700 MHz restart may not be far away
On Friday, Cyren Call Communications and the Public Safety Spectrum Trust (PSST) announced they had mutually agreed to terminate their relationship, bringing an apparent end to one of the wildest roller-coaster rides in the history of U.S. public-safety communications.
It’s amazing that less than 34 months have passed since Cyren Call Chairman Morgan O’Brien unveiled his public-private partnership plan for a 700 MHz public-safety wireless broadband network at IWCE in May 2006. Most pundits scoffed at the notion, because the political hurdles seemed insurmountable. However, a little more than a year later, the FCC passed an order that had many of the elements as Cyren Call’s original proposal, and the company later was hired by the PSST as its advisor amid a mad scramble to prepare bidding guidelines for the winner of the D Block auction.
Of course, there was no winner of that auction; in fact, there was not even a qualified bidder. This was a huge blow to the FCC’s entire model, because the D Block winner was supposed to fund everything — the network buildout, PSST operations and the relocation of 700 MHz public-safety narrowband systems to clear the broadband spectrum.
Meanwhile, the financial relationship between the PSST and Cyren Call became the subject of increased scrutiny. Cyren Call ended up loaning the PSST money, without which the PSST would not have been able to operate, because the organization had no revenue stream and its only asset was 10 MHz of spectrum that could not be monetized.
Some in Congress and in public safety argued that such a relationship was inappropriate — when an entity serves as banker and advisor simultaneously, critics said the advice may be tainted to protect the banking interest.
Certainly the arrangement was far from ideal, something officials for both the PSST and Cyren Call acknowledged. But there was no alternative, especially after the D Block auction failed. With no tangible assets and no clear path for ever having a revenue stream, the PSST represented a bigger credit risk than a recent college graduate still looking for his/her first job. As the financial markets began to tighten, where else was the PSST going to get funding?
Instead of thanking Cyren Call for loaning the PSST $6 million that very likely would never be repaid — funding the federal government never seriously considered offering — Congress decided to conduct a hearing to more closely investigate this supposedly problematic arrangement. Indeed, the hearing proved that the PSST-Cyren Call deal was questionable — but only in terms of the business arrangement, not the company’s motivation to help the public-safety organization.
In no way should this be construed as an effort to drum up sympathy for Cyren Call. It’s a company that invested in an opportunity that wasn’t realized — something that happens all the time in business. The difference is, most failed investments don’t land company officials in front of a congressional interrogation. It seems particularly ironic that Cyren Call would be scrutinized so heavily for loaning $6 million dollars to a public-safety organization at the same time Bernard Madoff was flying under the radar while reportedly conning people out of $35 billion. Maybe we should chalk this one up in the “No good deed goes unpunished” category.
With Cyren Call out of the picture — at least for the moment — the viability of the PSST is a huge question mark. The organization still has no revenue stream, it is almost $6 million in debt, and the odds that a new 700 MHz plan will be adopted this year are long, at best. Absent some kind of financing from the federal government, the outlook for the PSST seems rather bleak.
If the PSST eventually is stripped of its spectrum license, there likely would be a celebration among many public-safety entities that have asserted that a nationwide broadband model would not best serve local, state and regional interests. Instead, these entities believe the 700 MHz broadband spectrum should be licensed directly to local entities, a longtime practice in the public-safety arena.
Unfortunately, that strategy also has led to some unwanted traditions in the sector, including a lack of interoperability and massive functional disparities between the systems used by the “haves” versus the “have-nots.” Whether things would be different this time around is debatable, but it’s a debate that appears much more relevant today than it did even a few months ago, as the 700 MHz vision almost certainly must be revisited.
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