Intro: In this podcast we continue discussion on the in-progress FCC 700 MHz spectrum auction, with a focus on the D-Block public safety piece.

Mike: Gordon, can you give us a little background on the auction?

Back in 2005 Congress passed a law that requires all U.S. TV stations to convert to all digital broadcasts and give up analog spectrum in the 700 MHz frequency band. This law will free up 62 MHz of spectrum in the 700 MHz band and effectively eliminate channels between 52 and 69. This conversion, which has a deadline of February 18, 2009, has freed up spectrum that is being split up by the FCC into five blocks:

• A-Block - 12 MHz, split up into 176 smaller economic areas
  
• B-Block - 12 MHz, split up into 734 cellular market areas
  
• C-Block - 22 MHz, up into 12 regional licenses
  
• D-Block - 10MHz, combined with approximately 10MHz allocated for public safety, a single national license.
  
• E-Block - 6 MHz, split up into 176 smaller economic areas

Each Block has a reserve price set by FCC and if a reserve price is not met in the auction, the FCC will end up re-auctioning that piece of spectrum.

Mike: I know we discussed the auction a few weeks ago and not much has changed. Can you give us an update on where the auction is today?

Bidding round 102 came to a close yesterday afternoon with $19,524,595,900 (last week the auction finished at $19,450,389,100 - it is slowing) in total provisionally winning bids. Things have slowed considerably with only 40 new bids placed in round 102. For reference, on Thursday, each round averaged about 50 new bids.

Most active in the final round yesterday were E-Block licenses in the Bismark, North Dakota and Rapid City, South Dakota areas along with B-Block licenses in the southeastern United States.

The public safety D-Block still has not had a bid since the first round and will end up being re-auctioned by the FCC.

This may end up being the last week (an FCC decision but I'm thinking so). After the auction is closed the FCC will announce the winners.

Mike: Let's talk specifically about D-Block, the public safety piece. What's happened - why are we not seeing any new bids?

I think you have to go back and look at the history of D-Block. Early on it appeared Frontline Wireless would be one of the biggest bidders for D-Block spectrum - the company was setup for D-Block and had worked closely with the FCC on putting together specifications for the spectrum. Frontline built a formidable team including Vice Chairman Reed Hundt, who served as Chairman of the FCC between 1993 and 1997. The business plan, the organization, the technology seemed to all be in place........ On January 12 the company placed the following statement on their website:

Frontline Wireless is closed for business at this time. We have no further comment.

Another company, Cyren Call also looked like they were planning to bid on the D-Block Auction but did not.

Mike: So what happened?

Rumor has it Frontline could not attract enough funders - it seemed like a good investment - or at least you may think so up front. Many are now asking if the FCC's approach to solving the public safety inter-operability problem is in trouble. At the same time many are also asking "Is there a better way?"

I've always liked the idea of public-private partnerships and we've seen them work in times of disaster - last August I wrote here about the Minneapolis I-35 bridge collapse tragedy and how within minutes USI Wireless opened their subscription-based Wi-Fi service so anyone could use it for free. US Wireless didn't just stop there - because the network had only been built around part of the disaster, the company installed additional Wi-Fi radios in areas surrounding the catastrophe to blanket it with signals, providing an additional 12 megabits per second of capacity to the area around the bridge collapse.

A national network built from scratch may be too big of a bite though.

Mike: So what are we looking at for a solution?

Last month I had an interesting conversation with Rivada Networks’ Senior Vice President for External Affairs John Kneuer about emergency responder communications and the FCC Spectrum Auction.. Rivada uses existing cellular networks and commercial off-the-shelf technology to deliver high-speed voice and data services over a network that can survive natural or man-made disasters. I like the idea of using the existing commercial infrastructure for public safety for lots of reasons.

State homeland security officials have struggled for years with the inability of local emergency responders to communicate with each other and their federal counterparts during disasters. This inter-operability problem is so serious it has been identified as the number one concern of state homeland security officials in the National Governors Association 2007 State Homeland Security Directors Survey. Here's a quote from the report:

Mike: How does this system work?

