Independent telcos are hopefully awaiting the resolution of a range of issues involving the 700 MHz auction scheduled for early 2008. Often likened to “beachfront property,” the 700 MHz band not only can support 4G mobile broadband services, it also has excellent propagation characteristics and could enable broad geographic coverage, which makes it especially appealing to network operators serving sparsely populated rural areas.

“Because of its propagation characteristics, it means fewer towers would have to be built, and the construction cost is greatly reduced,” said Jill Canfield, senior regulatory counsel for the National Telecommunications Cooperative Association.

The 700 MHz spectrum in many areas is occupied currently by analog television broadcasters. But thanks in part to efforts by rural carrier associations, those broadcasters are required to vacate that spectrum by 2009 — an option made viable by the migration to digital TV broadcasting.

Portions of the 700 MHz band already were auctioned several years ago, but 30 MHz of prime spectrum in the upper 700 MHz band is still unassigned. Policy-makers, however, are rethinking the plan to auction that spectrum in response to demands from the public-safety community. Public safety already has been allocated 24 MHz in the 700 MHz band, but is asking for additional spectrum.

Robert Gurss, director of legal and government affairs for the Association of Public-Safety Communications Officials, noted that a survey of the public-safety community from 10 years ago indicated it felt 24 MHz was insufficient to meet its needs. “Since then, the demand for spectrum has mushroomed,” he said.

Another issue is that under the current plan, individual state and local governments are responsible for how the 24 MHz for public safety is used, which will likely create a hodgepodge of networks that will not be interoperable.

In the wake of findings by the 9-11 Commission that public-safety communications were inadequate, Congress and the FCC are considering several proposals to create a nationwide interoperable broadband public-safety network in the upper 700 MHz band that could be shared with commercial users. Advocates envision using packet prioritization to ensure the highest priority for public-safety communications, while enabling commercial interests sharing the network to help foot the bill.

Already presidential candidate and U.S. Sen. John McCain has proposed legislation that could support a hybrid public safety/commercial network. But if Congressional or FCC policy-makers opt to create such a network, they still must resolve how much, if any, of the 30 MHz currently planned for a purely commercial auction would instead be used for the hybrid network. Additionally, they would need to resolve how the relationship between the public and private sector would be structured.

Most of the hybrid network debate today focuses on three proposals — including one described in an FCC Notice of Proposed Rulemaking (NPRM) from late last year and two from start-up companies eyeing 700 MHz opportunities. Both start-up companies — Cyren Call Communications and Frontline Wireless — have some heavy-hitters on board. Cyren Call's chairman is Nextel co-founder Morgan O'Brien, while Frontline's leadership includes former FCC Chairman Reed Hundt, former head of the National Telecommunications and Information Administration Janice Obuchowski and former FCC chief technologist Stagg Newman.

Newman, who is chief technology officer for Frontline, likened the hybrid network concept to a 12-lane superhighway, with six lanes for public safety and six for commercial use. “Most times, the public-safety lanes won't be heavily used, and commercial users can use them,” he said in a recent Wireless Communications Association Webcast. “But commercial users will get out of the way instantaneously if needed. And if the air raid sirens go off, public safety will get access to as many lanes as it needs of the commercial network.”

The most ambitious of the three proposals is one from Cyren Call. That plan aims to use the entire 30 MHz currently slated for the commercial auction. It also calls for the creation of a public-safety broadband trust that would oversee the network and would appoint a private enterprise to manage it. Cyren Call hopes it would be selected to play the manager role.

Commercial network operators would lease spectrum from the trust, which they would use to build a network meeting strict coverage requirements. Operators would be selected by an auction or through a request for proposal process.

Oversight by the trust and setting operators up as lessees, rather than licensees, is critical to ensuring that public safety's needs are met, O'Brien said. Using an analogy of public safety and commercial operators sitting around a table, he said, “What we're imagining is that at the head of the table is public safety — both at the outset and over the years.”

To support the hybrid network, the Cyren Call plan calls for the trust to issue bonds valued at $5 billion and to give the proceeds to the U.S. Treasury. Network operators would repay the bonds, which would be issued at attractive low-interest rates, over time. “Because the buildout will be more expensive, the lessee would not be required to put a lot of cash up front,” O'Brien said. “The operator will plough its cash into the ground, then make lease payments as the trust has to pay back [the bondholders].”

Cyren Call estimates the maximum cost of building the network at $17 billion. “It would have to be more expensive per cell site than a traditional commercial network because it has to be designed so the grade of service for public-safety users meets a stringent test for access,” O'Brien said. He noted, for example, that dropped calls are unacceptable on a public-safety network.

O'Brien added that, subject to oversight by Congress, the FCC and the public-safety trust, additional funds could be borrowed using the very same mechanism to support a rural buildout.

