Would You Bid on This Spectrum?

You have decided to bid on 10 MHz (5X5) of the 700 MHz spectrum. For $5 million a year, you can gain another 12 MHz (6X6) of adjacent spectrum. The only caveat is that the first responder community will have priority on this additional spectrum. On the other hand, the first responders will be paying customers.

To win this spectrum, you have to take part in one, two, or three auctions at the same time. You can bid on the entire block as a single license (reserve price is $750 million) and if you win, you get to determine the technology you will use on the spectrum.

You can also bid in two other auctions. The first regional auction for 58 licenses is for those who will use LTE (Long Term Evolution) and the second regional auction for 58 licenses is for those who will use WiMAX. If enough regional licenses are bid on at auction, the FCC will go with regional licenses for either LTE or WiMAX, depending on which one has the greatest numbers.

However, if a bid for the nationwide license meets or exceeds the $750 million reserve price, that bidder wins the single nationwide license. The winning bidder must agree to build out a combination public/private system with priority use for the first responder community and has 15 years to build it out to cover 95 percent to 98 percent of the total population, and to pay the Public Safety Spectrum Trust $5 million a year for using its spectrum when it is available.

If you have been following this debacle, you know that some agencies including the NYPD have stated they have no interest in using this system once it is built, so the winning bidder will have a full 24 MHz of spectrum in New York City and anywhere else first responders opt out.

The public safety community will not have a fully interoperable broadband network on 700 MHz that covers most of the nation anytime soon. With up to 15 years to build the system out to the 95 percent to 98 percent requirements, the network operator can cherry pick and build out only cities where there is a demand for wireless broadband services then fill in as necessary when the deadline draws near.

The FCC's Third Further Notice of Proposed Rulemaking is a 212 page document and in it are great ideas for high-speed data, voice and video. Also buried in the document is a table on page 170 that states the various data rates the FCC believes are required: 20-384 Kbps for indoor video and 32-384 Kbps for outdoor video. All of the data speeds cited in this table were exceeded long ago by the current 2.5G and 3G wireless broadband networks. Who knows what the broadband data speeds and capacity of this type of network will be 15 years from now?

On page 188 there is a chart showing the FCC's "guess" of the associated relocation costs by region (click here to see the chart). Yes, once you own the spectrum you have to pay to relocate the public safety systems already using the spectrum for voice operations. The total cost of this reallocation is estimated at just under $27 million and appears to be a real guess.

Another issue I have is that "first responders" are so narrowly defined as to preclude priority access for highway departments that manage the roads during evacuations, power companies that turn power off so emergency workers can work safely as well as many other secondary responders.

There are all kinds of buried items in this document and there is only a 30-day window for comments. The FCC hopes to complete a Report and Order before the end of the year so the spectrum can go back out to bid in the spring. However, I believe that once the administration changes in January the FCC will change. Who knows, there might even be some logic applied to the sharing of this spectrum.

In its haste to complete a new Report and Order, I believe the FCC is coming up with rules that are so convoluted that the result will be yet another failed attempt to auction this spectrum so work can begin on the network that is needed by the first responders. I hope the next version of the FCC takes a little more time and uses a little more common sense before putting this spectrum back on the block.

Andrew Seybold is an authority on technology and trends shaping the world of wireless mobility. A respected analyst, consultant, commentator, author and active participant in industry trade organizations, his views have influenced strategies and shaped initiatives for telecom, mobile computing and wireless industry leaders worldwide. www.andrewseybold.com.

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