700MHz auction: FCC decision coming on public safety block

The U.S. Federal Communications Commission (FCC) closed its auction of 700MHz spectrum late Tuesday, but it faces a major decision on what to do with a block of spectrum designated for use by public safety agencies that did not meet the minimum bidding requirements.

Total bids for the 38-day auction were $19.59 billion, nearly double the $10 billion figure the U.S. Congress had budgeted. But the high bid for the so-called D block, a 10MHz band of spectrum that would have been paired with another 10MHz assigned to public safety agencies, was only $472 million, far short of the $1.33 billion reserve price set by the FCC.

Until the FCC decides what next to do with the D block, it won't announce the winners of the rest of the spectrum, a source at the FCC said. FCC Chairman Kevin Martin has proposed that commissioners "de-link" the D block from the rest of the spectrum, allowing the FCC to make new rules for the sale of the public safety block, the source said. The FCC does not yet have a timeframe for the decision on whether to de-link the D block.

The FCC required that the winning D block bidder build a nationwide voice and data network to be shared among commercial users and public safety agencies such as police and fire departments. But several of the rules attached to the D block raised objections, including a requirement that the winning bidder would have to give up millions of dollars in a deposit if it couldn't come to an agreement on network design with the Public Safety Spectrum Trust, which controls the public safety spectrum.

The winner of the D block would also have had to spend billions of dollars to build a nationwide wireless network that could handle both voice and data traffic. Many telecom experts see the 700MHz spectrum, which U.S. television stations are required to abandon by February 2009, as optimal for long-range wireless broadband services. Wireless signals in the 700MHz band travel three to four times farther and penetrate obstacles such as buildings more easily than wireless signals in higher spectrum bands.

Many members of Congress pushed for a public safety network after emergency responders couldn't communicate with each other during the Sept. 11 terrorist attacks and more recent disasters. Police and fire departments in neighboring cities often use different communication devices on different blocks of spectrum.

The FCC may hear several ideas about what to do with the D block. Telecom analyst Jack Gold of J. Gold Associates suggested the agency accept the lone bid for the public safety spectrum. "If it was up to me and I ran the auction, I'd take the money and run with it!" Gold said. "Why go through the time and expense of a new bidding process when in all likelihood the results will be the same?"

Gold called the auction overall a success. "Almost $20 billion is a pretty tidy sum, and now with the market turning downwards, it appears the timing of the auction was excellent," Gold said. "Having it now or in the next year would probably have produced even less, given market forces."

Rivada Networks, a provider of mobile voice and high-speed data services through commercial cellular and satellite operators, suggested the public safety community could look elsewhere for its broadband needs.