700 MHz enters waiting game
With the much-anticipated 700 MHz auction beginning in January, the public-safety side of the proposed nationwide wireless broadband network last month crystallized as expected, but answers regarding commercial participation and the terms of the public/private partnership could be months away.
After seeing its original public/private proposal fail to gain traction on Capitol Hill early this year, Cyren Call appeared to be on the cusp of realizing its desired role — serving as the national public-safety licensee’s primary ally. Early in October, Cyren Call was selected as agent/adviser to the Public Safety Spectrum Trust (PSST), which was virtually certain to be the licensee for public safety’s 10 MHz of spectrum in the band as of press time.
Established in June as a non-profit corporation, the PSST was the only entity that applied to fill the role as the national licensee. The PSST met the FCC’s criteria to be the licensee only after reconstituting its board to meet the commission’s mandate. As of press time, the FCC was evaluating the PSST application, but the eventual naming of the organization as the national public-safety licensee was considered a foregone conclusion by all industry observers.
Much less certain is which commercial entities would be willing to bid for the 10 MHz D Block spectrum, which is supposed to be coupled with the public-safety spectrum to serve as the foundation of a shared nationwide broadband wireless network designed to meet public-safety needs.
Wireless industry consultant Andrew Seybold said he believes the two largest U.S. wireless carriers — AT&T and Verizon — and newcomer Frontline Wireless are the most likely bidders for the D Block airwaves, which have a $1.3 billion reserve price tag attached to them. The key to attracting any operator to bid on the D Block spectrum and build a publicsafety-grade wireless broadband network will be the national licensee’s statement of requirements, he said.
“If the public-safety community puts too many terms and conditions on what they expect that network to look like, they could scare away the bidders,” Seybold said. “The shame of that is, if the bidders get scared away and nobody shows up … the losers are the first-responder communities, because they don’t get their 12 MHz built. The only way they get their 12 MHz built in a nationwide system is if there is a [D Block] winner, and somebody builds it all.”
Formulating the statement of requirements is the first duty for the national licensee. Presumably, public safety’s requirements will be released before Dec. 3, when prospective D Block bidders are required to file short-form applications to participate in the auction.
Cyren Call will not be developing the statement of requirements alone. Upon naming Cyren Call as agent/adviser, PSST Chairman Harlin McEwen said all three finalists for the post were “excellent” and each exhibited valuable expertise — so much so that the PSST could hire the two unnamed finalists to do work in the future. A week later, Cyren Call announced that RCC Consultants, 4DK Technologies and RACOM would serve on its team.
“There’s lots of work to be done in quick order, so it’s very likely that we may reach out to [the unnamed finalists] to help us with some of the tasks, and both of them indicated that they were interested in working with us,” McEwen said.
Assuming there is a D Block bidder, the commercial entity submitting the winning bid would have six months to forge an agreement with the public-safety licensee that is expected to include pricing for public-safety entities subscribing to the network.
What that pricing structure will look like is a significant unknown. Some in the carrier community have noted that hardening a nationwide network to meet public-safety standards could add several billion dollars to the cost of deployment. Meanwhile, public-safety proponents have noted that first responders should receive a price break because public safety will be providing 10 MHz of nationwide spectrum that the commercial carrier can leverage to increase its commercial revenue stream.
That pricing structure likely will include a mechanism to provide the national public-safety licensee with a revenue stream that would let it pay all operational expenses long term. In the short term, most industry observers believe the national licensee will need to secure some sort of loan to fund operations until subscription-based revenues begin to flow — something that likely will take more than a year.
From the government’s financial perspective, Congress is counting on the 700 MHz auction to generate at least $10 billion to fulfill budgetary obligations. While there had been some speculation that a weakened credit market and other factors could devalue the 700 MHz airwaves, those concerns were diffused considerably after AT&T agreed to pay Aloha Partners $2.5 billion for 12 MHz of spectrum that covered only 65% of the U.S. population. (See news brief on page 9.)
Most industry analysts agree that AT&T made a wise pre-emptive move and set the valuation market for the 700 MHz spectrum, but Seybold said there are too many variables to speculate on who will participate — much less win — spectrum in the auction that the FCC recently rescheduled to begin on Jan. 24.
“I’ve been talking to people all the time about what they think, and I have lots of guesses and lots of opinions,” Seybold said. “But at the end of the day, there are only two realities here: One, at the end of the auction, we will know who won. Two, at the end of six months after the auction, we will know who will really end up with the spectrum, after all of the trading.”
700 MHZ AUCTION TIMELINE
NOV. 19
Auction seminar for bidders. Short-form application filing window opens.
DEC. 3
Short-form applications due from participating bidders.
DEC. 28
Bidders’ upfront payments due to the FCC.
JAN. 18
Mock auction conducted.
JAN. 24
Auction begins.
