Competitive, technical realities strengthen case for D Block reallocation

Believe it or not, it’s been two years since the FCC failed in its attempt to auction 700 MHz D Block spectrum to a commercial operator under the condition that the winning bidder would have to negotiate a deal with the Public Safety Spectrum Trust (PSST) to build a nationwide broadband wireless network for first responders.

That auction infamously failed to attract a qualifying bid, resulting in the FCC receiving considerable criticism from members of Congress for (1) not providing public safety with a network, and (2) not writing auction rules in a manner that resulted in a third nationwide 700 MHz carrier to compete with AT&T and Verizon, the two dominant commercial operators in the band. Today, a different FCC wants to do everything in its power to avoid a repeat of the 2008 D Block fiasco.

But it won’t be easy. Absent significant action from Congress that creates legal or funding flexibility, the FCC faces a daunting task that is akin to threading the eye of a microscopic needle, because many of the goals lawmakers want the agency to accomplish include conflicting elements.

Ideally, Congress wants a third nationwide carrier in the 700 MHz offering 4G services, a dependable broadband wireless network for public safety and an auction that generates as much revenue as possible for the U.S. Treasury — money that could be used to help fund the public-safety network or to make a small dent in the burgeoning national deficit.

As if that wasn’t tough enough, FCC policies are not supposed to favor any particular carriers or technologies, which creates additional difficulties for the agency’s policy-makers.
For instance, a potential issue is the fact that the public-safety community has resoundingly put its support behind LTE as its preferred technology choice, so it can benefit from the innovation and huge economies of scale provided by AT&T, Verizon and other global operators. But any FCC requirement that LTE be used certainly would not be considered technology neutral.

More importantly, while a commercial D Block auction could be an opportunity for a third nationwide carrier to be established in the 700 MHz band, the only way to ensure a new entrant into the commercial 4G game would be to prohibit AT&T and Verizon from bidding. Of course, such a prohibition could hardly be considered carrier neutral, and removing these two giant providers from the picture would greatly diminish the potential revenue the D Block auction could generate for the government.

Some carriers like T-Mobile have advocated the FCC auctioning the D Block as pure commercial spectrum, unencumbered by any obligation to the public-safety community that many believed poisoned the previous D Block effort. The opportunity to secure spectrum on that basis should be more attractive to commercial entities and their investors, which again could help the treasury coffers.

Even if the D Block winner is not obligated to serve public safety as the rules dictated two years ago, the current spectrum plan would require the commercial operator to coordinate with public safety on an ongoing basis. That’s because there’s no guard band between the D Block and the PSST spectrum — after all, the two airwaves swaths were going to be the spectral foundation of a single network under the previous spectrum plan.

But, if the D Block and the PSST spectrum are used to support separate networks, interference issues between the commercial D Block winner and public safety will need to be addressed.
If the D Block winner wants to deploy WiMAX and public safety opts for LTE on adjacent airwaves, there could be a real problem. WiMAX currently is time-division-duplex (TDD) technology, while LTE is a frequency-division-duplex (FDD) standard. Industry sources tell me that deploying such technologies in the same geography on adjacent bands could create major interference issues.

One vendor said a guard band would be needed that would decrease the amount of usable spectrum in the D Block/PSST block by at least 20%, and it would be up to policymakers to determine whether the commercial or public-safety operator would “lose” spectrum so that a guard band could be created.

Thankfully, this scenario is not expected to be an issue, as most analysts believe a D Block winner would deploy LTE, as public safety plans to do on the PSST spectrum. Vendor say LTE networks can co-exist on adjacent channels — it is expected to occur elsewhere in the band between commercial networks — but they note that the D Block/PSST bands include less internal “buffer” spectrum than the other blocks, so interference resolution between a D Block winner and a public-safety operator likely would be more complicated and presumably more costly.

That’s not a promising scenario for anyone. Industry sources indicate that, in a vacuum, the cost of deploying an LTE network on the 10 MHz D Block will be virtually identical to the expense Verizon will pay to deploy its network on its 22 MHz C Block spectrum, but the network capacity will be roughly half as much because of the reduced spectrum. Including extra interference-mitigation expenses in the D Block business plan—something that promises to be ongoing, as both the commercial and public-safety networks are deployed and upgraded—makes it even tougher to compete with AT&T and Verizon.

Meanwhile, the last thing public-safety officials wants is to devote valuable resources toward interference mitigation instead of lowering costs for users or upgrading the network. This sector is particularly sensitive to such interference matters as the 800 MHz rebanding effort promises to take at least twice as long as the FCC intended.

In addition, officials in many of the large cities believe their public-safety communications requirements alone could use all the bandwidth available operating only on the PSST spectrum. To integrate other governmental and critical-infrastructure entities (entities that also could provide valuable funding support) onto the network — the kind of interoperability Congress has been demanding since 9/11 — likely requires additional spectrum that the D Block could provide.

Assuming no one in the Beltway wants to risk another failed auction because of shaky public-private business-case economics, the choice would seem to be between an unencumbered D Block auction for pure commercial purposes and reallocating the D Block to public safety.

A pure commercial D Block auction possibly would allow — but not guarantee, unless AT&T and Verizon are prohibited from bidding — a third major entrant into the 700 MHz LTE game, although RF physics and economics would seem to leave it at a decided competitive disadvantage. Reallocating the D Block to public safety would provide a solid spectral foundation for the type of interoperable communications that Congress has been claiming is as a top priority for the past decade.

Given the propensity for natural disasters and manmade threats such as terrorism, supporting public safety would seem to be the more sensible alternative at this point in time.

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