Rivada uses existing cellular networks and commercial off-the-shelf technology to deliver high-speed voice and data services over a network that can survive natural or man-made disasters. Right now Rivada is working with National Guard units in 11 states (Alabama, California, Georgia, Hawaii, Illinois, Louisiana, Massachusetts, Pennsylvania, Rhode Island, Texas, and Washington). These units are installing new communications systems for voice and data services over a network that uses existing commercial infrastructure. Not relying on a single network makes a lot of sense when you consider communications survival during natural or man-made disasters.

According to a Rivada press release, the Louisiana Army National Guard decided last year to adopt their interoperable public safety communications system for the following reasons:

• Is available today,
• Does not require new spectrum allocation or depend on federal spectrum auctions or mandates, and
• Offers far greater range and capability at a fraction of the cost of other existing or planned technologies.

Rivada also supplements existing technology and infrastructure as needed by:

• Building new towers in areas without sufficient commercial infrastructure;
• Employing Rivada Interoperable Communications Extension Systems (ICES) – “fly-in? units capable of being deployed within hours – where existing infrastructure has been degraded or destroyed;
• Using proprietary backwards-compatible technology to provide full interoperability between cell phones, PDAs, laptops, landlines and traditional ‘walkie talkie’-type Land Mobile Radio (LMR) systems; and
• Combining all of these elements into an efficient network architecture.

Mike: Who would these leasing agreements be with?

Right now Rivada is not saying who they are making leasing agreements with but it seems like a safe bet to assume Verizon, Sprint and AT&T will be involved - it would be good revenue along with PR and advertising for the companies. In terms of the public safety personnel it makes a whole lot of sense because they would be able to use their day-to-day wireless devices in emergency situations.

The providers would build out, maintain and update the infrastructure....... I'm liking this kind of solution.

The FCC 700 MHz Spectrum Auction

Intro: In this podcast we discuss the in-progress FCC 700 MHz spectrum auction.

Gordon: Mike, you are the reigning Global Wireless Education Consortium Educator of the year so you know about this stuff - what exactly is this spectrum the FCC is auctioning and where did it come from?

Back in 2005 Congress passed a law that requires all U.S. TV stations to convert to all digital broadcasts and give up analog spectrum in the 700 MHz frequency band. This law will free up 62 MHz of spectrum in the 700 MHz band and effectively eliminate channels between 52 and 69. This conversion, which has a deadline of February 18, 2009, has freed up spectrum that is being split up by the FCC into five blocks.

Gordon: What so interesting about this block of spectrum?

Cell coverage, required cell-site density and cost (total network cost and cost per customer).

I understand each spectrum block in the 700 MHz auction, except for the national public safely D-Block, has been assigned an area designation by the FCC. Could you describe those areas included in the 700 MHz auction using FCC definitions.

Economic Areas

Cellular Market Areas

Regional Economic Areas

The C-Block (22 MHz) is being auctioned using the 12 Regional Economic Areas (REAs) created by the FCC. The REAs are an aggregation of the 52 Major Economic Areas (MEAs) defined by the FCC.

REA Services include Wireless Communications Service (WCS)

All FCC areas, along with names, county lists, maps and map info data can be found on the Commission's website linked here.

Mike: How is the auction being conducted?

On their website, the Federal Communications Commission has  a public notice titled Auction of 700 MHZ Band Licenses. This document describes the bidding procedure for the 214 companies that have qualified for the auction, which will be handled by the Wireless Telecommunications Bureau (WTB). The WTB is one of seven FCC Bureaus and is responsible for all FCC domestic wireless telecommunications programs and policies.

Here's a summary outline of the procedure pulled from the 12 page FCC document:

• Bidding in Auction 73 started on Thursday, January 24, 2008.
• Each qualified bidder received prior to January 24:
  
  • At least two RSA SecurID tokens
  • An Integrated Spectrum Auction System (ISAS) Bidder’s Guide
  • A FCC Auction Bidder Line phone number

• The FCC will conduct the auction over the Internet and telephonic bidding will also be available. In either case, each authorized bidder must have his or her own SecurID token.

