New Bids Planned On Safety Spectrum
By Cecilia Kang
Washington Post Staff Writer
Wednesday, April 16, 2008
Lawmakers yesterday questioned members of the Federal Communications Commission about the failures of a recent auction of wireless spectrum.
Last month, the FCC held an auction of airwaves to enable the creation of new wireless networks, including one for emergency responders nationwide. One of the goals of the auction was to attract a private bidder that would build a network to be shared with public-safety groups. That block of airwaves, however, did not attract the minimum bid.
The House Energy and Commerce Committee's subcommittee on telecommunications and the Internet criticized the FCC for the auction's shortcomings, and some lawmakers said the agency should change the rules to encourage smaller wireless carriers to bid for the public-safety spectrum in a new auction.
Rep. Edward J. Markey (D-Mass.), the subcommittee chairman, said the commission should reconsider its rules to cap the largest carriers' spectrum holdings, preventing them from bidding on more. That would encourage bidding from small carriers, particularly businesses owned by women and minorities, he said.
Critics blamed the lack of bids on the FCC's reserve price of $1.3 billion for the public-safety airwaves and on the fact that the winning bidder would have to pay penalties if it could not negotiate a financial agreement with the Public Safety Spectrum Trust, the nonprofit group selected to hold the license for the spectrum.
The idea of creating a public-private partnership to build the emergency-services network has drawn criticism.
The FCC inspector general is investigating an allegation that the trust's business adviser, Cyren Call Communications, had too much control over the building of the network. Cyren Call admitted that it asked prospective bidders for $500 million in lease payments to use the spectrum, which critics say deterred bids.
Some subcommittee members expressed concern that the trust was using Cyren Call as both an adviser and a lender. The trust received a loan from Cyren Call for operational expenses; that money came from Cyren Call's venture-capital investors.
FCC Chairman Kevin J. Martin said yesterday that the agency will reconsider the requirements for the public-safety spectrum. He also said he expects the public-safety block to be put up for auction again in the fourth quarter.
Key lawmakers and FCC commissioners yesterday defended the planned public-private partnership. Such an arrangement is the only financially viable way to build a network that could cost $6 billion to $7 billion, they said.
"I support the concept of a public-private partnership for very practical reasons," said Rep. John D. Dingell (D-Mich.). "If done correctly, the private sector will help provide a world-class, interoperable public-safety network."
Still, some commissioners said the Public Safety Spectrum Trust needs closer supervision, particularly with regard to its relationship with its business adviser.
Democratic Commissioner Michael J. Copps also pressed for clarity on that relationship and called on the FCC to act as an "honest broker" between the public-safety community and a commercial carrier.
"This time the FCC needs to assume that more-active role upfront in the process," Copps said.
Another issue for some lawmakers was that most of the airwaves successfully auctioned ended up with the country's largest wireless carriers, not new, competing carriers. Verizon Wireless and AT&T won 70 percent of the licenses of 700-megahertz spectrum.
Markey called the spectrum "beachfront" property, increasingly in demand as wireless technologies expand. "At present, it looks like two mega-resorts are going up on the beachfront in the form of Verizon and AT&T," he said.
Martin said the auction was a success. Verizon Wireless bought its spectrum with the condition that it will allow consumers to use a greater variety of wireless devices and software applications over the new network than is allowed on existing networks.
Republican Commissioner Robert M. McDowell was more critical of the auction. He said the rules deterred smaller carriers from bidding. Smaller carriers had to compete with one another to buy regional licenses, he said, which as a result cost more.
"Smaller players had nowhere else to go, all while no new broadband provider emerged," McDowell said.
View all comments that have been posted about this article.