The Regulation

Last year, the FCC attempted to create a national public safety broadband network. It assigned to a nonprofit licensee 12 MHz of public safety spectrum in the 700 MHz band, and held an auction for another 12 MHz of spectrum. The winning bidder of that commercial license was then expected to form a public-private partnership with the public safety nonprofit to deploy a national network that could be shared by both first responders and commercial users. Unfortunately, there was no successful bidder in the auction. The FCC now seeks comments on how it can revamp its plan to achieve a national network.

Our Findings

• While we don't endorse the idea of a public-private partnership, we suggest some changes to the plan that will hopefully allow a successful bidder to emerge.

• The terms of the public-private partnership would be governed by a Network Sharing Agreement (NSA) to be negotiated by the winning bidder and the nonprofit. The value of winning the commercial license, therefore, depended completely on the terms of the NSA, which was to be negotiated after the auction. This arrangement created a crippling amount of uncertainty. In essence, interested parties were being asked to bid on a proverbial pig in a poke. As a result, it is not surprising that there was ultimately no winning bidder in the auction for the commercial license.

• Not only did potential bidders not know the terms of the Agreement to which they would be bound, but they could not be sure that they would be able to negotiate terms that would justify their investment.

• Failure to reach an agreement would result in severe penalties-potentially tens of millions of dollars-for the winning bidder. The nonprofit, however, would not face any penalties if an agreement could not be reached, a state of affairs that arguably creates uneven bargaining positions.

By the Numbers

• A 2004 survey by the U.S. Conference of Mayors found that about a quarter of cities polled did not have a communications link between their police and fire departments. More than 80 percent reported that they did not have the capability to communicate with FEMA, the FBI, and other federal agencies. Forty-nine percent of cities said they are not interoperable with the state police, and percent reported an accident within the preceding year in communications made response difficult.

• Carnegie Mellon engineering professor Jon Peha has calculated that the number of antennas deployed by public safety entities nationwide correlates less with population or geographic area than with the number of political jurisdictions. This means that more antennas are put up and more spectrum is used than is necessary to cover an area simply because local agencies and jurisdictions do not coordinate to share antennas and spectrum. Peha also points out that "the number of antenna towers, base stations, and repeaters used by a public safety agency are largely independent of the number of responders using that agency's wireless system where this number does not exceed 100 users and 85% of U.S. public safety agencies support no more than 100 users." In contrast, a commercial network operator will not employ more spectrum or equipment than necessary to produce a given amount of communications capacity at a certain quality level.

Recommendations

• The ideal solution would be to first negotiate the Agreement in detail, and then auction the license. It might be possible to do just that through a negotiated rulemaking under the Negotiated Rulemaking Act. 

• The Commission could establish a negotiation committee composed of the current members of the nonprofit and the representatives from potential bidders in the auction. The Commission would also have representation on the committee. Once the parties have negotiated in detail the terms of the public-private partnership (what would have been the NSA), the agreement would be reported to the Commission. If it is satisfied with the proposal, the Commission could then adopt it-with detailed specificity about the rights and responsibilities of the nonprofit and the commercial licensee-as part of new rules governing the licenses. The commercial license could then be auctioned with the understanding that the winning bidder would be subject to the negotiated agreement.