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Feds need to relax D Block rules
By Glenn Bischoff
February 27, 2008

LAS VEGAS--There are few things more gut wrenching -- and heart-breaking -- than coming so close to your dreams that you can almost touch them, only to have them snatched away. Being a lifelong Chicagoan, I believe I will never forget how the Cubs let their first World Series appearance since World War II slip through their fingers. That they were just five defensive outs away from what many in the city had waited their entire lives to experience made it all seem particularly cruel.

I thought of this as I listened to Harlin McEwen, chairman of the Public Safety Spectrum Trust (PSST), and Morgan O'Brien, chairman of Cyren Call Communications, co-deliver the keynote address this morning at IWCE 2008. It was on that very stage two years ago that O'Brien first floated the idea of a nationwide wireless broadband network for the public-safety sector, which certainly would be a dream come true for first responders.

Imagine a network that enables an interoperable communications path no matter where you are and advanced data capabilities -- such as mobile video surveillance or the ability to receive building diagrams and floor plans while en route -- that would keep first responders safer while also making them more effective. As a taxpaying citizen who counts first responders among family and friends, this appeals to me.

Public safety is on the cusp of such a network, but concerns are mounting that this is as close as the sector will get to its dream. Only one bid for the 10 MHz D Block has been received by the FCC after 118 rounds of the 700 MHz auction and that bid -- $472 million -- is well short of the $1.3 billion that the commission set as the reserve price. "The D Block bidding has been very disappointing," McEwen said.

Many wonder what the FCC will do with the D Block spectrum if the reserve price is not met, which is a virtual certainty as the auction is quickly moving to its conclusion. In more than seven years of covering the FCC, I have learned how difficult it is to predict what the commission will do on any given matter. But I know what it should do on this one: It should re-auction the D Block without a reserve price.

O'Brien said in this morning's keynote that the FCC anticipated such a scenario in its 700 MHz reallocation order issued last summer. "The FCC contemplated that the complexities of this would be such that it could cause a failure of entities to step up to a $1.3 billion obligation."

The FCC also should relax the penalties that would be imposed upon the D Block winner should it fail to reach an agreement with the PSST, which is the FCC-designated licensee for 10 MHz of public safety 700 MHz spectrum that would be paired with the D Block to form the backbone for the nationwide wireless network for first responders.

And Congress should give the FCC its blessing for both actions.

The various reserve prices set by the FCC for this auction were intended to ensure that auction proceeds met Congress' $10 billion mandate. To date, top bids total almost $20 billion, so it's no longer necessary to squeeze every last dollar from the D Block. We're talking about a difference right now of about $800,000, which is lunch money when viewed in the context of a $3 trillion-plus federal budget. Hopefully, dropping the reserve price will attract multiple bidders the next time.

But it won't, should the FCC's onerous penalties remain in place. Much has been said and written about public safety's requirements for the network, which many believe scared bidders away. However, I think the penalties -- the D Block winner would have had to forfeit 10% of its bid had it failed to reach a network-sharing agreement with the PSST and was deemed to have not negotiated in "good faith," which is a vague measure, at best -- were a big deterrent to potential bidders. 

This was particularly true of startup Frontline Wireless, which many thought would be an active player in the auction, because the FCC largely patterned its plan for this network on Frontline's spectrum model. Can you imagine facing the prospect -- as a startup entity with no prior experience in building out wireless communications networks of any kind, much less one that must be public-safety hardened -- of writing a $130 million check with no way to recover the expense? No wonder Frontline's investors backed away.

One thing that shouldn't happen is a relaxing of public safety's requirements for the network. The only way first responders will use it is if they feel certain it will be there when they need it and that it will work the first time, every time. The D Block winner would gain prime airwaves at a comparative pittance should the FCC relax its rules for a re-auction. It can afford to invest some of the money it saved to build the network to public safety's requirements.

Congress has an interesting habit of telling us how important first responders are, but failing to back up the words. Recall the legislation passed nearly four years ago that allocated $1.25 billion over five years for public safety answering point upgrades. To date, less than 10% of the money has been appropriated, with most of that money coming from proceeds being realized in the 700 MHz auction.

That approach needs to change regarding the proposed nationwide wireless broadband network for public safety. This morning, Derek Poarch, chief of the FCC's Public Safety and Homeland Security Bureau, said in his opening remarks that protecting the public is something the commission takes seriously. I have no doubts about that. But actions speak louder than words. The FCC needs to re-auction the airwaves but with significantly relaxed rules. And Congress needs to let the commission do it.

E-mail me at gbischoff@mrtmag.com.

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