Order Code RL34054
Public-Private Partnership for a Public Safety
Network: Governance and Policy
Updated September 28, 2007
Linda K. Moore
Analyst in Telecommunications and Technology Policy
Resources, Science, and Industry Division

---

Public-Private Partnership for a Public Safety Network:
Governance and Policy
Summary

This report summarizes salient points of the FCC rules regarding the creation
of a public-private partnership to build and manage a national communications
network for public safety use. The Communications Act of 1934, as amended,
empowers the FCC to set rules for auctions and to take steps to ensure the safety of
the public. The FCC has used this authority to create a governance structure allowing
a Public Safety Broadband Licensee to share spectrum rights with a commercial
enterprise and to collaborate in the construction and management of a shared
network. The two licensees and the network will operate according to requirements
set out by the FCC as part of its rulemaking for the upcoming auction of frequencies
within the 700 MHz band. These frequencies are being vacated by television
broadcasters in their switch to digital technologies.
As mandated by the FCC, the partnership is to build a shared network on
spectrum capacity assigned to two separate entities. One partner will be a not-for-
profit corporation, created for this purpose, that will hold a Public Safety Broadband
License. The other partner will be the winning bidder for a national license, known
as the D Block, that will be offered as part of the 700 MHz auction. Both licensees
will be required to conform to rules set by the FCC in creating a Network Sharing
Agreement (NSA). The NSA will in effect be the business plan and the contractual
foundation for the shared network.
The FCC has assigned itself the role of champion and protector for public safety
interests, nationwide emergency communications, and interoperable networks.
Under the umbrella of the Communications Act, it will undertake to monitor and
regulate the actions of the Public Safety Broadband Licensee and the companies
formed to manage the obligations of the D Block license holder. Congressional
oversight of the public-private partnership therefore is placed squarely within the
jurisdiction of the committees dealing with telecommunications.
There appears to be no policy in place to bridge the gap between the FCC rules
for the network sharing agreement and the laws passed by Congress that direct the
Office of Emergency Communications, within the Department of Homeland Security,
to put in place a national capacity for emergency communications and
interoperability. These laws notably include the 21st Century Emergency
Communications Act of 2006 (P.L. 109-295, Title V, Subtitle D) and the
Implementing Recommendations of the 9/11 Commission Act of 2007 (P.L. 110-53).
Congress may wish to evaluate whether FCC rule making is an adequate
mechanism for creating a structure to govern a shared network that will serve the
nation’s first responders and meet other public safety needs. Another option that
could provide governance of a shared network, a Congressionally-chartered corporate
structure, is also discussed in this report. Although the benefits of a federal
corporation must be weighed against its disadvantages, one of the benefits is the
opportunity to create joint jurisdiction for Congressional oversight.

---

Contents
Creating a Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Regulatory Governance Through Service Rules . . . . . . . . . . . . . . . . . . . . . . 2
Public Safety Broadband License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Selection and Establishment of the Public Safety Broadband Licensee . . . . 4
Right to Revoke License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Duration of License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Obligations of the Public Safety Licensee
. . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Commercial Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
D Block License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Minimum Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Assignment of License: Network Sharing Agreement . . . . . . . . . . . . . . 7
Assignment of License: Corporate Structure . . . . . . . . . . . . . . . . . . . . . 8
Cancellation of License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Duration of License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Network Build Out and Performance Levels . . . . . . . . . . . . . . . . . . . . . . . . . 9
Build Out Benchmarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Performance Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Network Sharing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FCC Network Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Other Obligations and Stipulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Duration of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Modification of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Rules for Managing Spectrum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Rebanding Public Safety Spectrum at 700 MHz . . . . . . . . . . . . . . . . . . . . . . . . . 13
Relocating Public Safety Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Costs Associated With the Relocation . . . . . . . . . . . . . . . . . . . . . . . . . 14
Freeze on New Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Determining Reimbursement of Costs . . . . . . . . . . . . . . . . . . . . . . . . . 15
Paying Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Wideband Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Congressional Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Governance through Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Governance by a Federal Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

