Public Safety Gets Lost In 700-MHz Bidding

The $1.3 billion "reserve price" for the spectrum that serves law enforcement and emergency management officials may be too much for some bidders, the FCC warns.
As the FCC auction of high-priced spectrum in the 700-MHz band moves into its fifth week, questions concerning support for public safety wireless networks have cropped up.

The total bidding has hit $19.4 billion and some individual licenses, such as the so-called C block of spectrum for the Great Lakes region, have received bids topping $1 billion. Among the highest individual bids is the one for the D block, at $472 million.

That sounds good, except that the "reserve price" -- the minimum winning bid, set by the FCC -- for the D block is $1.3 billion. And this slice of spectrum, designated for a hybrid private/public safety network that would greatly enhance the ability of first-responders, law enforcement, and emergency management officials to respond to a natural disaster or major act of terrorism, has attracted only one bid, placed in the opening round nearly 30 days ago.

That means that the D block almost certainly will not sell in this auction, a fact acknowledged earlier this week by politicians.

"We now know that only the D block may not sell in this auction," Rep. John D. Dingell, D-Mich., said in a statement last week. "The construction of a nationwide, next-generation, interoperable broadband network for public safety is a crucial policy objective, and the need for such a network has not diminished."

FCC Chairman Kevin Martin, who had pegged the creation of a public-safety network as one of the primary goals of the auction, admitted in testimony before the House Telecommunications Subcommittee that the D block will likely not sell.

"I do recognize that the concerns that public safety raised seem like they are too great at this point for anyone to be willing to put in a bid and work with public safety," Martin said.

Others were blaming the failure of the public safety network concept -- considered critical by many officials with the Department of Homeland Security and the Federal Emergency Management Agency as well as local public-safety workers -- on more structural issues: the rules set by the commission and the influence of large incumbents, i.e. the major wireless carriers, over the process. In fact, many observers believe the building of a public safety network should never have been left to the private sector and the big spectrum auction. The federal government should simply fund the network in partnership with the states, not unlike the interstate highway system, said Mark Cooper, research director at the Consumer Federation of America.

"The fundamental flaw in the approach to public-safety wireless communications was Congress' lack of courage," Cooper asserts. "They put up $1.5 billion for consumers whose TV sets are going to go blank [in the transition to digital broadcasting], but they couldn't put up the money for a homeland-security wireless network. It's an outrage."

Speaking at the Silicon Flatirons conference in Colorado, FCC commissioner Jonathan Adelstein chimed in, calling the failure of the D block to win significant bids "a great disappointment."

"We clearly misjudged the interest [in the D block] and set rules that apparently inhibited the financing [for bidders]," Adelstein said. "It's a concern, and it's something we will re-visit with our friends in public safety."

Adelstein also mentioned that the commission will likely review the downfall of Frontline Wireless, a startup headed by former FCC chairman Reed Hundt that was formed expressly to build a hybrid private/public network. Though originally backed by high-powered Silicon Valley investors, Frontline pulled out at the last minute after failing to assemble the upfront payment for bidders in the 700-MHz auction.

Rumors floating in the blogosphere in recent days have centered on Morgan O'Brien, the CEO of Cyren Call, at one time considered a rival bidder in the 700-MHz auction, and his possible relationship with the big U.S. wireless carriers. Whether O'Brien had any role in Frontline's collapse is unknown at this point, but the chatter has added to the lingering clouds that will likely surround the auction once the bidding is complete.

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