Lawmakers question what to do with public safety spectrum

Recent reports that an advisor to public safety agencies was seeking to make a profit on the recently completed 700MHz auction surprised members of the U.S. Federal Communications Commission, commissioners said Tuesday.

Four of the five commissioners said they had concerns about the Public Safety Spectrum Trust's (PSST) contract with outside advisors in the auction. The FCC has given PSST, a coalition of 15 public safety groups, control of about 10MHz of spectrum, and the agency tried to auction another 10MHz block to a commercial operator under the condition that the winning bidder would build a nationwide voice and broadband network to be shared by public safety agencies and commercial interests.

But the 10MHz D block of spectrum targeted for the public safety network produced only one bid of US$472 million, far short of the $1.33 billion reserve price set by the FCC. Some consumer groups have called for an investigation of bidding requirements added to the spectrum by PSST advisor Cyren Call. Those groups suggested startup Frontline Wireless may have dropped out of the auction because of lease payments demanded by Cyren Call.

Representative Anna Eshoo, a California Democrat, said Tuesday she's heard complaints that Cyren Call told potential bidders it would demand $50 million annual lease payments from them, then sell the spectrum back to public safety agencies at a profit. "That seems to be a lot of strings attached," she said during a hearing of the House of Representatives' Subcommittee on Telecommunications and the Internet. "Some assert that these alleged demands caused a lack of interest in the D block."

Cyren Call Chairman Morgan O'Brien has acknowledged that the company told potential bidders that the PSST would consider asking for lease payments from the winning bidder. But he denied Tuesday that Cyren Call demanded lease payments or sought to make a profit from leasing the spectrum back to PSST members. Eshoo's description of the negotiations between potential bidders and Cyren Call were incorrect "in every respect," O'Brien said.

Eshoo cut O'Brien off when he tried to explain what Cyren Call had talked to potential bidders about.

Still, FCC Chairman Kevin Martin said he was "troubled" by reports of PSST representatives looking for profits in the deal. "That's something we did not anticipate," he said.

The FCC may need to be more directly involved in negotiations between the PSST and potential bidders if it decides to re-auction the spectrum in a similar way, added Commissioner Jonathan Adelstein. "I believe we did not provide adequate clarity in the rules that we set," he said. "[The FCC] was allowing an enormous amount of flexibility by independent agents to do what they wanted to do, without adequate oversight by the commission."

Many telecom experts see the 700MHz spectrum, which U.S. television stations are required to abandon by February 2009, as optimal for long-range wireless broadband services. Wireless signals in the 700MHz band travel three to four times farther and penetrate obstacles such as buildings more easily than wireless signals in higher spectrum bands.

Many members of Congress pushed for a public safety network after emergency responders couldn't communicate with each other during the Sept. 11 terrorist attacks and more recent disasters. Police and fire departments in neighboring cities often use different communication devices on different blocks of spectrum.

Much of the hearing focused on what to do with the D block now. Representative Cliff Stearns, a Florida Republican, called on the FCC to auction the D block without tying it to the public safety spectrum. The FCC could use the money from the D block to fund a public safety network, he said.

But several witnesses, including PSST Chairman and CEO Harlin McEwen, suggested a D block auction would raise only a fraction of the money needed to build a nationwide network for public safety. Cost estimates range from $6 billion to upwards of $15 billion for the network, and a nationwide 22MHz block of spectrum sold during the 700MHz auction, more than double the spectrum in the D block, sold for $4.7 billion in the recently completed auction.

McEwen and FCC members advocated another auction with a combined commercial/public safety network. Unless Congress wants to shell out money for a public safety network, that's the only viable option, said FCC member Michael Copps.

Other witnesses suggested the FCC auction the D block through regional licenses, instead of one nationwide license. And Robert Duncan, a former U.S. Coast Guard admiral and senior vice president of government services for wireless services provider Rivada Networks, called for the FCC to use existing wireless networks for a public safety network.

But after years of problems with public safety communications, no wireless carriers have stepped forward to offer their networks, McEwen said.

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2008 IDG Communications, Inc.