700 MHz auction isn’t time for greed
From an outsider’s perspective, the 700 MHz auction looks like a rousing success. Congress needed auction bids to top $12 billion, and the high bids totaled more than $19.3 billion just 60 rounds into a proceeding that was expected to go well beyond 100 rounds.
In other words, lawmakers should have at least $7 billion more than was budgeted from the auction to use for various programs, despite pre-auction concerns about a credit crunch, open-access requirements tied to the C Block and public safety obligations tied to the D Block. So Congress should be happy, right?
Not necessarily. The answer depends on lawmakers’ perception. If they view the glass as half-full, Congress will look at its $7 billion windfall and applaud the FCC’s handling of the auction, perhaps looking for a minor tweaking of the D Block rules.
But there’s a chance that Congress — already outspoken in its questioning of FCC Chairman Kevin Martin’s policies on several fronts — will adopt a glass-half-empty perspective and wonder: Was this auction an opportunity lost?
For federal lawmakers who view spectrum auctions primarily as a tool for generating revenue for the U.S. Treasury, it’s a legitimate question. After all, in the bidding thus far, the 28 MHz of unfettered spectrum had generated more than $14 billion, while the 32 MHz of spectrum tied to open-access and public safety obligations attracted bids totaling just a little more than $5 billion.
At least the 22 MHz C Block exceeded the FCC’s $4.6 billion reserve price. The real problem is with the 10 MHz D Block, which had not been the subject of any activity since a first-round bid that was well below the FCC’s reserve price.
Unless a late D Block bid meets the FCC’s $1.3 billion reserve price, it’s likely that the commission will need to reauction the spectrum. Given the high price tags associated with unfettered spectrum in this auction, lawmakers may be inclined to order the FCC to scrap the public safety obligations associated with the D Block and see if bidders are willing to pay $4 billion or $5 billion for the frequencies.
While such a course may be tempting, it would be a mistake. Sure, the dollar figures being thrown around are substantial — even from a federal-government perspective — and could be used to fund some projects that might bolster re-election efforts in a down economy, but an extra $5 billion is not going to put a dent in the national debt. In fact, it’s not even enough — by most industry estimates — to give public safety the money it would need to make interoperable communications a reality.
But a shared network that uses commercial broadband technologies can serve as a backbone for interoperability at a fraction of the cost and effort it would take for public safety to attempt such an endeavor on its own — without establishing a program that necessitates an annual drain on the federal budget.
Congress understandably doesn’t want to fund a $20 billion network buildout, along with annual maintenance and upgrades, but the D Block bid indicates there is a commercial operator willing to tackle the job. If the spectrum needs to be reauctioned, Congress should voice its support for the FCC keeping the current D Block rules without a reserve price. (Providing some seed money to help the Public Safety Spectrum Trust operate through a delay would be a good idea, as well.)
Such a stance may not maximize the U.S. Treasury coffers, but it is the most realistic path to ensuring that the first-response community has access to the critical broadband tools it needs. If this vision can be realized, the cup will not be half-full or half-empty; it will be overflowing with myriad applications to help public safety protect and serve better than ever before.
Donny Jackson is MRT’s senior writer.