Cyren Call: Don’t blame us for Frontline’s demise

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Cyren Call Communications Corp. said it never demanded long-term payments as a condition for a winning bidder of the 700 MHz national commercial/public-safety license, breaking its silence in response to news reports and blog postings that strongly suggested that it caused the demise of one-time D-Block aspirant Frontline Wireless L.L.C.
“Anyone stating or implying that I or any member of Cyren Call or the Public Safety Spectrum Trust Corp. ‘demanded’ a spectrum lease payment is lying. Furthermore, anyone suggesting that any spectrum lease payment would be paid to Cyren Call is lying,” said Cyren Call Chairman Morgan O’Brien.
The anti-collusion gag rule imposed on 700 MHz bidders lifted Thursday, allowing auction participants to publicly speak out for the first time since early December when short-form applications were due. AT&T Mobility and others detailed their
plans for their 700 MHz winnings shortly after the deadline. “I was pinning a lot of hopes on them [Frontline] coming to that auction,” said O’Brien.
Cyren Call, the official advisor to the PSST, and the PSST itself were not subject to the quiet period, but the Federal Communications Commission asked them to honor the rule, which is designed to prevent anticompetitive behavior in the recent auction, which raised nearly $20 billion but did not attract a bidder willing to pay the minimum $1.3 billion for the D-Block license.
Congress and the FCC are investigating the 700 MHz auction results, including Frontline Wireless’ abrupt collapse two weeks before the Jan. 24 start of the auction. The FCC is expected to launch a new rulemaking soon to consider rule changes in hopes of attracting a bidder in a D-Block re-auction later this year.
Cyren Call acknowledged that in conversations with potential bidders, it presented an estimate of $50 million a year when asked about the spectrum lease payment likely to be requested by the PSST during negotiations over a network-sharing agreement.
Indeed, in an interview with RCR Wireless News, O’Brien said Cyren Call and Frontline Wireless met Nov. 29 at the latter’s request to inquire about what a network-sharing agreement between a D-Block winner and the PSST might entail financially. O’Brien said he did not attend that meeting, though confirmed the $50 million annual payment was put on the table as the starting point.
“They asked for a meeting. We set up a meeting with them, which we did with others, to walk through where we were between PSST bidder document one and getting ready to put out bidder document two. At that meeting, when asked, ‘When you talk about a lease payment, can you give us an idea – an order of magnitude what you’re talking about?’ we said a $50 million annual payment subject to about a half-dozen things, including getting the FCC to approve it in the NSA.”
Frontline didn’t object, according to O’Brien. “They could have said are you are out of your mind – $50 million – but they didn’t.”
O’Brien rejected news and blog accounts that would have made the $50 million necessarily a recurring payment, or $500 million total over the 10-year D-Block license term.
“Anonymous third-party allegations that the prospect of an annual spectrum lease payment ‘killed’ Frontline do not stand up to scrutiny,” Cyren Call stated.
Moreover, O’Brien noted there were other forces at play in the lead-up to the 700 MHz auction. “You can’t forget what was happening in the capital markets daily as we were heading into this thing. It couldn’t have been worse timing, but the commission didn’t have any choice,” O’Brien stated.
There also has been speculation that possible investors in Frontline failed to make good on their commitments and that a major vendor associated with Frontline might have pulled out at the 11th hour.
O’Brien said the FCC has been in general discussions with PSST, along with Cyren Call, about next steps. He predicted the FCC could attract serious bidders in the next go-round if the rules are right.

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