---

Public-Private Partnership for a Public
Safety Network: Governance and Policy
This discussion of governance for a public-private partnership arises from
preparations by the FCC to auction 62 MHz1 of radio frequencies in the 700 MHz
band of radio spectrum, commencing January 16, 2008, in conformance with
requirements in the Deficit Reduction Act.2 The FCC has issued rules, in a Second
Report and Order,3 concerning the allocation of this spectrum, the upcoming auction,
the final disposition of spectrum assigned for public safety use, and the creation of
a public-private partnership to build and operate a nationwide network for public
safety users, with agreements for sharing spectrum.
The decision to create a partnership is centered on two conclusions, endorsed
by the Federal Communications Commission (FCC) and the majority of stakeholders:
1) that a network with national coverage would meet public safety needs for robust
communications capabilities, information, and interoperability; and 2) that sharing
spectrum with commercial users would benefit public safety by providing new
sources of funding,4 economies of scale in building the needed network, and access
to additional spectrum in times of large-scale emergencies, among other benefits.
Although debates continue concerning public safety spectrum and network needs,
these will not be discussed in this report.5
1 Spectrum allocations are assigned within bands that are divided into bandwidths or
channels based on assigned frequencies. Electromagnetic radio waves are usually identified
by frequency, measured in cycles per second, or hertz. Standard abbreviations for
measuring frequencies include kHz — kilohertz or thousands of hertz; MHz — megahertz,
or millions of hertz; and GHz — gigahertz, or billions of hertz. The 700 MHz band plan
(698 MHz to 806 MHz) refers to those channels that are assigned to technologies that
transmit signals at speeds within or near 700 million cycles per second.
2 P.L. 109-171, Sec. 3003 (a) (2).
3 FCC, Second Report and Order, July 31, 2007, WT Docket # 96-86. The full notice was
released August 10, 2007; the Public Notice for comment on proposed auction rules was
released August 17, 2007 (AU Docket # 07-157).
4 Cyren Call Communications Corporation, in ex parte comments filed with the FCC on June
4, 2007, set the cumulative capital expenditure for building a public-private network at $18
billion, of which roughly a third of the cost would be for enhancements for public safety use.
An estimate from Northrop-Grumman Corporation places the cost at $30 billion, when
service applications are included. (Statement by Mark S. Adams, Chief Architect Networks
and Communications at WCA 2007, Washington, DC, June 14, 2007.) These estimates do
not include the cost of radios.
5 For a discussion of public safety communications needs, see CRS Report RL33838,
Emergency Communications: Policy Options at a Crossroads, by Linda K. Moore.

---

CRS-2
Creating a Partnership
Since it initiated auctions in 1994, the FCC has consistently provided auction
rules that allow it to establish financial requirements for potential bidders, to set aside
licenses for specific classes of bidders, to provide economic incentives, and other
tools for managing the auction process.6
In addition to setting up rules for the auction process, the FCC also establishes
and enforces service rules for the use of licenses. Among the provisions of service
rules for advanced wireless services there is typically a requirement that licenses be
put to use within a specific number of years. Service rules can also be used to specify
technologies, uses, or users. Over the years these rules have often focused
specifically on cell phone networks and their technologies, with the goal of providing
widely accessible cell phone service. For the upcoming auction, the FCC has
expanded the scope of its service rules to include a plan that mandates spectrum
sharing between a public safety spectrum license holder and a commercial licensee.
The commercial licensee will be obligated to build a network to satisfy public safety
needs as well as those of its commercial customers.
Regulatory Governance Through Service Rules
The FCC has followed past procedures in the creation of service rules to
establish the structure for a public-private partnership as part of its preparation for
the auction of licenses in the 700 MHz band. In its review of background and
discussion of its decisions, in the Second Report and Order, the FCC has tried to
anticipate the problems that might arise in building and operating a shared network
and to preclude difficulties by providing a regulatory framework that sets and
enforces rules and requirements. The regulatory framework for a public-private
partnership comprises sets of binding requirements for organization, performance,
and compliance for three interlocking components:
! Public Safety Broadband Licensee holding 10 MHz of spectrum at
700 MHz.
! Commercial partner, the winning bidder for Block D, which is a
national license for 10 MHz of spectrum at 700 MHz.
! Network Sharing Agreement (NSA) that the two licensees are
required to create in order to build and manage a shared network.

