Answering $5 billion question a prerequisite to Cyren Call debate
ORLANDO–From the first day Cyren Call Communications and Morgan O’Brien proposed a public-private partnership to have commercial operators build a nationwide, public-safety-grade network for emergency responders, most discussions regarding the notion have ended in the same manner.
“It’s an interesting idea, but it doesn’t matter,” the conventional wisdom says. “It will never happen because there’s no way Congress is going to give up the money it plans to receive from the 700 MHz auction.”
This point is hard to argue, making further debate on the controversial topic irrelevant to those who would rather spend their time on more realistic issues. During a session yesterday at the Association of Public-Safety Communications Officials (APCO) conference, O’Brien effectively said what most observers have believed from the beginning: Unless Congress can realize the $5 billion in auction revenues that already has been earmarked for the federal budget, the Cyren Call proposal likely is going nowhere.
But, for the first time, O’Brien offered a potential solution to the “political reality,” as he called it. The public broadband trust that would be the licensee of the 30 MHz of spectrum could guarantee the U.S. Treasury the $5 billion currently budgeted. The trust would borrow the money, pay the Treasury immediately, and repay the loan with money received from the winning RFP bids submitted by the commercial operators of the public-safety-grade network or other possible revenues.
After the session, O’Brien acknowledged that saddling the trust with a $5 billion loan from Day 1 is less than ideal for public safety, noting that it “encumbers the economics” of the proposal.
I agree. Such an obligation makes the proposition riskier, which generally isn’t a good thing to do when dealing with the risk-averse public-safety community. But I think it’s worth the risk, because this is a debate that needs to happen — and it won’t unless the $5 billion question is answered.
Moreover, forcing the trust to repay a $5 billion loan may be exactly what is needed to create the balance needed to make the Cyren Call proposal an effective public-private partnership. Sound ridiculous? Perhaps, but here’s my thinking on the matter, which begins with the two polar-opposite scenarios in the Cyren Call proposal that have concern me the most.
The first concerns the potential for the broadband trust to cater too much to the commercial operators building and maintaining the networks, with the result being that the networks perform more like typical commercial networks and fail to meet the needs of public safety.
To prevent this from occurring, public-safety representatives clearly need to control the broadband trust, which conceptually is the right idea. But simply giving the spectrum to the trust could create an imbalance of power that could undermine the partnership.
In this second scenario, public safety would have virtually no stakes in the game. It would be given the spectrum that would be leased to commercial operators to build a data network that — while it would be nice to have — is not an absolute requirement to do its job. After all, public safety doesn’t have the network today.
Such circumstances could result in the trust acting as if it is playing at a casino with house money. With virtually nothing to lose, it might take unnecessary risks in choosing a vendor or technology. More troublesome is the possibility that public safety might demand every bell-and-whistle feature that is included in the network with little or no regard to the economic viability of the system.
Driving such an agreement initially might look like a sweetheart deal for public safety, but it won’t look so good if a commercial operator can’t make money to cover its costs and is forced to quit maintaining the network. Also, in this scenario, there’s a chance that the only operators willing to accept public safety’s terms are those who are unproven, possibly under financed and/or who desperately need the spectrum to be a player in the commercial sector — a profile public safety probably doesn’t want in its network operator.
But, with the trust having $5 billion on the line, no one could characterize this as a spectrum handout/giveaway or complain that the trust is controlled by public safety. And, with a loan to repay, a public-safety-controlled trust will have to balance the economic viability of its network criteria against the needs of emergency responders. That’s a public-private partnership structure that has promise for long-term sustainability.
Hopefully, public-safety leaders soon will declare their support for Congress to OK an FCC proceeding to look at the Cyren Call proposal. This is a debate that needs to happen, and agreeing to fund $5 billion if the notion becomes reality is a small price to pay compared to the potential benefit.
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