• There will be a minimum opening bid amount for each license and package and the minimum opening bid amount is subject to reduction at the discretion of the WTB. The WTB will not entertain requests to lower minimum opening bid amounts.
  

• The WTB has established the following block-specific aggregate reserve prices for Auction 73:
  

  • Block A, $1.807380 billion;
    
  • Block B, $1.374426 billion;
    
  • Block C, $4.637854 billion;
    
  • Block D, $1.330000 billion;
    
  • Block E, $0.903690 billion.
    

Mike: It's interesting the range of reserve prices - is it safe to say that these correlate to the "value" the FCC sees with each?

• If, at the close of bidding in Auction 73, the aggregate reserve price for the A, B, C and/or E Blocks has not been met, the WTB will issue an announcement that bidding in Auction 73 is closed and set a date for commencement of Auction 76.

• Round results will be available approximately 10 minutes after the close of each round. and two types of reports will be available to bidders: (a) publicly available information, and (b) bidder-specific information available only to that bidder when logged in to the FCC Auction System.

• Each qualified bidder will have a default watchlist that contains every license and packages of licenses selected on the bidder’s short-form application. Qualified bidders may also create custom watchlists.

• On Tuesday, January 22, the WTB conducted a mock auction, which will allow qualified bidders to familiarize themselves with the FCC Auction System. Only qualified bidders will be permitted to participate in the mock auction.
  

• Once winning bids are announced (either after Auction 73 or Auction 76) and winning bidders are announced, winning bidders will have 10 business days to file a long-form application (FCC Form 601) and make down payments for all of the licenses it won.

Mike: Who are some of the major bidders?

USA Today has published an interesting article titled Google could cause a stir in FCC's airwaves auction and, in the article, some of the leading bidders and their likely strategies are listed.

Let's take a quick look at some of the major bidders (in alphabetical order) and their expected bidding strategies. For additional detail be sure to read the USA Today Article.

Mike: Why is AT&T going after public-safety spectrum? Am I missing something?



Mike: Is this National Spectrum? As opposed to regional?



Mike: Can you give us some background on the auction to date?

The 26th round finished yesterday (Friday - Feb. 1, 2008) afternoon - here's a quick update from the FCC auction site:

• Bidding Rounds to Date: 26
  
• Bid totals to Date: $18,554,080,600
  
• The A and B-Blocks have been getting most of the attention lately:
• The Los Angeles A-Block leads the A's with a current bid of $580,268,000.
• The Chicago B-Block leads the B's with a current bid of $892,400,000.
• There has not been a C-Block bid since it passed the FCC reserve price on Thursday. The current C-Block bid is $4,713,823,000.
• The public safety D-Block has not had a bid in 25 consecutive rounds and is stuck at $472,042,000, well below the $1.3 Billion reserve price set by the FCC.
• E-Block bidding has been slow with the New York City E-Block leading at $178,897,000.
• 23 licenses had not registered a bid at the end of round 26, 19 of these 23 are in the E-Block.
  

Mike: Any personal observations and opinions on the auction?

• It looks (to me anyways) like the C-Block bidding may be done. Since the FCC reserve price of $4.6 Billion has been passed, the open-access that Google wanted is assured. We won't know who the winning bidders are until after the auctions have closed but I'd say Google is the current leading C-Block bidder.
  
• Right now it does not look like the D-Block will meet the $1.3 Billion reserve price and will end up being re-auctioned by the FCC.
• A number of E-Block licenses will not meet minimum bids and will also be re-auctioned.
  
• The FCC had set an original goal of $10 Billion for the auction. With current bids totaling over $18 Billion, it appears the auction (from the FCC's perspective) will be a success.
  

Bidding is closed for the weekend with round 27 starting Monday (Feb. 4, 2008) morning.

Mike: What's the best way to stay updated?

If you want to stay updated - the FCC Auction 73: 700 MHz Auction Summary page lists, among other things, results of the auction after each round. You can also watch my blog!

Mike: When will we know the winners?

The auction will likely last a couple of months so we won't know the winners until then. We should start to see products from the winning bidders that use the spectrum sometime next year.