FCC Spectrum Auction - What Have They Done!?

by Andy Seybold

WWW.AndySeybold.Com

First responders are about to lose big time, once again. If the Further Notice of Proposed Rule Making that is expected turns into a Report and Order and I were the Public Safety Spectrum Trust I would hand the broadband license back to the FCC and say, “No thanks!”

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Can you imagine this auction?

1) You bid for a single nationwide license, reserve price of $750 million, which is a bargain for 10 MHz of 700-MHz spectrum

a. You win and you have to choose between LTE and WiMAX as the technology

2) You bid in the WiMAX auction for one or more of the 58 regions on the block

a. If you are top bidder and there are enough bids on enough regions, you win the spectrum if the WiMAX auction is a success

3) You bid in the LTE auction for one or more of the 58 regions on the block

a. If you are top bidder and there are enough bids on enough regions, you win the spectrum if the LTE auction is a success

4) IF there are more regions bid on in the WiMAX auction (or more total POPs), the WiMAX auction is the winner, WiMAX is the technology, winning bidders get the spectrum and the FCC lowers the reserve price for the rest of the regions and goes back out to auction as WiMAX-only spectrum

5) IF there are more regions bid on in the LTE auction (or more total POPs), the LTE auction is the winner, LTE is the technology, winning bidders get the spectrum and any regions not sold go back to auction as LTE-only spectrum

6) The build-out period is extended from 10 to 15 years and the requirements are for benchmarks in coverage at the 4, 10 and 15 year marks with the final build-out requirement being 98% population coverage in “more dense” regions and 90% coverage in “less dense” regions

The outcome of this “auction” is clear to me. Clearwire and/or Intel win it as a national license by spending $0.01 over the reserve price. They declare for WiMAX and the winner now has a nationwide 700-MHz swath of spectrum that is 20 MHz wide—and the first responder community is shut out yet again. The bottom line is that Clearwire does not care if the first responders use the network in urban areas such as New York (they already said they would not use the new network) because if first responders do not use the spectrum, the winner has full use of all 20 MHz of spectrum. In the less dense areas, the winner would like some first responder users to help pay for the network. All it costs the new winner is $5 million a year for a virtually unencumbered 10 more megahertz of spectrum.

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There are many issues with this spectrum becoming a WiMAX network:

· WiMAX is unproven (as is LTE), but WiMAX FDD (Frequency Division Duplex) does not exist and LTE has been designed from the beginning as an FDD technology.

· If WiMAX is the “winner” we will end up with a one-off network using 700 MHz since, to my knowledge, WiMAX is not and will not be deployed in 700 MHz anywhere else in the world.

· There will be no fallback to existing 3G technologies unless it is on the Sprint network (assuming Clearwire is the winner). So until coverage is complete in a given region, no first responder agency will start using the WiMAX network because there is no fallback to other networks that offer coverage on 3G, which is already deployed.

· If the devices have to be two-mode (WiMAX and CDMA), they will cost more than an LTE/CDMA or LTE to UMTS device because they will be U.S.-centric and a smaller number of devices will built, therefore, there will be no economy of scale.

· Build-out requirements are such that the winner will only need to build out major metro areas for the first 10 years and worry about the rest of the U.S. population later.

Many of these same issues will be faced if the network were to become an LTE network, but the LTE network would then be built, I believe, by a number of second and third tier existing network operators and a smattering of new entrants. First responders would be able to purchase a mutli-mode device that would enable the use of existing 3G networks where LTE had not yet been deployed, giving the first responder community a larger coverage footprint during the entire build-out period.

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I don’t know of a single incumbent network operator that has WiMAX on its own roadmap moving forward (except for Sprint, which has given the task of making it work to Clearwire), so I believe if the system becomes a WiMAX system it will be built by network operators that do not have existing networks and must fight for tower locations and permits, and that will only have a few devices to offer.

How many companies do you think will build a mobile and handheld WiMAX device for first responders? Hardened as they need to be, with 2-5 watts of audio to drive a speaker instead of a speaker mounted in the device, and with the flexibility of being able to be used not only on the new WiMAX broadband network but also on the adjacent APCO 25 and analog channels in the balance of the 700-MHz first responder system? Yes, I could ask the same questions for LTE, but at least with LTE we have a standard that will be deployed in hundreds of networks and used by millions of customers all over the world, so costs will be reduced.

Let’s suppose I am wrong and LTE is the technology of choice. What then? If LTE is the choice, I am sure that it will not be a single network operator that will win the entire nationwide license but a number of tier two and three network operators. I don’t for a moment expect that AT&T or Verizon will have any interest in this system, but I do believe they will continue to do what they are doing now, which is signing up more and more first responder agencies to use their existing 3G networks for broadband wireless services. The more they sign up that are happy with the service, the fewer there will be for this network and as Verizon and AT&T roll out their own LTE networks on 700 MHz, the first responders are likely to stay with them and not move to the new network.

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The new proposed rules make it very clea,as they now stand, that it will not be until after year 10 that this network will even come close to providing the same level of coverage AT&T and Verizon provide today, and in 10 years their coverage will be even better. So there will be fewer customers from the first responder pool for the new network, thus the entire idea of a network that provides interoperability of broadband data for first responders (not voice) remains a myth or a dream.

The Further Notice of Proposed Rule Making has not been published yet, but my information comes to me via a speech given to the Subcommittee on Emergency Communications, Preparedness and Response, Committee on Homeland Security, House of Representatives, by Derek Poarch, Chief, Public Safety and Homeland Security Bureau of the Federal Communications Commission on September 16, 2008, so I have to assume it is fairly accurate.

I have to tell you that this turn of events really upsets me. There were a lot of good suggestions made in the comments following the first failed D Block auction. Yes, there were many diverse opinions and, yes, some of them were self serving. I read most of them and nowhere did I see any proposals like this convoluted series of auctions that will, in my opinion, end in failure for the first responder community even if there is a winner.

Once again it will be the first responder community that will lose, and this last chance to establish some form of interoperability will be out the window for good. It would make more sense in the long run to auction this spectrum for typical public use and to mandate a nationwide roaming agreement between all of the network operators for first responders using existing networks and technology. It would be cheaper and faster, and would provide the first responder community with what this soon-to-fail network promises—nationwide data with voice interoperability in the future.

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My last point here is that I am also very disappointed that none of these rules takes into account the fact that rural America could greatly benefit from this type of network as well—providing wireless broadband to rural homes and businesses.

We have wasted years and millions of dollars trying to sort out a way to help our first responders help us, and as far as I am concerned, if the information I have relayed above becomes the next Report and Order, we will have failed this community once again.

I don’t know where we will go from here, but I do believe that, once again, our federal government has set this up to fail, and to fail in a very big way.

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