Wireless Auction Probe Clears Companies

FCC Process to Establish Emergency Services Network Is Questioned

A federal investigation into a failed auction of wireless spectrum found no fault with the companies involved, but revealed some larger systemic problems with the process.

The auction of airwaves took place this year, and some of the licenses were sold successfully to wireless phone companies, but another portion failed to attract bidders to build a public safety network available to emergency, police and fire services across the country.

The Federal Communications Commission's inspector general's office said in a report yesterday that it reviewed the role of Cyren Call, a business adviser to the Public Safety Spectrum Trust Corp., a group representing public-safety officials.

Public-interest groups had raised concerns about meetings in which Cyren Call told potential bidders that the Public Safety Spectrum Trust would charge lease payments estimated at $50 million a year for 10 years. Critics had said the lease payments turned off potential bidders.

But the IG report said those talks between Cyren Call and potential bidders, including Verizon Wireless and Frontline Wireless, did not dissuade bidders from participating in that portion of the auction.

"Frontline, as well as other entities interviewed, stated that the lease payment amount was only one of many factors it considered in deciding whether to participate in the D block," the report stated.

An official with PSST said he was glad the report showed Cyren Call did not act improperly. Cyren Call said in a statement that it will continue to work for the PSST as the FCC offers the spectrum at auction again.

The report did identify some potential problems with the process. Bidders balked at rules that they could not negotiate financial terms, such as lease payments, up front, making it difficult for them to estimate the true cost of building a network. If the two sides were unable to agree on terms after the auction, the commercial bidder would have had to pay a penalty to the FCC.

Public interest groups said the IG report focused narrowly on the question of the business adviser's role, without addressing larger issues about how the FCC should restructure the auction to ensure that a nationwide public-safety network is built.

Public Knowledge, a public interest group, and Media Access Project, an advocacy group, said the FCC needed to be more involved in negotiations between the Public Safety Spectrum Trust and its commercial partner.

"The Commission should take a more active role in future auctions to make certain public safety receives the spectrum it deserves," Gigi B. Sohn, president of Public Knowledge, said.

That sentiment has been echoed by lawmakers and Democratic FCC Commissioner Michael J. Copps, who said in testimony to Congress this month that the FCC should act as an "honest broker" between the two parties.

Harold Feld, senior vice president of Media Access Project, said, "It's critical for the FCC going forward to say what kind of assurances it would give bidders and financiers on what their obligations are going to be or else it could look like an invitation to throw money down the hole forever."