FCC restarts D Block debate

Less than two months after the 700 MHz auction failed to attract a qualifying bid from a commercial entity willing to partner with public safety to build and maintain a nationwide wireless broadband network for first responders, the FCC is seeking comments regarding rules for a D Block re-auction.

Although most commissioners would prefer that the federal government fund such a network, budgetary and political realities mean that a public/private venture “represents the last best hope we have” for a nationwide network built for public safety, said Commissioner Michael Copps.

But commercial operators shunned the public/private partnership concept during the 700 MHz auction. The lone bid for the 10 MHz D Block was well below the FCC’s $1.3 billion reserve price, and most industry observers believe that bid came more as part of Qualcomm’s auction strategy than as an indication that the company wanted to partner with public safety in the manner described by the FCC.

Commercial entities have said that there was so much uncertainty surrounding the D Block — most aspects of the proposed deal would be determined after the auction in a negotiated deal with the Public Safety Spectrum Trust (PSST) — that it was difficult for them to effectively place a value on the airwaves. In addition, significant financial penalties associated with not reaching a deal with the PSST also worried investors.

With this in mind, Commissioner Jonathan Adelstein called for greater detail in the FCC’s rules accompanying a re-auction of the spectrum.

“It is important that we get the specifics nailed down as clearly as possible this time around, since it may be our last shot,” Adelstein said.

In its notice of proposed rule-making (NPRM), the FCC seeks comments on several issues, including performance requirements and the license term for the D Block winner, whether the spectrum should be licensed nationwide or on a regional basis, and whether the 10 MHz of public safety spectrum should be limited only to public safety use.

During a House subcommittee hearing, several members of Congress expressed concern that the non-profit PSST had hired a for-profit company, Cyren Call, to be its adviser. The NPRM seeks comment on whether the PSST should have such an arrangement.

Several Beltway sources believe Congress would prefer that the FCC play a greater role in negotiating a public/private partnership, reducing — or perhaps eliminating — the need for the PSST. But many question whether it is appropriate for the FCC to serve as an active negotiator on behalf of public safety when it also must serve as the regulatory arbiter of disputes arising in the proposed public/private partnership.

“I think that would be a conflict,” PSST Chairman Harlin McEwen said.

Meanwhile, Rep. Jane Harman (D-Calif.) introduced legislation that would authorize as much as $2 million in grants to the 700 MHz public safety broadband licensee — currently the PSST — during 2009 and 2010 to pay its operating costs incurred while pursuing a public/private partnership with the winner of the D Block auction for a nationwide network.

PSST officials repeatedly have acknowledged that operational funding is a significant issue for the organization, which has no tangible assets other than a license for 10 MHz of nationwide spectrum in the 700 MHz band. While valuable, that spectrum cannot be used for revenue generation until the PSST reaches a network-sharing agreement with the eventual winner of the D Block spectrum.

To date, the PSST has used a $4 million loan from Cyren Call to pay its operational costs. McEwen testified before a House subcommittee that the PSST would not be able to repay the loan if it did not reach a network-sharing agreement with the D Block winner that would provide a revenue stream.

Many observers noted several potential problems with the bill, the most notable being that it is highly unlikely that Congress will approve a new spending bill in a tight budget year when most of its members are seeking re-election. In addition, many question whether $1 million per year would be enough money to fund the PSST’s operational expenses.

Based on the comment timetables, the earliest probable date for the FCC to issue new D Block rules likely would be in late July or August, which means an auction likely would not happen until at least October or November.

KEY QUESTIONS ASKED IN THE FCC’S D BLOCK NPRM

Is it in the public interest to retain the public/private partnership model?

Should the public/private model be modified?

Should the public safety spectrum licensed to the PSST be limited to public safety use only?

Should for-profit entities be involved in the PSST?

What rules should govern public safety access to a shared network during emergencies?

Should the D Block and public safety’s broadband spectrum be licensed nationwide or on a regional basis?

Source: FCC