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Today's Headlines •  A Setback For Public Safety •  Rules Dissuaded Bidders? •  Regulatory Challenges Await - Advertisement - - Advertisement -		Issue Of The Week: Monday, March 17, 2008 Trouble On D-Block: Spectrum Auction Finds Achilles Heel by David Hatch      FCC Commissioner Jonathan Adelstein didn't mince words when CongressDaily recently asked him about the auction of public spectrum that was supposed to pave the way for a nationwide wireless high-speed Internet network for fire, police and rescue squads.      "It's looking pretty bleak for the D-block," Adelstein replied, referring to a band that is part of a larger swath of airwaves being vacated by broadcasters as they shift from analog to digital signals. During an impromptu interview last month, Adelstein, a Democrat, added, "It's very disappointing that public safety won't have that network available to them quickly." He acknowledged that the agency "miscalculated" in crafting rules for the block.      That apparent miscalculation has marred an auction that FCC Chairman Kevin Martin and other agency officials have otherwise heralded as a smashing success.      The bidding, which began Jan. 24, has raised more than $19.5 billion for the U.S. Treasury -- nearly double the $10 billion Congress had expected. As of today, 214 parties vying for 1099 licenses had held more than 235 rounds, with activity at a trickle and expected to end soon.      The FCC has yet to disclose the winners, although analysts already are projecting that AT&T and Verizon are among the biggest victors. Google will have a presence on another band called the C-block -- because a portion of those frequencies must be accessible to unaffiliated devices and software through "open access" requirements.      But the Achilles' heel of the so-called 700 megahertz auction remains the public safety band, which only generated one bid of $472 million -- far short of the minimum $1.3 billion "reserve" price. As the action winds down, no winner is expected, forcing regulators to evaluate what went wrong and how they can resell the airwaves. A Setback For Public Safety      The D-block was supposed to create an innovative public-private partnership that would remedy communications flaws that sometimes turn disaster scenes into modern-day versions of the Tower of Babel. Shortcomings in the system -- such as handsets ill-equipped to communicate across jurisdictions and agencies -- were highlighted with deadly consequences during the Sept. 11, 2001 terrorist attacks and in the wake of Hurricane Katrina in 2005.      The winning bidder would have commercial rights to frequencies that could be tapped by public safety officials during emergencies. Under the arrangement, the licensee would construct or upgrade a coast-to-coast broadband system for first responders at an estimated cost of up to $10 billion.      Firemen racing into burning buildings would be able to instantly download floor plans and police in squad cars could quickly access large files about suspects. The network would offer state-of-the art voice and data communications.      While some jurisdictions have invested in these sorts of technologies in recent years, others have not. "There are still a lot of communities that are struggling to improve their communications systems just because they don't have the funding," explained Yucel Ors, director of legislative affairs at the Association of Public-Safety Communications Officials International.      Rep. Jane Harman, D-Calif., a member of the House Energy and Commerce Committee and a strong advocate for first responders, told CongressDaily that ongoing glitches are a "glaring black eye for both the administration and Congress because we haven't been able to fix this since 9/11."      Ors acknowledged that delays with the D-block are a setback, but he remains optimistic about a re-auction. "The goal is still to move towards a national broadband network for public safety," he said, adding that his organization hasn't contemplated the possibility that this might be off the table. Rules Dissuaded Bidders?      Several factors contributed to the apparent failure of the public safety band auction, including a high reserve price and strict build-out requirements for the winner, according to Rebecca Arbogast, an analyst with the investment firm Stifel Nicolaus.      She also suggested regulators may have ceded too much responsibility to the licensee and the public safety community to hash out the details of their sharing arrangement. As a result, some prospective bidders may have balked at entering into protracted negotiations and potentially being slapped with a hefty financial penalty if the discussions failed.      Another factor was the collapse of Frontline Wireless, a venture backed by former FCC Chairman Reed Hundt and several prominent Silicon Valley investors in order to vie for the spectrum. It abruptly went out of business shortly before the auction began -- and after Frontline spent nearly a year touting its plan in Washington.      Despite these challenges, Ors predicted that once the auction ends, carriers previously distracted with securing other frequencies would be able to devote more attention to the D-block. Regulatory Challenges Await      Government regulators now face the unenviable task of figuring out how to guarantee a successful outcome for public safety. Martin, the Republican chairman of the FCC, told reporters in early March that if no D-block winner emerges, the agency would reevaluate "to make sure that we address the public safety needs that we've identified."      Options include reselling the frequencies under the same rules -- or under relaxed ones featuring a lower reserve price, less stringent construction benchmarks and smaller geographic licenses available to multiple players. Another idea is to scrap the public-private approach altogether, though that is considered unlikely at this juncture.      House Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., already plans to hold an oversight hearing on this issue -- a move strongly endorsed by other lawmakers, including Energy and Commerce ranking member Joe Barton, R-Texas, and Harman.      "This hearing will be of the utmost importance as we approach the seventh anniversary of 9/11," Markey told reporters last week. "Its importance will be highlighted, I think as well, by the fact that we're having a national election that is going to be largely turning on those security types of issues." He said it was premature to discuss any new parameters until he has fully assessed the situation.      Harman said the hearing might be scheduled for mid-April, with Arbogast predicting that a re-auction would be completed no later than February 2009, when broadcasters finalize their shift to digital.      "Our hope is that we learn from the mistakes of this [auction] but definitely have a public-private partnership for this portion of the spectrum," Harman said. "I think that's the only way we will ever be able to get to true interoperability."      FCC Commissioner Michael Copps, a Democrat, isn't ready to abandon the hybrid approach just yet. "My personal predisposition would be to work with the public sector-private sector model," he recently told reporters. If an encore auction is held, he said it should happen quickly, adding, "We can't keep pushing this out."      For emergency crews, the second shot at the D-block may be their last chance at realizing the cutting-edge network they insist is needed.      With no other obvious source of funding, "there is no automatic fallback here" if the do-over fails, Arbogast warned. "If this one doesn't work," And Copps observed of the auction now winding down, "There's maybe one more chance to get this right."

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