700 MHz saga nears conclusion

A public/private partnership to build a nationwide, wireless broadband network for public safety reportedly remains a key component of a draft of 700 MHz auction rules being considered by FCC commissioners amid intense lobbying and speculation that an order will be approved early in August.

Multiple Beltway sources and media reports indicate that the draft order being circulated within the FCC calls for the auction winner of 10 MHz of commercial spectrum to partner with a national licensee of 12 MHz of public-safety airwaves to build out a nationwide broadband network on the combined spectrum.

This arrangement was the foundation of the proposal from Frontline Wireless, but the FCC draft does not include many of the other conditions sought by Frontline, including provisions that would require the commercial auction to comply with open-access principles — which would allow any device to connect to any network — and adopt a wholesale-only business model. Many believe such encumbrances effectively would prevent incumbent wireless carriers from bidding on the public/private spectrum, leaving public safety to partner with a startup wireless company.

Not including open-access obligations was requested in a letter to the FCC and Congress written by the National Public Safety Telecommunications Council (NPSTC) that was endorsed by the Association of Public-Safety Communications Officials. The letter expressed support for a network buildout requirement obligating the commercial partner to provide coverage to a geographic area serving more than 99% of the population in the continental United States within 10 years and reiterated the need for a public/private partnership to make a nationwide public-safety broadband network a reality.

"Because public safety does not have access to funds even to build, much less to operate, maintain or refresh such a network, network deployment must be funded pursuant to a public-safety/commercial partnership between the NPSL and the E Block auction winner as codified in the FCC rules and in the Network Sharing Agreement to be negotiated between the NPSL and the E Block auction winner," the NPSTC letter states.

Probably the most controversial aspect of the NPSTC letter is the process that would be used to decide disputes in negotiations between the commercial auction winner and the public-safety licensee. Consistent with Frontline's proposal, NPSTC advocates that the FCC acts as the arbiter on such matters. However, NPSTC also contends that public safety should have the right to call for the commercial spectrum to be reauctioned if the national public-safety licensee does not like the FCC's resolution of disputes.

"If the FCC came back to us with unreasonable, unacceptable terms … at that last stage — if we don't agree that it's going to meet our needs — why should the highest bidder walk away with that spectrum?" NPSTC spokesman Harlin McEwen said. "Because at the end of the day, we don't get anything; we're right back where we started.

"We take the position that this is very different, very special, and we do need that ultimate veto power."

Whether such a stipulation was included in the draft order is uncertain, but several Beltway sources said the FCC has indicated that public safety would be "happy" with the language of the draft order.

Of course, what's included in a final FCC order can vary significantly from a draft proposal, particularly when something as valuable as prime 700 MHz spectrum is at stake. Lobbying from wireless trade association CTIA and many of its powerful members continues to focus on the success of past auctions without encumbrances, which the organization believes to be the way to maximize auction revenues for the U.S. Treasury.

But less than half of the commercial spectrum — 28 MHz of the 60 MHz to be auctioned — would fall into the unencumbered category. Conversely, in addition to the 10 MHz that would be used for the public/private partnership network, the draft FCC order reportedly calls for the winner of 22 MHz of spectrum to adhere to open-access obligations.

In an effort to curb any concerns about revenue shortfalls, the FCC draft reportedly also requires that all 60 MHz be reauctioned if bidding does not reach the $10 billion level anticipated by Congress and that the 22 MHz of open-access spectrum be reauctioned if those frequencies do not attract more than $4.6 billion in bids. Frontline Wireless Vice Chairman Reed Hundt, who served as FCC chairman when the agency began spectrum auctions in the 1990s, said the reported reserve prices would represent poor public policy.

"This is 10 times higher than any previous reserve price," Hundt wrote in a column for VentureBeat. "The time delay of a cancellation adds to the advantages of incumbents and discourages new entrants. It raises the cost of new entry. The very high reserve price is effectively a tax on starting a new business. … It's hard to imagine a less venture-friendly proposal than this reserve price."

But the reserve price was not a deterrent to Internet search-engine firm Google, which has advocated open-access and at least some wholesale stipulations on the 22 MHz swath of spectrum.

"Should the commission expressly adopt the four license conditions requested in our July 9th letter — with specific, enforceable, and enduring rules — Google intends to commit a minimum of $4.6 billion to bidding in the upcoming auction," Google Chairman and CEO Eric Schmidt wrote in a letter to Martin.

As the FCC contemplates auction rules, other entities are busy determining their roles in whatever process that is adopted. A coalition of public-safety organizations has incorporated the Public Safety Spectrum Trust (PSST), which hopes to become the national licensee for the 12 MHz of public-safety broadband spectrum in the 700 MHz band.

Although the FCC officially has not established the need for a national public-safety licensee, the PSST has released a request for proposals to serve as the new entity's agent/adviser. One expected respondent to the RFP is Cyren Call, which initiated the idea of a public-private partnership for a broadband network more than a year ago. While Cyren Call's proposal no longer is being considered, Cyren Call still could fulfill the role it envisioned if selected by the PSST.

"Our preferred role is to be an adviser to the public-safety community," Cyren Call spokesman Tim O'Regan said. "If for some reason that is not possible, we would not rule out our participation in the auction, but that is not our preferred role."

Frontline Wireless has anticipated participating in the auction, but it could face some difficult decisions if the FCC adopts final rules similar the its draft order. Frontline Wireless has advocated putting public/private and open-access obligations on the same spectrum. If the FCC separates these conditions on different swaths of spectrum as proposed in the draft order, it's doubtful that Frontline Wireless would be able to finance serious bids for all 32 MHz of spectrum. Likely, the company would have to focus its resources on one swath.

Meanwhile, a wild card in the entire scenario is Verizon Wireless, which has been active at the FCC and in private meetings with public safety. As of press time, the giant wireless carrier still had not offered any public plans for working with public safety, but many observers believe the provider is considering a bid on the 10 MHz block of spectrum that would be earmarked for a public/private partnership.

As of press time, the FCC had not scheduled an open meeting for July, an unusual development. In theory, the commission could approve 700 MHz auction rules without an open meeting, but most industry observers believe the commission will want to make its statements on such a high-profile issue in a public meeting. Most Beltway sources said they expect the FCC to rule on the matter in an early August meeting.

PSST: Not A Secret Anymore

Public-safety organizations participating in the Public Safety Spectrum Trust

• American Association of State Highways and Transportation Officials (AASHTO)
• Association of Public-Safety Communications Officials (APCO)
• Forestry Conservation Communications Association (FCCA)
• International Association of Chiefs of Police (IACP)
• International Association of Fire Chiefs (IAFC)
• International Municipal Signal Association (IMSA)
• National Association of State EMS Officials (NASEMSO)
• National Public Safety Telecommunications Council (NPSTC)
• National Sheriffs Association (NSA)