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William Jackson | Another chance for FCC

Cybereye—commentary: Failure to sell Block D means FCC has a second chance to get public safety network right

By William Jackson

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The Federal Communications Commission’s failure to attract a winning bidder for the swath of radio frequency spectrum set aside for a public safety network in its recent 700 MHz auction is not necessarily a bad thing.

There is a consensus that the rules for the public/private partnership required in the auction were hastily put together, creating an uncertain environment that could guarantee neither a profitable business model for the licensee nor the interoperable high-speed infrastructure envisioned for the nation’s public safety agencies.

The failure to sell Block D means FCC has a second chance to get it right.

The overall auction was not a failure. Licenses for three blocks of radio frequency spectrum being reclaimed from TV broadcasters raised more than $19 billion.

But two 5 MHz pieces of spectrum adjacent to blocks already set aside for public safety use were reserved for a single nationwide license.

The licensee would have been required to negotiate a network-sharing agreement giving public safety agencies priority access to the commercial network in this band during emergencies.

But the price of more than $1 billion set by FCC for Block D, the cost of network build out, uncertainties of a network-sharing agreement and heavy penalties for failure scared off viable bidders.

This public/private partnership was not the first choice of many FCC commissioners, who preferred direct federal funding to build a network. But the federal funding is not there, and it is unlikely that Congress will provide it this year. So partnership looks like the best available option.

I don’t think the partnership model is a bad idea. If the history of government information technology projects has taught us anything, it is that industry is more likely than government to build a cost-effective network.

But the approach needs to balance two goals: The private sector wants to make a profit, and government must serve the public interest. These goals often come into conflict, but they are not necessarily contradictory.

The first step for FCC is to eliminate — or at least reduce — the reserve price. The licensee will need to minimize its risk in building out the network, and the price of the spectrum should be based on economic realities rather than maximizing government income.

FCC Commissioner Michael Copps has spelled out some requirements for a successful Block D auction, including an analysis establishing what is economically feasible and the release for public comment of a set of network and operational specifications.

If this work is done upfront, clearly defining the desired results and enabling prospective bidders to perform due-diligence analysis on the project, they might be able to produce a network that can satisfy the dual requirements of profit and the public interest.

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