FCC Chairman Kevin Martin is under the gun about the D Block fiasco. Perhaps he should consider this suggestion for the next step.

The FCC exceeded the amount of money Congress expected for the 700 MHz auctions by a substantial amount. The usual suspects won a lot of spectrum, some new players got some and other small players increased their footprints. However, the fact remains that the big experiment, the public/private shared network, only received one bid and it was below the reserve price.

Shortly after the auction results were released, the House Subcommittee on Telecommunications and the Internet held a hearing on the entire auction. Out of this came news that several subcommittee members believe Google “gamed the system” and only bid up to the C Block reserve price and then went home.

I wonder how Google can be “gaming the system” when the system was set up to permit this type of bidding? Some in the subcommittee lamented the fact that more minority interest companies did not bid on the spectrum, and still more that the end results will not have much of an effect on increasing the amount of competition in the wireless market.

The subcommittee also listened to witnesses talk about why the D Block did not sell. The head of the Public Safety Spectrum Trust gave his testimony, as did the chairman of Cyren Call, the Deputy Chief in charge of communications for NYPD, Leap Wireless and the FCC commissioners. At the end of the session, there was no clear mandate as to what to do with the D Block so the FCC commissioners are all going back to their offices to try to figure it out.

PRICEY ENDEAVOR
It doesn’t take much thought to understand why this spectrum was not won at auction. The reserve price ($1.3billion) was too high; the penalty if the winning bidder could not reach an agreement with the PSST was too high (10% of the winning bid); and asking a single network operator to take all of the risk for this network, which would be costly and would carry severe buildout requirements, does not make sense.

Add to this the fact that before the bidding started, AT&T Wireless signaled to Verizon Wireless that it could go after the C Block because AT&T already had purchased some 700 MHz spectrum from Aloha and would, therefore, probably concentrate on filling in and augmenting that footprint with other A and B Blocks, which is exactly what it did. So Verizon was left with the C Block, AT&T got a lot of A and B block spectrum and no one with the financial resources was left to bid on the D Block.

Further, if it goes to re-bid, I don’t believe either AT&T or Verizon will be interested, and I don’t know of any incumbent wireless operator that could come up with $1.5 billion (for the spectrum, for example) and then come up with $10 billion-$14 billion more to build it out in a timely fashion. But we don’t have a clue what the FCC is going to do at this point, and I suspect we will see it release a report and order and ask for comments before it goes back out to bid.

NEW PLAN
I believe a network management company should be the successful bidder and all of the incumbent network operators build the network together, each getting a tax credit for the portion it builds, and all of the networks can share in the use of the spectrum on a secondary basis. I believe that combining the D Block with the first responders 10 MHz of spectrum would give this consortium 80% access to 20 MHz of spectrum.

The network could be built out at the same time everyone is building out their own 700 MHz networks, and we also could cover rural America and use the network for broadband to homes and businesses. It would be great if we could help the first responders get what they need, help solve the rural broadband issues and get the network built without it costing any one network operator a lot of money.

From a technology point of view, this would work, especially with a managed services company pulling all of the pieces together and being the one interface to the PSST. The biggest stumbling block, as always, will be the politics – but it can be done if we keep in mind that this needs to happen so our first responder community can better serve all of us. Let’s see, was that a round table for the first meeting or a rectangular table?

Seybold heads Andrew Seybold, Inc., which provides consulting, educational and
publishing services. For more information, visit www.andrewseybold.com