Many have argued that congressional hearings are more about public posturing than gathering information that can be used to make good public-policy decisions. I almost hope so, because many of the contradictory statements uttered during this week’s 4½-hour hearing regarding the 700 MHz auction would leave serious public-policy advocates bewildered.

Not surprisingly, members of the House subcommittee generally were pleased with the financial aspects of the auction, which generated $19 billion for the U.S. Treasury, about $7 billion more than Congress budgeted. Some expressed disappointment that a new nationwide carrier did not emerge from the auction, but that certainly was not the focus of the hearing.

Instead the hearing rightly focused on the 10 MHz D Block, the winner of which was supposed to partner with the Public Safety Spectrum Trust (PSST)—licensee of 10 MHz of public safety spectrum in the band—to build and maintain a shared nationwide broadband network for public safety. Of course, the D Block auction produced only a single bid that was well below the FCC’s reserve price for the airwaves, so there was no winner.

Subcommittee members repeatedly emphasized how important a nationwide public-safety network is to them, with several calling it a “top priority.” The fact that only a handful of the 30 members bothered to hang around for the entire hearing might cause one to wonder how much of a priority it really is, but it should be noted that elected officials’ appointment calendars are often overloaded and the subcommittee did not recess for lunch.

More disconcerting were some of statements made that could undermine efforts to make a D Block reauction successful. Some of the more notable instances were:

· A majority of the FCC commissioners stated that a nationwide public-safety network could be built for $5-8 billion. This is very troublesome, as I’ve never heard an estimate of a commercial network being built nationwide for less than $12 billion, and public-safety requirements for the shared network will force that number to be higher. I have heard several estimates that meeting public safety’s expectations would increase the cost of a commercial nationwide network by $5-8 billion. Perhaps that’s what the FCC commissioners were referencing, but it certainly wasn’t made clear at the hearing.

· Rep. John Dingell (D-Mich.) expressing concern that the PSST’s hiring of a for-profit entity like Cyren Call is contrary to the FCC’s order calling for the PSST to be a non-profit entity. Non-profit entities hire for-profit firms all the time to provide services and financing. In fact, few would be able to survive without doing so.

Let’s face it, if the PSST is ill prepared to negotiate with the D Block winner and cuts a bad deal for public safety, it will be criticized unmercifully—and rightly so. To negotiate well with a commercial operator, the PSST needs people on its side who have experience building commercial wireless networks. Whether that expertise comes from Cyren Call or another firm, it will not come for free.

As FCC Commissioner Michael Copps stated, public safety deserves “the best and the brightest” on its side as it enters negotiations. Some have argued that the FCC could fill this role, but having the FCC be an advocate of one party in negotiations and then supposedly become an independent reviewer of a D Block-PSST deal would be a conflict of interest.

Dingell and other subcommittee members are concerned that the PSST is accepting loans from Cyren Call and indicated to potential D Block bidders that it would seek a spectrum-lease payment from the commercial operator—$50 million per year is the figure being quoted.
They should be concerned, but not from the standpoint that something sinister is in the works. Rather, the concern should be that the PSST must borrow money from Cyren Call—loans that may never be repaid—and seek spectrum-lease payments from a D Block winner, because it will have no sources of revenue until it reaches an agreement with that entity.

As we’ve stated before in this space, the FCC cannot address this problem, as it does not have funding power. That responsibility belongs to Congress, which should take action to help fund the PSST until a network-sharing agreement is reached with a D Block winner.
Barton and other subcommittee members floated the notion of dedicating D Block proceeds to the expense of building a federal public-safety network. It’s doubtful such an auction would generate nearly enough money to build the network, much less fund the $1 billion-per-year that likely would be needed to operate it.

On the other hand, Congress could earmark a fraction of that cost to the PSST now to ensure that it has the resources to execute the necessary outreach to potential public safety subscribers and establish a team that can negotiate on an even playing field with a well-represented D Block winner. In addition, appropriate funding of the PSST could make the Cyren Call loans and spectrum-lease-payment controversies disappear overnight.

From the standpoint of Congress, a relatively small outlay now to help enable a long-term public-private partnership would seem a much better choice than the massive ongoing funding proposition that would surround a government-owned nationwide network for public safety. Of course, either option would be better than no broadband network for public safety, which could be a real risk if Capitol Hill does not help the cause.

E-mail me at donald.jackson@penton.com.