Controversy surrounds unsold spectrum block intended for public safety use

Company advising a public safety group denies it demanded lease payments from potential winning bidders in the recently concluded 700MHz spectrum auction

The company advising a public safety group on the recently concluded 700MHz spectrum auction at the U.S. Federal Communications Commission has denied that it demanded lease payments from potential winning bidders for a piece of that spectrum.

Instead, Cyren Call, which served as an advisor to the Public Safety Spectrum Trust (PSST) in the auction, answered questions from potential bidders for the D block, a 10MHz block of spectrum that was to be paired with a second 10MHz block controlled by the PSST, said Morgan O'Brien, Cyren Call's chairman. Under the FCC's auction plan, the winner of the D block would be required to use the two blocks of spectrum to build a nationwide wireless network to be shared by commercial users and public safety agencies such as police and fire departments.

The D block didn't meet the $1.33 billion minimum price set by the FCC, and the agency hasn't yet decided what to do with the spectrum. Some consumer groups, including Public Knowledge and Consumers Union, called for an investigation of bidding requirements added to the spectrum by the public safety community. Those bidding requirements may have caused one potential bidder, startup Frontline Wireless, to drop out of auction, Public Knowledge president Gigi Sohn said in mid-March, just after the auction ended.

"The lack of activity in the D block that would have supported public safety activity raises some cause for concern," Sohn said then.

Some lawmakers have also talked about looking into private conditions placed on the D block. But O'Brien, in a statement Thursday, said potential bidders approached Cyren Call and the PSST to inquire about possible conditions. The PSST told potential bidders that it did intend to request a lease payment of $50 million per year from the winning bidder for the spectrum it controlled, but that was within the FCC guidelines, O'Brien said.

The PSST made that information known in a bidder information document released Nov. 30, well before Frontline dropped out of the auction, and before a Frontline press release saying it intended to bid in the auction, O'Brien added. "Anyone stating or implying that I or any member of Cyren Call or the Public Safety Spectrum Trust Corporation ... 'demanded' a spectrum lease payment is lying," O'Brien said in a statement. "Furthermore, anyone suggesting that any spectrum lease payment would be paid to Cyren Call is lying."

O'Brien's comments came late Thursday, after the FCC lifted its quiet period for auction participants.

Also on Thursday, Google confirmed it did bid on the 22MHz band of spectrum called the C block, as it promised the FCC it would. Verizon Wireless won most of the C block with a bid of $4.7 billion, but Google officials said Thursday the company bid several times on the C block. Google had promised to bid at least $4.6 billion on the C block if the FCC would require the winning bidder to follow so-called open-access rules, by allowing outside devices such as mobile handsets from other carriers and allowing users to run outside applications on the network.

"As you probably know by now, Google didn't pick up any spectrum licenses in the auction," Google officials said in a blog post. "Nonetheless, partly as a result of our bidding, consumers soon should have new freedom to get the most out of their mobile phones and other wireless devices."

Google was the high bidder on the C block "for many days during the early course of the auction," said the blog post, by Richard Whitt, the company's Washington, D.C., telecom and media counsel, and Joseph Faber, Google's corporate counsel.

While the FCC only accepted two of four conditions Google proposed, the company still wanted to bid, the company officials wrote.

"We still believed it was important to demonstrate through action our commitment to a more open wireless world," Google officials wrote. "We're glad that we [bid]. Based on the way that the bidding played out, our participation in the auction helped ensure that the C Block met the reserve price."

Google officials didn't immediately address a question about what the company would've done with the spectrum had it won the auction.


Copyright © 2008 IDG Communications, Inc.