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Interoperability: Who Pays for D Block Radio Spectrum?

FCC considers options for national interoperable public safety radio network.

Interoperability: Who Pays for D Block Radio Spectrum?
Illustration by Tom McKeith
In spring 2008, the FCC sought bids on a portion of the radio spectrum known as the "D Block," which is intended to provide a nationwide platform for an interoperable public safety radio network that would implement the 9/11 Commission's recommendations.

The commission advocated construction of a nationwide radio network that would allow interoperable communication by first responders at the incident command level. The D Block auction was conceived to implement this recommendation. As originally contemplated, the auction winner would secure the right to share this designated public safety spectrum with commercial mobile telephone companies when the public safety radio spectrum wasn't being used by first responders.

Commercial companies would pay for the right to use this spectrum on a nonpriority, pre-emptive basis. Under this approach, commercial carriers could use the D Block spectrum unless it was required by first responders. If first responders needed the spectrum, private users would immediately be precluded.

The revenue would in turn help pay for the construction of a proposed nationwide public safety radio network. Unfortunately the D Block auction didn't generate the minimum required bids, and the network plans were left in limbo. Many observers felt the auction rules and underlying assumptions were flawed.

Rep. Edward Markey, D-Mass., noted in a March 18, 2008, press release that policymakers should review the auction's high reserve price. Markey also questioned the legal authority for the public-private partnership envisioned by the original D Block auction rules, the rigorous build-out requirements and the penalties associated with a failure to fulfill license conditions.

Thus before revisiting the D Block auction process, the FCC voted on May 14, 2008, to release a notice of proposed rulemaking (NPRM) to solicit comments on how the process could be improved. The notice appeared in the Federal Register on May 21, 2008. The FCC announced that written comments on the NPRM were due June 20, 2008, and reply comments were due July 7, 2008.

Overall the NPRM indicates the FCC is willing to reconsider the current public-private approach to D Block spectrum sharing and to adopt a different approach, provided a substitute funding mechanism can be found to support the project's construction.


New Funding Approaches

The NPRM welcomed comments on a variety of new approaches to the design, operation and funding of the proposed D Block public safety network. Among its more controversial financial suggestions, the FCC invited comments on whether the proposed public safety network should be financed by a system requiring mandatory financial commitments from local first-response agencies:

"Should we require the purchase of a minimum number of minutes, and if so, on whom and in what way would this obligation be imposed? We seek comment on whether any such obligation should be conditioned on the availability of government funding for access, for example, through interoperability grant money from the United States Department of Homeland Security, and whether we should require public safety users to pay for access with such money."

Requiring local governments to pay for a federally conceived program has long been disfavored by local public officials. Without federal funding, local governments are unlikely to support a mandatory local-funding obligation to build the network. Though this is a curious approach to financing, it indicates the FCC's willingness to consider many different funding mechanisms for the project.

It was surprising that the agency also invited comment on the desirability of imposing restrictions on traditional sources of network financing. The FCC said essentially that capital or operational funding mechanisms for the public safety broadband licensee involving private-equity firms or other commercial or financial entities would not be permitted.

Private funding has historically built every major public improvement - from highways and bridges to dams and water tunnels. To exclude traditional private-funding sources from financing a proposed nationwide public safety radio network would appear shortsighted and counter to historical precedent.

Though the FCC is prepared to exclude certain funding sources as a method of financing the network, it also appears willing to consider heretofore untapped revenue sources. In particular, the FCC has signaled a willingness to tap into the considerable resources of the Universal Service Fund (USF), according to the NPRM.

The USF was established by the federal government and is funded largely by payments collected on monthly telephone bills. Traditionally the USF has been used to provide or subsidize phone service for the elderly and poor to help fund telephone service in rural communities and pay for Internet connections used by schools. The fund has not previously been a major source of funding for public safety infrastructure.


Developing the Network

Beyond funding, the NPRM explores new options for physically developing the network. Until the NPRM was issued, it was generally understood that given the undertaking is nationwide, the federal government would play the central role in developing the country's network. However, the FCC has called this notion into question. The FCC opened the door for a greater state role in constructing the network by seeking comments on whether providing a broadband network might be more effective and efficiently accomplished by letting states coordinate the participation of public safety providers in their jurisdictions.

In raising the issue for a larger state government role, the FCC asked if state governments are better situated to address implementation challenges that cross public safety jurisdictions (e.g., coordinating use by sheriffs' departments in neighboring counties) and intrajurisdictional challenges, such as coordinating use among police and fire departments.

