D Block auction: Wait til next year?

FCC commissioners are sorting through myriad recommendations to change the commission’s public/private partnership strategy as they try to establish rules for a D Block reauction that seems increasingly likely to occur sometime in 2009.

In reply comments sent to the commission by July 7, most agreed that a public/private partnership is still the best option for creating a 700 MHz nationwide broadband network for first responders, but a variety of opinions were given regarding the technical needs and structure of the arrangement.

In its comments, the Public Safety Spectrum Trust (PSST) — licensee for public safety’s 10 MHz of broadband spectrum in the 700 MHz band — reduced its 10-year coverage goal for the network from 99.3% of the U.S. population to 98% (see maps). With such a change, the PSST estimates the commercial partner would save $1.4 billion in capital expenditures because 3800 fewer tower sites would be needed.

In addition, the PSST proposed that public-safety users would receive priority access on no more than 70% of the network’s capacity — during the last auction, it could have been 100% — and largely has abandoned the MVNO role for itself that reportedly troubled many potential bidders.

But telecom giant Verizon stated in its filing that the D Block auction concept is “fundamentally — and fatally — flawed,” noting that a commercial operator cannot expect a return on its investment to justify the $20 billion in incremental costs that would come with making the network suitable for public safety.

With this in mind, Verizon and AT&T recommended that the public-safety broadband licensee — currently the PSST — should be allowed to select commercial partners through a request-for-proposal (RFP) process.

PSST Chairman and CEO Harlin McEwen said an RFP concept could be acceptable but said it is not an option that the FCC can consider. The FCC is required by law to auction the D Block spectrum, and Congress almost certainly would not pass a law allowing an RFP, especially with its membership focused on the upcoming November elections.

“I don’t expect Congress will be functional for another year,” McEwen said.

Although FCC Chairman Kevin Martin testified before Congress earlier this year that he hoped the D Block reauction would begin in November, speculation increased that the auction likely would be pushed to 2009 — a scenario Martin told reporters is a possibility.

Indeed, the FCC is pursuing a process that calls for it to release a draft of its proposal, which will be subject to 45 days of input — 30 days for comments and 15 days for reply comments. Following this process, the FCC would release its rules, which would be subject to the same 45-day comment and reply periods.

With the D block draft rules not expected to be released until September, Beltway insiders noted that the two comment cycles would leave little time for the FCC to get its rules published in the Federal Register and collect bidder applications and auction downpayments by the end of the year.

If the FCC fails to approve D Block rules this year, the task could fall to a new FCC — a scenario that McEwen said he would like to avoid, because of the potential delay it likely would create in the process. McEwen said he’s comfortable that the FCC will get the rules done this year, even if the auction is not conducted until 2009.

“I think [Martin] clearly wants to get this done while he’s still chairman,” McEwen said.

FCC spokesman Rob Kenny said the commission would try to conduct the auction this year, although he acknowledged that meeting this goal would require an “ambitious timetable” and the possibility exists that the auction would not happen this year. However, Kenny indicated that the commission wants to approve D Block rules in 2008.

“The most important thing is to move forward,” he said. “You don’t want to have to start the [D Block rule-making] process over.”

$1.4 billion

Capital expenditures saved because 3800 fewer tower sites would be needed.