In auction’s aftermath, D Block questions linger

With the close of a 700 MHz auction whose mixed results still remain largely unknown, the spotlight now shifts to how policymakers at the Federal Communications Commissions and Congress will respond to a national commercial-public safety license left to languish after 38 days and 261 rounds of bidding.
“It appears at this time that the D Block did not receive a winning bid. If the FCC certifies this to be the case, we encourage commissioners to act swiftly in examining the current rules regarding the D Block and the creation of a nationwide broadband network for public safety,” said Harlin McEwen, chairman of the Public Safety Spectrum Trust, a non-profit group licensed to partner with a commercial D-Block licensee that has yet to emerge. “If changes are necessary, the FCC must make certain that the interests of public safety remain at the top of the list. Only a public-private partnership will provide an innovative solution that will permanently solve our country’s continuing public-safety communications crisis and first responders have a vital role to play in any network designed for their benefit.”
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The absence of a bidder willing to pay the minimum $1.3 billion for the D Block put a damper on bidding otherwise successful in terms of the nearly $20 billion raised during the auction.
“The next generation of wireless networks to be deployed in the 700 MHz band will be faster than those available today, and they will extend to both urban and rural areas of the country,” said FCC Chairman Kevin Martin. “Wireless broadband will be able to reach unserved areas of the country, and it will bring increased competition to the broadband sector that is currently dominated by DSL and cable providers.”
But the D-Block overhang remains palpable and inescapable.
“I believe the commission remains committed to ensuring that we work to solve public safety’s interoperability challenges,” Martin said. “Because the reserve price for the D Block was not met in the 700 MHz auction, the FCC is now evaluating its options for this spectrum.”
“The final set of rules the FCC ends up adopting will likely be shaped by input from House and Senate leaders, as well as the discussions at . hearings,” said Jessica Zufolo, an analyst at Medley Global Advisors L.L.C.
At least one congressional hearing is planned to address auction results and public-safety issues, and there have been calls to investigate the D-Block failure top to bottom.
“I believe that any new auction for the D Block should be consistent with an overarching policy goal of advancing public-safety objectives and ultimately achieving a state-of-the-art, broadband infrastructure for first responders,” said House telecom subcommittee Chairman Edward Markey (D-Mass.).
“In developing a plan for a re-auction of the D Block, the FCC should also take into account the auction results to gauge the level of new competition achieved. Policymakers should also analyze whether a need for a high reserve price continues to exist. Moreover, I believe we must fully review the nature and authority of the public safety spectrum trust and whether this model should be retained or modified, the length of the license term, the build-out requirements and schedule of benchmarks for such build-out, the opportunities for ensuring further openness in wireless markets, the penalties associated with failure to fulfill license conditions, and other issues,” Markey said.
Other congressional panels may decide to weigh in as well. The House Commerce oversight and investigations subcommittee and the House Committee on Oversight and Government Reform have been quietly monitoring 700 MHz auction developments in recent months.
“The Federal Communications Commission’s spectrum auction produced some good results for consumers. While the open-access provisions weren’t all that we would have liked, consumers will have the benefit of some device and applications flexibility that they wouldn’t have had otherwise,” said Gigi Sohn, president of Public Knowledge.
“However,” she added, “the lack of activity in the D Block that would have supported public-safety activity raises some cause for concern. Following reports that Frontline [Wireless L.L.C.] dropped out of the auction as a result of alleged conditions put on the block by the public-safety community, we urge the commission to look into the auction results.”
The PSST’s McEwen, without being specific, took a seemingly defensive posture in contemplating the uncertain path forward for the D Block.
“It is unfortunate that some stand in the way of bringing state of the art communications capabilities to America’s first responders, even to the point of demanding that public safety obligations be removed entirely from the D Block,” McEwen stated. “Others have suggested that temporary regional patches at huge expense to public safety could replace the innovation that would come with the creation of a nationwide network built to meet public-safety’s needs. I cannot understand opposition to the only viable solution to date that would transform public-safety communications in our country and allow public safety to benefit from the next generation of wireless technology in a meaningful way. However, I am hopeful that decision-makers in Washington will see that these unconstructive comments are harmful to those who are trusted to protect the public every day.”
Meantime, the identities of winning bidders for the 1,000-plus wireless licenses will remain a mystery until the FCC agrees to “delink” the D Block from the other licenses snapped up in bidding. That action could come in days, which will trigger the lifting of the anti-collusion gag rule on 700 MHz applicants and bidders. The anonymous bidding technique was intended to prevent anti-competitive activity during the auction.
“We continue to expect that Verizon Wireless and AT&T [Mobility] will be among the biggest acquirers of spectrum, with the details of what they and others have bought and paid to be closely watched,” stated analysts at Stifel, Nicolaus & Co. Inc.