The FCC's willingness to consider a large state role might simply be a "stalking horse" designed to shift a greater portion of the network's construction funding obligation to the states. Despite the FCC's willingness to consider a larger role for the states, some notable problems in developing public radio systems in individual states exist, such as cost overruns, delays and coverage gaps. These problems suggest the public will be better served by preserving the federal government's central role in developing this complex national undertaking.

For a discussion of problems encountered by New York and Pennsylvania in developing public safety networks, see the December 2006 report by the New York state comptroller, Statewide Wireless Network - Briefing Document for State Officials available at the Web site.

The NPRM ventured further into uncharted territory when it invited comments on how the operational elements of the proposed network should be defined. The NPRM asked whether the network's operational characteristics should be specified in advance or whether bidders should be free to decide what operating components are in the best interest of first responders. This is a marked departure from the traditional procurement process, whereby a sponsoring public agency carefully defines the operational elements and performance criteria for the radio system it's interested in purchasing.

It's difficult to appreciate how this somewhat casual approach to developing a strong interoperable nationwide public safety network will produce the desired result. Leaving bidders free to define the operational elements of the network will likely produce vastly different proposals that will be difficult to evaluate and compare. Established practice suggests it is preferable to carefully articulate the features required of a network and provide a consistent framework for the evaluation of competing proposals.

Curiously the NPRM also appears to downplay some of the "site hardening" lessons learned from man-made disasters, such as 9/11 and natural disasters, like Hurricane Katrina, and the recent earthquake in China. For example, in the FCC's June 2006 independent panel report examining Katrina's impact on communications networks, the Katrina panel recommended radio sites be hardened with robust backup sources, redundant backhaul options and secure backup cache of critical components. However, the NPRM appears willing to back away from these recommendations.

The NPRM expresses the FCC's willingness to consider backup power and site-hardening requirements for the nation's public safety network that are only as stringent as those applied to conventional wireless phone networks. The NPRM asked: "Should we simply provide that the network must meet the same requirements regarding backup power applicable to commercial mobile radio service providers, given that these requirements were themselves established to meet homeland security and public safety goals?"

There are several problems with this approach. First, the FCC's current backup power rule for commercial wireless providers is now in court and could be overturned or revised. Second, any reduction of the requirements for site hardening and backup power would appear to undermine a core premise of such a network, which is to ensure its availability during a national emergency. It's difficult to imagine the FCC would propose, much less adopt, a change to the D Block auction process that could potentially make the resulting public safety network more vulnerable to outages.


Intriguing Options

Although some ideas floated by the FCC are potentially troubling, some are intriguing. For example, to its credit, the FCC proposed to integrate satellite technology into a new, more futuristic public safety radio network. The added redundancy that satellite links could provide to a terrestrial-based network is definitely a step in the right direction, assuming the cost of satellite-accessible handsets can be reduced.

The FCC's goal of encouraging new thinking with the development of the network is also reflected in the agency's request for comments on the fee structure that would be used to access the network.

Because of the unique public safety objectives and the need to secure financing to construct the network, it might be prudent to control fees by employing a classic "public-utility" fee-setting mechanism. That is, the rates charged to users could be capped at an amount that will give the D Block auction winner an investment-grade rate of return (thus securing a fair profit and access to construction capital), and simultaneously keeping public-user costs to a minimum. Using a public-utility fee structure could control or cap fees in a way that advances the interests of all involved parties.

In a particularly dramatic example of a clean break from its previous approach, the FCC expressed a willingness to consider developing a de facto nationwide network based upon interconnected regional networks.

But without some compelling reason, it would likely be counterproductive to discard the nationwide footprint originally envisioned for the D Block public safety radio network and to replace it with a costlier piecemeal network cobbled together across diverse regions. Such a lack of cohesiveness would likely increase overall design costs, increase the cost of procuring equipment by reducing economies of scale and likely result in new challenges when seamlessly connecting regional networks.

The FCC's May 2008 NPRM for the D Block public safety radio spectrum re-auction comprised more than 100 pages of single-spaced type. In addition to the concepts discussed herein, the NPRM outlined dozens of other intriguing new approaches to the network's design, funding and construction. The best hope now for a new nationwide public safety network rests in the viability and originality of the new ideas submitted by the public to the FCC and the FCC's commendable and apparent willingness to thoughtfully consider the best of these new ideas.

David L. Snyder is an attorney concentrating in the development of cellular, fiber-optic and public safety radio networks. He is a founding partner of Snyder & Snyder, a law firm based in Tarrytown, N.Y. For more information on the firm or to contact Snyder, please visit