700 MHz still up in the air
Failure of the recent 700 MHz auction to generate a D Block winner that would build and maintain a nationwide broadband wireless network for public safety has become a hot topic in the nation’s capital, where Congress and the FCC claim establishing an interoperable network is a top priority.
“We have to get this right,” said Rep. John Shimkus (R-Ill.) during an April 15 House subcommittee hearing about the 700 MHz auction. “We’re going to be held accountable if we don’t, and we should be.”
All five FCC commissioners testified at the hearing and reiterated support for a reauction of the 10 MHz D Block, the winner of which would negotiate a deal with the Public Safety Spectrum Trust (PSST) — licensee of 10 MHz of public safety airwaves in the band — to build a shared network on the combined 20 MHz of spectrum to provide nationwide broadband access to public safety.
“The simple reality is that public safety does not have the resources to fund a nationwide network,” FCC Chairman Kevin Martin said during the hearing. “Absent funding legislation, a public/private [arrangement] really is the only way.”
Martin said the earliest the FCC would conduct a reauction of the D Block would be during the fourth quarter of this year. To attract more bidders, PSST officials have advocated that the FCC remove penalties for not reaching a network-sharing deal and lower — if not eliminate — the $1.3 billion reserve price for the swath that the one bid made by Qualcomm did not approach.
Steve Zipperstein, vice president and general counsel for Verizon Wireless, testified that the buildout of a shared nationwide network would be “orders of magnitude higher” than the $6-7 billion figure quoted by Martin. In fact, given public safety’s coverage and network-reliability expectations, Zipperstein said he does not believe any single carrier could justify the cost of the buildout.
“The economic imbalance is such that, even if we tinker around the edges [of the current D Block proposal], I don’t think you will have a successful bidder,” Zipperstein said.
With this in mind, Morgan O’Brien, chairman of PSST adviser Cyren Call, said the PSST is pursuing the possibility of a consortium of several operators serving as the commercial partner for the nationwide network. By establishing such a consortium, the costs of building and maintaining a nationwide broadband wireless network for public safety would not be too burdensome for any one operator, he said.
“There will be a successful auction winner, and it is most likely going to be a consortium of some number of players, probably familiar players,” O’Brien predicted. “It is highly unlikely that either AT&T or Verizon will be part of it.”
O’Brien said he believes “the right kind of deal” with top U.S. carriers AT&T Mobility and Verizon Wireless would be “very attractive” to the PSST. But O’Brien said he does not believe either company is interested in a public/private partnership with the PSST.
“Each of those companies has dramatically improved their position at 700 MHz and, therefore, has less need at 700 MHz,” he said. “Just as important, each of them had an opportunity to come into the [D Block] auction and didn’t.”
Mobile wireless communications consultant Andrew Seybold said AT&T Mobility and Verizon Wireless must be enticed by something other than 700 MHz airwaves to be part of the public/private partnership.
“The only way that AT&T and Verizon could be made to play is if there are some incentives to play, such as tax credits or something else,” Seybold said, “because they don’t need the spectrum.”
Charles Dowd, deputy chief of the New York City police department’s communications division, expressed support for an interoperable regional approach to the public safety network that could better serve the needs of different geographical locales. Robert Irving, general counsel for Leap Wireless, said regional D Block licenses would be more attractive to mid-sized and regional commercial wireless carriers.
Alternatives to the FCC’s public/private partnership also were discussed during the subcommittee hearing. Reps. Cliff Stearns (R-Fla.) and Joe Barton (R-Texas) both expressed interest in the notion of auctioning the D Block without any public safety obligations and taking the proceeds from that auction to fund a nationwide public safety network on the PSST’s 10 MHz of spectrum.
Martin noted that the FCC would welcome this or other federally funded alternatives, but that would be the decision of Congress, not the commission. O’Brien said such a plan would not work, because the costs of the network would greatly exceed the revenue that realistically would be generated by an unencumbered D Block auction.
“Not only did they get the number wrong, they continually ignored the operating-expense component of it, which is at least as important,” O’Brien said, noting that operating costs for such a network likely would be at least $1 billion annually. “What greater nightmare could you have than sinking billions of dollars of taxpayer money into a network which you then had not funded the operating costs of?”
Robert Duncan, senior vice president of government services for Rivada Networks, said his company’s model of reselling commercial carriers’ services — reinforced by Rivada to meet first-responder requirements in areas needing greater capacity or a temporary network to replace a failed network — to public safety is the most efficient way to address interoperability between first responders. Duncan said Rivada could solve the problem at a cost of $500 million and it could be done quickly.
“This is a real present need, and it has to be satisfied with a present capability,” Duncan said during an interview with MRT. “We offer one alternative to make that happen, and it’s based on the belief that the current networks are quite extensive, that they are — for most purposes — up to the job of handling the kind of needs that first responders have.”
But subcommittee chairman Ed Markey (D-Mass.) questioned the reliability and coverage that commercial networks would provide, citing a newspaper article detailing the fact that cellular calls typically get dropped when customers enter the Thomas P. “Tip” O’Neill Jr. Tunnel in Boston.
“If you can’t solve something simple like this, then really I’m dubious,” Markey said of the notion that commercial carriers’ networks should be entrusted with public safety communications.
Rep. Jane Harman (D-Calif.) agreed, noting that commercial wireless carriers failed to offer any solutions to public safety interoperability in the three years following 9/11.
“My view is that we give the D Block one more shot,” Harman said.
However, with a D Block auction not expected until the fourth quarter, a network-sharing agreement between the PSST and a D Block winner may not happen for a year. That is a problem for the PSST, which needs to find a way to fund its operations until such a deal can be completed.
To date, the PSST has paid its bills with money from a $4 million loan provided by Cyren Call, which is being funded by venture capitalists. Cyren Call is assuming some substantial risk in the deal, because if the PSST does not reach an agreement with the D Block winner on a spectrum-lease arrangement, “we basically know there is no way to pay this back,” PSST Chairman Harlin McEwen testified during the House subcommittee hearing.
O’Brien said funding the PSST during this period is the “No. 1 challenge” for the organization. Rep. John Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, questioned O’Brien at length during the hearing about the financial arrangement between Cyren Call and the PSST. Dingell noted that the FCC called for the PSST to be a non-profit organization and expressed concern that a for-profit entity like Cyren Call was involved in the PSST’s operations.
O’Brien said he would prefer that the PSST have its own funding and not require financial support from Cyren Call. However, any federal-government funding of the PSST would have to be approved as a law passed by Congress.
“I’m urging each and every one of them to quickly sever the financial ties between Cyren [Call] and the PSST by doing what they should have done in the first place, which is giving funding to the PSST,” O’Brien said.
“I just didn’t think it was going to happen before, and it didn’t, so we made an arrangement. Otherwise, exactly what kind of position would the PSST have been in if somebody had bid in this last auction and they were supposed to sit down and start negotiating [a network-sharing agreement with a D Block winner]?”