As elaborated in the rules, all three of these components must be tailored to
meet guidelines set by the FCC. Contracts and other legal agreements must be
approved by the FCC;7 compliance is subject to oversight;8 and disputes are to be
6 See CRS Report RL31764, Spectrum Management: Auctions, by Linda K. Moore.
7 As stipulated in the rules covering both of the licensees and the Network Sharing
Agreement. See discussion in text of this report.
8 FCC, Second Report and Order, released August 10, 2007, paragraph 523.

---

CRS-3
resolved through the FCC, in accordance with the Communications Act of 1934, or
through litigation.9
The following overview of the FCC’s Second Report and Order, and subsequent
orders, highlights salient issues for policy makers as regards public safety
communications. This report is not an exhaustive study of all provisions that pertain
to public safety nor does it cover other parts of the order dealing with the upcoming
auction.10
Public Safety Broadband License
Congress directed the FCC to allocate 24 MHz of spectrum within the 700
MHz band for public safety use as part of the transition from analog to digital
television, which would free these airwaves.11 The initial planning for public safety
use of frequencies at 700 MHz began in 1997 and concluded with the submission of
the final report of the Public Safety National Coordination Committee (NCC) in
2003. The NCC operated as a Federal Advisory Committee12 to the FCC, developing
technical and operational standards for the 700 MHz band and structuring the
management of licenses through regional committees. The existing governance for
these channels is made up of 55 Regional Planning Committees (RPCs), loosely
coordinated through the efforts of the National Public Safety Telecommunications
Council (NPSTC).13
The band plan originally intended to carry public safety radio traffic at 700 MHz
has been revised to create two different licensing approaches. With the support of
NPSTC14 and others, the FCC has negotiated modifications to the band plan that
reflect changes in technology and public safety needs. One block of the revised band
plan will be for narrowband (primarily voice) applications and the other for
broadband applications. Channels have been reassigned to support narrowband
operations in 12 MHz of paired spectrum, at 769 - 775 MHz and 799 - 805MHz.15
These channels will be administered by states and localities through the existing
9 Ibid., paragraph 529. Possible recourse for failure to complete a Network Sharing
Agreement are discussed in paragraphs 508 and 509.
10 See CRS Report RS22218, Spectrum Use and the Transition to Digital TV, by Linda K.
Moore.
11 The Balanced Budget Act of 1997, 47 U.S.C. § 309 (j) (14). For a discussion of the DTV
transition see CRS Report RL34165, The Transition to Digital Television: Is America
Ready? by Lennard G. Kruger.
12 The role and organization of Federal Advisory Committees is addressed in CRS Report
RL30260, Federal Advisory Committees: A Primer, by Stephanie Smith.
13 See [http://www.npstc.org/index.jsp]. Viewed August 28, 2007.
14 See, for example, NPSTC position paper on 700 MHz, released July 6, 2007, at
[http://www.npstc.org/documents/NPSTC%20Public%20Safety%20700%20MHz%20Po
sition%20Paper%2007052007.pdf]. Viewed August 28, 2007.
15 Second Report and Order, paragraph 322.

---

CRS-4
regional committee structure. All RPCs with approved band plans are required by
the FCC rule making to submit amended band plans.16 The networks built on the
narrowband frequencies will be financed through long-standing procedures that use
a combination of local, state and federal funds.
Spectrum will be allocated for broadband communications (high speed data
transmission, video, and voice) in 10 MHz of frequencies at 763 - 768 MHz and 793
- 798 MHz.17 These frequencies will be assigned to a Public Safety Broadband
Licensee that will also be responsible for the administration of two guard bands, each
covering one megahertz, at 768 - 769 MHz and 798 - 799 MHz.18 Guard bands are
created to act as buffers against interference from other operations on nearby
frequencies. The Public Safety Licensee will be obligated to meet a number of
requirements. These requirements focus mainly on three areas: the formation of a
not-for-profit corporation to hold the license; the responsibilities of this non-profit
organization — including establishing standards and participating in the creation of
the Network Sharing Agreement; and compliance. The cost of building the national
network using the spectrum held by the broadband licensee will be shouldered by its
commercial partner, although there could be system enhancements or other
components funded by the public sector.
In order to accommodate the new band plan, some public safety network
operators will have to modify equipment already purchased for use on 700 MHz
frequencies. Some of the cost of these changes will be covered by the commercial
licensee.19 (Discussed below, in section on 700 MHz rebanding.)
Selection and Establishment of the Public Safety Broadband
Licensee
The FCC will select the Public Safety Broadband Licensee. To qualify, the
applicant must be a not-for-profit corporation, either pre-existing or formed for the
purpose of becoming the licensee. No commercial interests will be permitted, either
in the holding of the license or its management. The applicant must be “broadly
representative” of public safety entities. As part of its application, the prospective
licensee must provide written certification from at lest ten geographically diverse
state and local government entities attesting to the applicant’s acceptability.20
Representation on the Board of the Directors is to consist of members from named
organizations representing public safety21 and at-large members selected jointly by
16 Ibid., paragraph 346.
17 Ibid., paragraph 322.
18 Ibid., paragraph 322.
19 Ibid., paragraph 322.
20 Ibid., paragraph 373.
21 Revised list (September 24, 2007) provides for one voting member each from the
Association of Public-Safety Communications Officials - International (APCO), the
National Emergency Number Association (NENA), the International Association of Chiefs
(continued...)

