Lawmakers question what to do with public safety spectrum

Recent reports that an advisor to public safety agencies was seeking to make a profit on the recently completed 700MHz auction surprised members of the U.S. Federal Communications Commission (FCC), commissioners said Tuesday.

Four of the five commissioners said they had concerns about the Public Safety Spectrum Trust's (PSST) contract with outside advisors in the auction. The FCC has given PSST, a coalition of 15 public safety groups, control of about 10MHz of spectrum, and the agency tried to auction another 10MHz block to a commercial operator under the condition that the winning bidder would build a nationwide voice and broadband network to be shared by public safety agencies and commercial interests.

But the 10MHz D block of spectrum targeted for the public safety network produced only one bid of $472 million, far short of the $1.33 billion reserve price set by the FCC. Some consumer groups have called for an investigation of bidding requirements added to the spectrum by PSST advisor Cyren Call. Those groups suggested startup Frontline Wireless may have dropped out of the auction because of lease payments demanded by Cyren Call.

Representative Anna Eshoo, a California Democrat, said Tuesday she's heard complaints that Cyren Call told potential bidders it would demand $50 million annual lease payments from them, then sell the spectrum back to public safety agencies at a profit. "That seems to be a lot of strings attached," she said during a hearing of the House of Representatives' Subcommittee on Telecommunications and the Internet. "Some assert that these alleged demands caused a lack of interest in the D block."

Cyren Call Chairman Morgan O'Brien has acknowledged that the company told potential bidders that the PSST would consider asking for lease payments from the winning bidder. But he denied Tuesday that Cyren Call demanded lease payments or sought to make a profit from leasing the spectrum back to PSST members. Eshoo's description of the negotiations between potential bidders and Cyren Call were incorrect "in every respect," O'Brien said.

Eshoo cut O'Brien off when he tried to explain what Cyren Call had talked to potential bidders about.

Still, FCC Chairman Kevin Martin said he was "troubled" by reports of PSST representatives looking for profits in the deal. "That's something we did not anticipate," he said.

The FCC may need to be more directly involved in negotiations between the PSST and potential bidders if it decides to re-auction the spectrum in a similar way, added Commissioner Jonathan Adelstein. "I believe we did not provide adequate clarity in the rules that we set," he said. "[The FCC] was allowing an enormous amount of flexibility by independent agents to do what they wanted to do, without adequate oversight by the commission."

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.