700 MHz war: Frontline challenges Verizon while AT&T mulls auction plans

The 700 MHz debate has suddenly turned both interesting and nasty in the lead-up to next month’s expected ruling by the Federal Communications Commission on auction rules.
An AT&T Inc. official disclosed the top mobile-phone operator is mulling a play for a national commercial-public safety broadband license at the upcoming 700 MHz auction, while Northrop Grumman Corp. told the FCC an open-access shared network-along the lines proposed by Frontline Wireless L.L.C.-would not compromise first-responder communications.
Meantime, Criterion Economics L.L.C., the firm that used industry funding to blast Cyren Call Communications Corp.’s public-safety proposal and, more recently, universal service fund support for rural wireless buildout, contributed to a Washington Post column sharply criticizing the Frontline plan. That was followed today by the issuance of new Criterion study-funded by Verizon Communications Inc.-predicting public-safety agencies may have to cough up $9 billion over a six-year period to the winning bidder of a national commercial-first responder license. The one-two punch prompted Reed Hundt, vice chairman of Frontline and a former FCC chairman, to challenge Verizon’s head honcho to debate the matter before federal regulators.
CTIA, the national association representing the mobile-phone industry, has argued before the Federal Communications Commission that a public-private licensing approach-especially one based on a wholesale model with various conditions attached-would scare off bidders to the benefit of Frontline and detriment of the U.S. Treasury.
Congressional budget experts have said the government could generate up to $15 billion from the auction of 60 megahertz at 700 MHz later this year. Frontline, a startup backed by Silicon Valley investors, industry veterans and former telecom policymakers, has proposed a dual-use network in which first responders would have priority access to shared commercial and public-safety spectrum in the 700 MHz band.
In a story posted on the Center for Public Integrity’s Web site, AT&T Senior VP Robert Quinn Jr. said a hybrid nationwide wholesale network is not out of the question for his company. “It’s a different business model for us, but one that we’d be looking at,” Quinn said. “If, in the end, that spectrum is attached to public safety, and for example there’s a wholesale requirement, we’ll take a look at it.”
AT&T did not dispute the veracity of the quotes, but nonetheless criticized the story.
“The post does not accurately reflect the position of AT&T. Specifically regarding the issue of ‘open-access requirements,’ our position has not changed. As we’ve stated on the record at the FCC, mandated ‘open-access’ conditions on licenses in the 700 MHz band should be rejected,” an AT&T spokesman said. “Further, we need to see the specific rules the FCC adopts for the auction before determining our level of participation.”
FreedomWorks said markets, not the FCC, should pick winners and losers. FreedomWorks, an advocacy group chaired by former House majority leader Dick Armey (R-Texas), publicized the Criterion analysis of Frontline’s proposal,
“The Frontline proposal is a significant departure from the current auction system that has allowed market forces to efficiently allocate spectrum resources,” said Wayne Brough, chief economist at FreedomWorks. “Not only does this proposal take important questions about resource allocation out of the marketplace, but it also leaves important questions about financial viability unanswered. The spectrum auctions, by and large, have been a huge success that captures market forces when allocating important and scarce resources. The Frontline proposal is a step backwards that introduces new regulations on spectrum without any measure of financial viability. Due diligence is especially important when taxpayers may be left holding the bag.”
Internet companies, consumer advocates, pro-net neutrality interest groups and throngs of citizens aligned with large political organizations have backed in varying degrees Frontline’s plan. Public safety backs a nationwide commercial-public safety network at 700 MHz, but has not specifically endorsed Frontline’s plan. Earlier this month, first responder groups incorporated a non-profit Public Safety Spectrum Trust in Washington, D.C. The new entity could contract Cyren Call or another party to serve as its agent in negotiations with a future 700 MHz commercial-public safety licensee.
Frontline said its critics have effectively legitimized its efforts to have the FCC establish a regulatory framework addressing broadband needs of public safety and consumers alike. Now the firm wants to debate the wireless industry directly.
“Now that Verizon is hiring teams of surrogates to attack Frontline, we have to recognize Frontline is taken seriously by the most powerful telephone companies in the world,” said Frontline’s Hundt. “What is really important is not Frontline, but homeland security. We invite Ivan Seidenberg, Verizon’s CEO, to meet in Washington any one of Frontline’s partners to debate the merits of Frontline’s plan to build a national public-safety network versus Verizon’s plan. Because Verizon and the FCC must realize America needs a national interoperable, wireless public-safety network.”
Meantime, CTIA accused Frontline of mischaracterizing the wireless marketplace, declaring that carriers “do not, and cannot as a practical matter, warehouse spectrum as Frontline alleges.”