channel trunked radio system license.  Assuming that we actually would have (or should have) received a license grant, we would have constructed the system on 1981.  Let’s assume that it took us 3 years to load the system with customers which is consistent with the quantity of radios we were selling in those days, we would have generated revenues in excess of $5 million dollars that we were unable to get as a result of the inability to obtain the license.  This does not count the amount of money that we would have obtained from selling the license to Nextel which we did do with our other licenses in the late 1990s.  The economic blow to the organization was massive.  The incidental and consequential damages are innumerable.  This set our company back many years in our growth, profitability and our ability to take advantage of opportunities that presented themselves which could have generated even more business and profitability.

The saga continues. . . . . . . .

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