Despite all the documents and reports, the Federal Communications Commission’s recent failure to attract a bidder to create a nationwide broadband network for public safety is being blamed on too much uncertainty and too little information.

FCC was bold and innovative but in the end offered little detail on what the project would cost, how it should be structured and what revenues it might generate. The result, industry observers say, was too many unknowns that could cause huge financial losses for bidders.

If FCC moves forward with an anticipated second attempt to create the public-safety network, it should provide critical technical information to prospective bidders, experts say. The commission also must provide information on the known costs and likely revenues related to building and operating the network.

STILL WORKABLE
Despite the unsuccessful auction, advocates of a nationwide license for public safety say it is a groundbreaking idea that FCC should try again.

“Setting up a national license and the idea of sharing the public-safety network are a radical departure from the past and a huge step forward for the FCC,” said David Aylward, director of the ComCare Alliance, a nonprofit umbrella group for public-safety communications.

However, as a business proposition, “they got it wrong,” he said.

FCC is weighing its options for public-safety communications after it failed to attract its minimum reserve price for the D Block of radio spectrum, which was to be partially dedicated to a nationwide wireless broadband network for first responders. The spectrum auction closed March 18 after receiving $19.6 billion in bids.

The D Block in the 700 MHz band received a single bid of $472 million, far short of the $1.3 billion reserve price. To create the national network, FCC had ordered that a 10 MHz portion of the D Block be shared by public- safety and commercial users, with fire and police having priority during major emergencies. The winning bidder was to negotiate the sharing arrangement with the Public Safety Spectrum Trust, a group designated by FCC.

The plan had been promoted by start-up company Frontline Wireless LLC, which abruptly shut down in January. On March 19, advocacy groups asked FCC to investigate allegations that an official adviser to the spectrum trust may have scared off bidders by stating that the winning bidder would pay as much as $500 million in fees over 10 years as a cost of operating the network. The public bidding documents mention a fee but do not specify the amount.

If FCC holds another auction, Aylward said, it should disclose upfront all potential costs and how much public-safety groups are likely to pay for the network. The information would best be developed by a group of telecommunications providers and experts based on the bid documents issued by the public-safety trust.

“There has been no public discussion of what this network will cost to build,” Aylward said. “It could be $4 billion to $7 billion.”

In addition, he expressed concerns about the network’s legal structure as outlined in the public bid document. The structure calls for a substantial role for an entity — presumably the public-safety trust’s adviser, Morgan O’Brien, of Cyren Call Communications — to maintain and operate the network for a fee, Aylward said. The network operator would provide services such as customer care, billing and operations centers.

FCC has been asked to investigate O’Brien’s alleged discussions about the fee with prospective bidders. Trust officials and O’Brien declined to comment, citing an FCC order barring discussion of the auction.

Aylward declined to judge whether the proposed prominent role of the network operator is a good arrangement, but he noted that the structure gives the winning bidder limited legal control. “If I was a bidder and saw that, I would walk,” he said.

Another observer, John Kneuer, senior vice president at Rivada Networks, a provider of wireless network solutions, said bidders did not have an opportunity to review detailed technical specifications for the new network before the auction. As a result, he added, there was great uncertainty about how much it would cost to build and operate the network.

“There was insufficient clarity in the technical specifications,” Kneuer explained. “They were not offered to the general public.”

If the details are made public, it is more likely that prospective bidders will be able to negotiate better agreements and allow public safety to better leverage the commercial networks, he said.

It might be better for more than one carrier to fulfill the first responders’ broadband needs, he added.

“The danger of the D Block is that you are locking public safety into one preferred network provider,” Kneuer said.

Charles Werner, fire chief of Charlottesville, Va., and a member of a Homeland Security Department advisory committee on firstresponder communications interoperability, said the high reserve price and a possible 10 percent penalty might have doomed the auction.

The penalty was to be imposed on the D Block winning bidder if no agreement could be reached with the public-safety trust. If the spectrum cost $1.3 billion, the penalty would have been $130 million.

“It’s too risky and too unknown,” Werner said. “Who in their right mind would take that offer?”

If those requirements are removed, another auction would likely be a success, he added.

THE HILL IS WATCHING
Rep. Ed Markey (D-Mass.), chairman of the Energy and Commerce Committee’s Telecommunications and Internet Subcommittee, said he is ready to review the public-safety trust and its business model, along with other terms.

Policy-makers should analyze whether there is a need for a high reserve price, Markey said in a news release.

He also said the subcommittee must 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.”

The subcommittee will hold a hearing on those issues.

Werner said he is optimistic about the finances of the new network. Because FCC made nearly double the expected revenue in the spectrum auction, almost $20 billion, it should offer some financial incentives to build and operate the first responder network, he said.

“People are looking at the negatives,” Werner added. “But I believe this can work.”

Alice Lipowicz (alipowicz@1105govinfo.com) is a staff writer at Washington Technology.