Wireless Guru Andy Seybold Tells the FCC: It's the money, stupid

After forcing tens of millions of Americans to replace their TVs in order to free up spectrum space, the FCC held an auction in May for a sizable chunk of that space . . .and nobody placed a winning bid.In fact, only one company even showed up — Qualcomm –and it’s bid of $472 million was little more than a third of the $1.3 billion reserve set by the FCC. Needless to say, there was a lot of finger-pointing: at the FCC, at ‘advisors’ to the FCC from various public safety groups.  The latter were even accused of rigging the auction to make it fail.  But in the end, an investigation by the FCC itself (take that as you will) determined that “Rather, the many layers of uncertainty and risk, and the growing prospect of high network costs… were responsible for potential bidders’ decisions not to bid.”That’s bureaucratese for ‘We didn’t know what we were doing, so we’ll blame jumpy bidders.”Now the FCC is preparing to auction off this so-called ‘D Block’ of spectrum again — and the question is not just whether they can run the auction better than last time, but whether it should be running the auction at all.A little background:  In the aftermath of 9/11 and Hurricane Katrina, the FCC learned one very important lesson; in a catastrophic environment, most first responder agencies barely have the communications bandwidth to talk within their departments and far too many cannot communicate and coordinate with other responding agencies, even ones in neighboring cities or towns.It was a glaring and dangerous problem that needed a quick solution.The Federal Communications Commission (FCC) had decided to set aside a block of broadcast spectrum, formally assigned to TV stations, for use by public safety first responders; police, paramedics and others. The spectrum set aside in the 700-MHz band was to be the first step toward providing first responders with a common segment of spectrum where they can build a truly interoperable nationwide communications network.Building this network would be expensive and, therefore, the FCC came up with an idea for a private/public network. The thinking was that one of the existing wireless network operators (AT&T, Verizon, Sprint, T-Mobile, etc.) would bid on the spectrum when it was auctioned. The winning bidder would then work in conjunction with the Public Safety Spectrum Trust (PSST), which had been given the license for the other piece of spectrum for this shared network, to build out this crucial communications system. The FCC wanted the winning bidder to build out the network and for the first responder community to have priority access to it during emergencies on a local, regional or federal level. During the auction, additional spectrum rights would also be auctioned for normal or typical wireless networks for voice and data services.When the spectrum space went to auction earlier this year, all of the commercial spectrum space available was bid on and won, mostly by the existing wireless network operators. However, none of the bidders (except a cherry-picking Qualcomm) wanted to get involved with the spectrum for the shared network.And why should they?Asking a single commercial operator to undertake the task of building out a nationwide network for shared use, with a projected network construction cost of between $15 and $20 billion and the prospect of far smaller than normal profits, was asking too much, even of the large wireless companiesAfter the failed auction, the House and Senate, as well as the FCC, held hearings to determine why no company had stepped forward to purchase it and work with the first responders. You’ve just read the conclusions of the FCC internal investigation.  In fact, the real answer is quite simple:It’s the money, stupid.The FCC intends to re-auction this portion of spectrum and has asked for comments from individuals, companies and government agencies about how it can change the requirements for this portion of spectrum and attract some bidders this time around. Let me make this easy for them.1, A network management company should be awarded the spectrum (at bid) and each existing wireless network be asked to build a portion of the nationwide network, sharing the cost.

2. Network operators should be given federal tax credits to help defray their costs, and they should have access to the spectrum on an as-needed basis.

3. This network should be extended into rural America to solve another problem—rural America’s lack of high-speed access to the Internet. There is federal money available for this and this approach could solve both problems using the same network. This model has better profit potential, it spreads the cost among existing network operators and would get the network built faster.

The only problem with my solution is that it is too logical. While it can be easily accomplished from the technology aspect, I am not at all sure the politicians are up to the task. Are the grand communicators in Washington listening?

 Andy Seybold has over 40 years of experience in the wireless and mobility industries Mr. Seybold has published three books, including Using Wireless Communications in Business, and regularly writes for several leading industry publications as well as producing his weekly commentary and a newsletter covering the 3G landscape. Read more of Andy’s work at WWW.AndrewSeybold.Com.