Waiting to exhale: Public safety, FCC eye Jan. 24 auction start
With the 700 MHz auction less than three weeks away, speculation is rampant regarding which operators will secure valuable spectrum, particularly for the 10 MHz D Block that will be paired with public safety’s 10 MHz in the band to provide the foundation for a nationwide broadband wireless network.
Today is the deadline for the 266 potential bidders to make their upfront payments to the FCC and complete their applications to participate in the auction, something that most are expected to do. Assuming they fulfill their application requirements, the vast majority of bidders will be regional players likely pursuing some of the hundreds of licenses available in the A and B blocks — airwaves not encumbered by rules requiring open access (as in the 22 MHz C Block) or a deal with public safety (as in the D Block).
“Of the 266, the majority are after the A and B blocks,” mobile wireless analyst Andrew Seybold said during an interview with MRT. “There are very few on this list, I would guess, that have the stomach to go after the C and D blocks.”
Indeed, bidders will need deep pockets to secure one of the seven C Block licenses — the combined reserve price is $4.6 billion — or the nationwide D Block license, which will require a minimum bid of $1.3 billion. That’s a lot of money to invest before spending a dime on network deployment.
Groups that can be ruled out include Sprint Nextel, T-Mobile and the cable consortium that bid in last year’s AWS auction, because none of them filed an application to participate in the auction (some cable firms are expected to bid individually, probably on a regional basis).
Familiar names that have filed applications and have the money to make a bid on nationwide spectrum include incumbent wireless providers like Verizon Wireless and AT&T Mobility, as well as intriguing entrants like Google, Frontline Wireless, Qualcomm, Chevron and Vulcan Spectrum, which is headed by Microsoft co-founder Paul Allen.
Seybold believes Chevron and Vulcan are seeking targeted regional spectrum, while Qualcomm is most interested in the E Block — an unpaired 6 MHz swath that is adjacent to the airwaves the company is using for its MediaFLO mobile-broadcasting initiative. Google is expected to bid on the C Block, which includes the open-access mandate the company championed before the FCC.
While it’s possible that one or more of these four entities might be interested in the D Block, none would be considered a probable D Block bidder. Seybold said Qualcomm’s broadband public-safety experience in the Washington, D.C., area makes it particularly intriguing, but he doubts the vendor will want to risk being seen as a competitor to its service-provider customers.
With this in mind, Seybold said he believes the most likely D Block bidders are Verizon Wireless (bidding as Cellco Partnership), AT&T Mobility and Frontline Wireless (bidding as Licenseco). Frontline publicly has expressed interest in working with public safety on a nationwide basis, while Verizon and AT&T have been discussing possibilities with public-safety officials for more than a year.
“I didn’t see any other names that could step up,” Seybold said.
Key officials representing the FCC and the Public Safety Spectrum Trust (PSST) — the licensee for public safety’s 700 MHz broadband spectrum — have expressed confidence that an operator will bid for the D Block. But Seybold is not so sure any bidder is comfortable it can build a network on the spectrum that will meet public safety’s requirements and still deliver the return on investment needed to keep stockholders happy.
“That one’s too close to call for me,” Seybold said.
It is the possibility that no one will bid on the D Block that has to be most worrisome to public-safety and FCC officials right now. Without a bid, the current idea of a public-private partnership for a public-safety network will have to be scrapped, and the first-responder community will be left with 10 MHz of prime spectrum and no clear way to fund the buildout of a network on it.
Hopefully, when the auction opens on Jan. 24, at least one qualifying bid will be made. Of course, the FCC’s anonymous-bidding rules will preclude us from knowing who has placed the high bid until the auction is finished — probably in March — but just knowing that a qualifying bid exists will let everyone involved proceed along the course established by the FCC last year.
At that point, it will be much easier for PSST officials to sleep. And they need their rest now, as burning the midnight oil could become the rule when the PSST tries to negotiate a network-sharing agreement with the D Block winner during the six-month window after the auction.
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