700 MHz: Will the D block lie dormant?

There’s still a long way to go before the 700 MHz auction concludes, but after 11 straight rounds with no bids on the public-safety/commercial shared license, it’s only fair to start asking the obvious question: What happens if the no one else bids on the D-block license?

The D block has a $1.3 billion reserve price, and right now it sits at $472 million, having received a single bid in the first round. For other bands, the FCC’s rules are clear: if they fail to meet their reserve prices, they’ll be promptly re-auctioned with some of their requirements stripped. For the nationwide C block that means the open-access provisions Google has fought so hard to attach to the license will go away. But the FCC hasn’t been so specific. If you don’t believe check out the Auction 73 rules -- the reserve rules are buried way down in Paragraph 193.

The FCC states only the possibility of public-safety licenses being re-auctioned. That means at the end of this auction, if the D-block bidding fails to meet the reserve, the options are wide open. The commission could order another auction with a lower reserve price, or they could award it to the highest provisional bidder. They could even scrap this entire shared emergency/commercial network plan entirely. The latter is highly unlikely, though. There is probably much more national policy -- as well as political -- interest in seeing a nationwide public-safety network built, and if that means giving the spectrum away cheap, the FCC will likely do it.

But that raises another question. Is there a competent network operator with the resources and aptitude to actually build this network. The two big potential operators, Cyren Call and Frontline, are out of the picture. Cyren Call became the consultant for the Public Safety Spectrum Trust, which precludes it from participating in the auction. Frontline Wireless went belly up after generating much hoopla about building the country’s fourth nationwide broadband network. No other champion has yet emerged.

There is obviously one operator interested in running the network since the license has generated one bid. (Any guesses who it is? Send them my way.) Technically any of the 200-plus bidders in the auction could have submitted that bid, but in reality there are only a handful of operators that could tackle a project so massive. But it does raise the question that perhaps someone is looking at the D block as a potential investment. A bidder could feasibly act as spectrum holder and then negotiate with an operator to run the actual network for it. After the auction concludes, the winner of the D-block license has 6 months to negotiate with the PSST for a spectrum and network-sharing agreement. Although the bidders can’t talk to each other while the auction is going on, they can certainly try to strike a few deals after the auction closes.

In any case, we’re going to be following the D block as is the rest of the industry. Be sure to check the Telephony Unfiltered Blog as well as the TelephonyOnline site for daily updates on the auction’s progress.

Contact me at kfitchard@telephonyonline.com.