FCC Mulls Public Safety Spectrum Price Drop

The 700-MHz D Block of spectrum, which is used by police and firefighters, was originally priced at $1.3 billion.
In moving to encourage bidding for the 700-MHz D Block of spectrum, the FCC this week proposed that the reserve price be lowered from $1.3 billion to $750 million.

The figure, however, is still much higher than the $472 million that was bid for the spectrum with public safety features earlier this year.

The major government players in the auction -- the FCC and key congressional leaders -- all want to see some of the spectrum used to beef up the country's woefully uncoordinated public safety networks.

The FCC hopes to improve chances for selling the spectrum at its meeting this week by dropping the price for the spectrum and by opening the bidding up to regional bids. Also, the time period for network build out would be extended to 15 from 10 years.

The sole bid for the D Block -- for $472 million -- was placed earlier this year by Qualcomm, but it wasn't considered to be serious because it was so far below the $1.3 billion reserve. In the past, bidders were discouraged from bidding because of the unknown complexity of building a combination commercial-public safety network as well as by the potential cost of building the network. The FCC has suggested a nationwide public safety network could cost as much as $7 billion, but potential bidders have said it could cost much more.

Well-heeled investors including investors from venture capital powerhouse Kleiner Perkins Caufield and Byers took their Frontline Wireless company out of the bidding earlier in the year and the current turmoil in financial markets is likely to scare off many but the bravest investors now.

FCC Chairman Kevin Martin has signaled his strong support for a nationwide public safety network. "We want someone to build out a public safety network and solve the interoperability problem," he said earlier this month.

Any new auction of the D Block will likely take place next year.