A chorus of House Energy and Commerce Telecommunications and the Internet Subcommittee members criticized the FCC today because of its failed auction of a crucial chunk of spectrum that would give the nation’s public safety providers an interoperable wireless emergency network. The recently completed sale of frequencies on the 700-MHz band generated $19 billion but yielded no successful bidders for the so-called “D-block,” which is the part of the spectrum that would need to be freed up for such a network. House Energy and Commerce Chairman John Dingell urged all five commissioners to “craft a workable plan” for that spectrum. Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., and others said that a public safety-private sector partnership remains the best option and that the commission should be open to new ideas while fixing flaws in the previous plan. The auction’s failure “may ultimately prove fortuitous,” Markey said.
Telecommunications and the Internet Subcommittee ranking member Cliff Stearns, R-Fla., said more than a dozen lawmakers warned of the D-block auction’s potential fate in a June letter. “We predicted this. Perhaps the FCC should have heeded our warning,” he said. Rep. Fred Upton, R-Mich., said he believed potential bidders were reluctant because of uncertainties about terms of the proposed partnership. Rep. Jane Harman, D-Calif., said a successful re-auction is critical because public safety providers’ ability to communicate “is a matter of life and death.”
FCC Chairman Kevin Martin acknowledged the D-block letdown but said the larger auction, which was the largest in agency history, achieved many milestones. The revenue generated exceeded the CBO’s $12 billion estimate, he said, even though some studies valued the spectrum at $30 billion. The Republican regulator also tried to debunk what he called several auction-related “myths,” including speculation that Verizon and AT&T won everything and that small and rural carriers did not obtain spectrum. Martin said it could have been more efficient to use proceeds from the auction of other frequencies to provide federal funding to build the network for public safety agencies, but added that the FCC lacks that authority. A new D-block auction could take several months to set up and an auction could end late this year, he said. When structuring the auction, Martin said “all options should be on table for us to consider.” Commissioner Michael Copps, a Democrat, said a D-block public-private partnership is “our last, best hope,” but as the FCC plans for a new auction, it must guard against the possibility that the network could be “hijacked for purely commercial purposes.” Democratic regulator Jonathan Adelstein called for a “top-to-bottom review of what went wrong.”
The auction of the so-called “C-block,” which Verizon Wireless won, was also a focus of debate at the hearing. Verizon’s $4.74 billion bid beat out a $4.71 billion offer by Google. Dingell praised the FCC for imposing “open access” requirements on the spectrum, which he said would encourage more innovation and consumer choice. Rep. John Shimkus, R-Ill., asked Martin whether he thought Google was “gaming the system” and never intended to win the spectrum because it really wanted to ensure that the reserve price was met, which triggered the open access conditions. “You’ll have to ask them what their goals were,” Martin responded. “Ours was a focus on openness.”
This article appears in the April 19, 2008, edition of National Journal Daily PM Update.