Wednesday, May 21, 2008

The Clever D Block Initiative

In the bandwidth feeding frenzy that was the recent 700 MHz spectrum auction, one small bank of frequencies went unsold. Sadly, D Block did not meet its reserve price and remains assigned to the UHF analog TV channels scheduled for shutdown next February. What makes this sad is that of all the new possible applications for the 700 MHz band, D Block was slated for perhaps the most important role of all in an ingenious plan to bootstrap a new nationwide public service network. So clever was this plan that I think it deserves another look. It might just be the blueprint for how to get other things we want in this less than robust economy.

The origin of the D Block idea goes back to the horrific morning of September 11, 2001. As the Twin Towers came crashing down in New York City, we were shocked to learn that the loss of life was exacerbated by an electronic communications fiasco. Firefighters couldn't even coordinate with police officers because their radios operated on different frequencies. What's more, this problem permeates the entire nation. Public safety two-way radio is an ad-hoc service with no national network. That's what D Block is intended to fix. Combining the D Block frequencies with the current public safety frequencies offers the opportunity to coordinate a suite of broadband and narrowband services that all police, fire and rescue units could access.

Seems like such a good idea should have been implemented already. But some six and a half years after 9/11, there is still no nationwide public safety network. Why? Building out a whole new network is an expensive proposition. The cost has been estimated to be some $6 to $7 billion. In the big scheme of things, it seems like this amount of money could be included in our federal budget without causing a noticable bump. But in these times of big deficits and slow economic growth, it's hard to get broad bipartisan support for even a project as worthy as this one.

So here's the clever part. How would you like to get that brand new public safety network for free? Well, at least free to the taxpayers. Before you jump up and say that's impossible, take a look at what the FCC tried to pull off in Auction 73. The A, B, C, and E Block licenses were sold to commercial entities for cash on the barrel head to the tune of $19 billion for the Federal Treasury. But D Block was held back. In order to win a nationwide license for this spectrum, bidders had to commit to creating that nationwide public safety network. Why would they do that? Because in consideration for building the public safety network, the winner would get to share the spectrum for commercial gain.

The 10 MHz D Block and the existing 10 MHz public safety spectrum in the 700 MHz band were paired to create a public/private partnership. The reserve price was set at $1.3 billion and the doors swung open to prospective bidders. Everything sold quickly except, you guessed it, D Block. The lone bid was for about a third of the reserve price. Major carriers wanted nothing to do with the idea. A dejected Federal Communications Commission is now soliciting public comments on how to rebid the shunned D Block.

Alternatives include reapproaching Congress for the funds, perhaps delaying any action to see if a new administration might be warmer to the idea. Or simply forgetting the idea of a national public safety network and selling off D Block for commercial usage. But I say not so quick. There may still be a way to get that new network for "free."

It comes down to a matter of incentives. The fact that the D Block auction failed simply means that the terms and conditions weren't attractive enough in this economic environment. The idea still has merit and it could well be the right answer at the right time. Let's face it, as a nation we're strapped. Between skyrocketing oil prices, plummeting housing prices, a credit crunch and anemic economic growth, a public/private partnership might be the most expeditious way to get things moving. But what incentives will do the trick?

The variables to play with are the reserve price, any lease costs for commercial use of the existing public safety spectrum, public financing of the buildout, preferred tax treatment, and perhaps first crack at any new spectrum that opens up. The idea is to sweeten the pot with incentives that don't result in out of pocket expense to the taxpayers. Public financing wouldn't necessarily cost us anything if it were just a matter of ensuring that the monies are available to loan for such a large project at reasonable market rates.

If this approach still isn't enough to make it happen, then a fallback position would be to keep the partnership but have the public kick in some cash. That's not quite as desirable but it is a way to privatize at least part of the massive effort involved in building and running such a system. Can you think of other ways to make this work? If so, make your voice heard to the FCC during this public comment period.

I'd like to see this very clever plan work out for the public safety network because we certainly can use it. Both 9/11 and Hurricane Katrina taught us that big disasters can come upon us with little or no warning. We need to get prepared for whatever the next challenge is. Beyond that, there is a model here that might work to solve other problems. I'm thinking crumbling infrastructure, a shortage of domestic energy and water, even more of a stretch into education, employment and crime. The right incentives might just unleash the proven power of business on some of these seemingly intractable public sector needs.

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