Critics attack the Cyren Call proposal on four fronts. First, they argue the government could raise more money if the spectrum were to go to a commercial auction. Another drawback, they say, is that the plan would require legislative action to divert the 30 MHz of spectrum away from the planned commercial auction, to create the trust, and to create the funding mechanism.

McCain's legislation would address the spectrum issue and ultimately could establish a trust. But under his plan, the trust would be created only if an auction were unsuccessful.

Opponents say such legislation would delay creation of any networks — to which O'Brien quipped, “My attitude is, ‘Well, then, we'll just have to hurry.’”

A third concern is whether network operators will be willing to undertake an expensive buildout, using spectrum they do not control. Cyren Call, however, believes the network's excellent reliability will be attractive to network operators. “We believe there is strong demand for a public-safety-grade network,” a spokesman for Cyren Call said.

Finally, opponents question whether public safety needs so much spectrum. O'Brien said Cyren Call's request for 30 MHz was driven by a sophisticated model, which assumed that the network would reach 99.3% of the population and would be non-blocking for public-safety applications. That, in turn, drove a requirement for the network, when mature, to support 30 million non-public-safety users in order to be commercially viable. “It was the only way to support a rational buildout,” O'Brien said.

The hybrid networks envisioned in the FCC's NPRM and by Frontline are less demanding in terms of the spectrum that they would require.

The FCC proposal would use just 12 MHz of spectrum, which it would pull from the 24 MHz already awarded to public safety, leaving 30 MHz intact for a purely commercial auction. The Frontline proposal also would use 12 MHz from the existing public-safety allocation but would supplement it with 10 MHz pulled from the commercial 30 MHz. That 10 MHz would be awarded to a single national licensee through an auction. Frontline's goal is to be that licensee, although the company envisions that it would work with other operators to build and run the network.

The FCC and Frontline proposals are similar in that they call for a single national license, rather than using the public trust approach advocated by Cyren Call. Because both the FCC and Frontline proposals are within the scope of existing statutes, neither would require legislative action.

Noting that the Frontline plan calls for reaching 75% of the U.S. measured by geography and more than 99% measured by population, Obuchowski, who is chairman of the company, said, “To that end, we would love to have some rural telco partners.” She added that the plan calls for reaching those goals within 10 years.

She declined at this time, however, to provide details about how Frontline would work with other carriers. “How the network would be designed and managed is a vision we're working on,” Obuchowski said. She also was unwilling to share projected subscriber numbers or the estimated cost to build the network.

As for whether 22 MHz would be the right amount of spectrum to support the envisioned network, Obuchowski noted that the plan already had received validity in the market. “It's a coverage network more than a capacity network,” she added.

Obuchowski said she didn't see need for a public-safety broadband trust to retain control of the network. She noted the Pentagon for years has depended on a commercial operator to provide mission-critical communications. “There's no reason that shouldn't work for public safety,” she said.

The public-safety community, however, favors using the trust approach and has put its support behind the Cyren Call proposal. “If you're relying on commercial licensees, you'll always have the question of what will be the situation five years from now,” Gurss said.

He added that it would create difficulties if part of the 24 MHz of spectrum already intended for public-safety use were to be redirected toward a hybrid network as in the Frontline and FCC proposals. “In some areas there are no television stations, and some deployment has occurred,” Gurss said. “Also, a lot of planning has been done, and some people have purchased equipment at a different band. In anticipation of getting the spectrum, a lot of deciding has been done, and rules have been adopted.”

Independent telecom associations such as the NTCA and the Organization for the Promotion and Advancement of Small Telecommunication Companies have not yet voiced support for, or opposition to, any of the hybrid network proposals. Spokespeople for both groups, however, said they would like to see the commercial auction occur on schedule.

Meanwhile, policy-maker support for the hybrid network concept seems to be growing — although which, if any, of the proposed plans they are likely to adopt is anyone's guess.

Rebecca Arbogast, an analyst for financial firm Stifel Nicolaus, who has followed plans for the 700 MHz band, noted that the FCC risks making either commercial operators or the public-safety community unhappy.

“The FCC doesn't have a history of bucking public safety,” she said, adding that no one within the government wants to be accused of not allocating sufficient bandwidth for emergency situations. “Right now, they're trying to find a third path,” she said. “But the FCC may need to make a tough decision.”

700 MHz PUBLIC SAFETY/ COMMERCIAL NETWORK PROPOSALS COMPARED

PROPOSAL	SPECTRUM	BUSINESS STRUCTURE
Cyren Call	30 MHz (currently scheduled for commercial auction).	Public safety trust to lease spectrum to network operators.
FCC Notice of Proposed Rulemaking	12 MHz of 24 MHz already allotted to public safety.	Single nationwide license to be awarded through an auction.
Frontline	22 MHz (12 MHz of 24 MHz allotted to public safety plus 10 MHz of 30 MHz scheduled for commercial auction).	Single nationwide license to be awarded through an auction.