---

CRS-5
the FCC bureaux for Public Safety and Homeland Security and for Wireless
Telecommunications. In the Second Report and Order, the FCC provided a list of
11 organizations designated to appoint board members and allowed for two at-large
members, creating a board of 13 members.22 In a later Order on Reconsideration,23
the FCC changed the composition of the board, adding three representatives from
named organizations,24 eliminating one representative,25 and increasing the number
of at-large members from two to four.

As part of the FCC’s oversight, the selected licensee will be required to file
quarterly financial reports with the FCC, with copies to the chiefs of the Public
Safety and Homeland Security Bureau and the Wireless Telecommunications
Bureau.26 The licensee to be selected must meet criteria for its articles of
incorporation and bylaws, as specified in the Second Report and Order rules.27 The
FCC has judged that it is appropriate for it to provide, as needed, “extensive”
oversight to ensure that these corporate governance stipulations are met.28
The FCC will select the licensee after a public notice has been issued by the
Public Safety and Homeland Security Bureau setting out the baseline requirements
described in the rule making and explaining the procedures for applying for the
public safety license.29 The required notice, released September 10, 2007, sets a
deadline of October 10 to submit applications. In addition to meeting the
requirements set out in the Second Report and Order, applicants must provide a
description of qualifications. Examples of relevant qualifications are: experience
with public safety radio operations; knowledge of FCC rules; ability to work
cooperatively and impartially with all relevant parties; expertise in managing a large-
scale, multifaceted initiative; and accounting and auditing capabilities.30
21 (...continued)
of Police (IACP), the International City/County Management Association (ICMA); the
National Governors Association (NGA); the National Association of State EMS Officials
(NASEMSO); the Forestry Conservation Communications Association (FCCA); the
American Association of State Highway and Transportation Officials (AASHTO); and the
International Municipal Signal Association (IMSA).
22 Second Report and Order, paragraph 374.
23 FCC, Order on Reconsideration, September 24, 2007, WT Docket No. 96-86.
24 These are FCCA, AASHTO and IMSA.
25 National Public Safety Telecommunications Council (NPSTC).
26 Second Report and Order, paragraph 377.
27 Ibid., paragraph 375.
28 Ibid., paragraph 376.
29 Ibid., paragraph 380.
30 FCC, Public Notice, Public Safety and Homeland Security Bureau Solicits Applications
for the 700 MHz Public Safety Broadband License, September 10, 2007( DA 07-3885) at
[http://fjallfoss.fcc.gov/edocs_public/attachmatch/DA-07-3885A1.pdf]. Viewed September
12, 2007.

---

CRS-6
Right to Revoke License. The FCC considered a number of options to
assure that the public safety license holder would receive the level of services needed
for a robust emergency communications network. Suggestions that the public safety
licensee be able to request the reassignment or re-auction of the D Block license, if
cooperation and progress was deemed unsatisfactory, were rejected.31 The FCC has
reserved for itself the right to re-assign the commercial license, if necessary, under
circumstances detailed in the rule making.32 It also has asserted its authority to
revoke the license awarded to the Public Safety Broadband Licensee if it fails to meet
its obligations under the Network Sharing Agreement or otherwise does not comply
with FCC rules and regulations.33
Duration of License. Unless revoked, the public safety license will be valid
for ten years, effective February 17, 2009, the scheduled date on which analog
television broadcasts on the 700 MHz band must end. The license is renewable.34
Obligations of the Public Safety Licensee

