Failure of the D block to sell in the 700 MHz auction sparks debate over the future of the public safety-commercial network

For the commercial operators participating in the 700 MHz auction, the question of license ownership was settled weeks ago, but for the Public Safety Spectrum Trust, the decisions over a future nationwide wireless emergency networks are just beginning.

The House Subcommittee on Telecommunications and the Internet opened its first hearing on the 700 MHz auction today, trying to make sense of the D-block license that would have been used to build a shared public safety-commercial network but instead languished with only a single bid through the auction’s 261 rounds last month. Subcommittee chairman Ed Markey (D-MA) in his opening remarks lauded the $19.6 billion windfall the FCC brought in through the auction of the other A, B, C and E block bands but expressed disappointment in the lackluster interest in the D block.

“This is essentially the tale of two auctions, and so, with the good news, there is also some bad news,” Markey said. “Obviously, the D block is disappointing. Yet I believe that pursuing ways for public safety entities and the private sector to partner toward achieving a network that possesses nationwide interoperability and broadband capability remains our best option going forward on the D block.”

What those ways are, though, is becoming a matter of intense debate. After the auction closed in March, the FCC delinked the D block from the rest of the auction results, opting to decide at a future date how to award the license. Qualcomm had placed the sole bid on the auction in the first round, but its $472-million asking price was far below the $1.3-billion reserve set by the FCC.

While one Congressman, ranking Republican Cliff Stearns, said the D block should be re-auctioned without any conditions attached—essentially making it another commercial license—most lawmakers backed the FCC’s plans to take another shot at making the shared network project work, with much encouragement from the public safety community itself.

“We cannot let this auction fail,” testified Harlin McEwan, chairman and CEO of the PSST. “If it does, then the individual federal, state and/or local government agencies will be the only remaining source of the substantial funding needed to construct and operate a modern, dedicated, nationwide broadband communications network for public safety use. In today’s fiscal climate, that would likely pose insurmountable challenges. I respectfully ask the members of this Committee to help us ensure that failure is not an option in a D-Block re-auction.”

Just how the FCC will go about attracting a bidder where it failed last month has become a matter of intense debate, though. FCC Chairman Kevin Martin and other commissioners made a pitch for direct federal funding of a nationwide public safety network.

“It would have been better to take the auction proceeds and provide the public safety community with the resources needed to build their own interoperable network,” Martin said before the subcommittee. “But we do not have the authority to directly fund such a network. As a result, the public/private partnership was the only means available to us to address this crucial issue…The commission will, however, also need to take into account why the D block did not attract a successful bidder. The commission needs to consider whether the demands that were placed on the prospective D-block winner, such as network expectations and build-out requirements, were too great.”

FCC Commissioner Michael Copps, however, was one of the few to propose a specific framework for re-auctioning the licenses. He said the FCC requirements placed on the D-block winner must be more clearly spelled out if there is any hope of attracting bidders. The FCC and the PSST, he said, need to resolve many technical details about the future network and to clearly define the roles of the public safety community and the network operator before the auction begins. The FCC, Copps continued, also needs to hire network experts to advise the FCC so it can get an honest determination of the costs of building the network the government expects to receive. The FCC must then put those experts to use compiling a detailed economic analysis of the project and then put that analysis and the entire project up for public comment, Copps concluded.

“If this effort is going to really work, we all need to understand how involved and proactive the commission must be,” Copps said. “I believe we made substantial progress in carving out that role before the auction. But then we did so prospectively. This time the FCC needs to assume that more active role up-front in the process.”

In other regulatory news, the FCC on Monday granted Nextlink Wireless, XO Communications’ wireless subsidiary, renewal extensions on 48 local multipoint distribution service (LMDS) service licenses until 2012. Nextlink first acquired the spectrum in 1999 to use as a last mile alternative in urban markets, but when the original broadband wireless access craze went bust, it shelved its plans. In 2006, however, XO dusted off the spectrum to launch a wireless backhaul and business access network. According to the FCC’s licensing requirements, XO must either deploy commercial services over those airwaves or lose them. The extension gives Nextlink another four years to make good on that pact in markets where it has no wireless service yet. It has already launched service in 34 other markets, though.