The selected public safety licensee, having met the initial requirements for
qualification, will have additional tasks set for it by the FCC. General
responsibilities include:35
! Negotiate a Network Sharing Agreement with its commercial
partner, the qualifying, winning bidder for the D Block.
! Administer access to the network for public safety users, including
assessment of usage fees.
! Represent the interests of its public safety constituents that utilize
the network.
! Negotiate purchase agreements with vendors that provide savings
through economies of scale, or other benefits. This responsibility
does not limit the licensee’s right to determine and approve
equipment specifications.
! Approve, in consultation with D Block licensee, the equipment and
applications that may be used on the network. The licensee has the
sole authority to determine the acceptability of equipment or
applications. State and local entities must seek approval from the
licensee before linking their systems or equipment to the broadband
network.
! Coordinate stations accessing narrowband and broadband
frequencies.
! Oversee and implement the relocation of some users required by
rebanding of parts of the 700 MHz band.
31 Second Report and Order, paragraph 509.
32 Ibid., paragraphs 509 and 523 - 526.
33 Ibid., paragraph 527.
34 Ibid., paragraph 385.
35 Ibid., paragraph 383.

---

CRS-7
! Decide, at its sole discretion, whether or not to allow federal public
safety agencies access to the broadband network.
! Review requests for construction or use of wideband networks in
areas that will not be served by the new broadband network.
(Wideband refers to enhanced narrowband systems that allow for
some data transmissions in addition to voice communications.)
! Facilitate negotiations to build network sites on public land owned
by states or localities.
The Commercial Partner

The commercial partner in the public-private partnership will be the winning
bidder for Block D, one of the licenses to be offered at the auction of 700 MHz band
licenses in January 2008. The FCC has ruled that eligible bidders for Block D that
qualify as small businesses under existing FCC rules will be entitled to a bidding
credit (a reduction in the amount due on the wining bid) of 15% for companies with
average attributable gross revenues of $40 million in the past three years and 25% for
companies with average annual earnings of no more than $15 million.36 Many start-
up companies could qualify as designated entities under this designation.
D Block License
The D Block will be a single, nationwide license for frequencies at 758 - 763
MHz and 788 - 793 MHz, a total of 10 MHz.37
Minimum Bids. The FCC has directed the Wireless Telecommunications
Bureau to set reserve prices for each block of licenses to be auctioned.38 It suggested
that the reserve price for the D Block be set at $1.33 billion. Based on winning bids
for a previous auction, the D Block has a presumed value of $1.7 billion but the FCC
rules recommended that the amount be discounted to reflect the additional service
rules and requirements for the D Block license holder.39 The rules state that the FCC
will re-auction licenses if reserve prices are not met during the January 2008 auction
process. This could include the D Block.40
Assignment of License: Network Sharing Agreement. The winning
bidder will not be assigned the D Block license until it has met specific requirements
established by the FCC such as completion of a Network Sharing Agreement with the
36 Ibid., paragraph 536.
37 Ibid., paragraph 65.
38 Ibid., paragraph 304. Comments were sought by the Wireless Telecommunications
Bureau in a Public Notice dated August 17, 2007 (AU Docket # 01-157). The suggested
reserve price for Block D is $1.33 billion.
39 Ibid., paragraph 305.
40 Ibid., paragraph 306.

---

CRS-8
Public Safety Broadband Licensee.41 The negotiations for the NSA are to begin on
either the date that the winning bidder files its long form application (post-auction,
the long form provides additional information pertaining to each license won at
auction), or the date the FCC grants the public safety license to the selected Public
Safety Broadband Licensee, whichever date is later. The FCC has required that,
within six months from that date, the NSA will have been completed by the
negotiating parties and approved by the FCC.42 The FCC also required a separate
agreement that grants the Public Safety Broadband Licensee 1) right of first refusal
if network assets are to be sold and 2) the option to purchase the network assets at
fair market value if the D Block license is cancelled or terminated.43
The winning bidder for the D Block is required to file a report with the FCC,
within ten days of the commencement of negotiations for the NSA, certifying that
good faith negotiations have begun and are being actively pursued. A timetable of
at least the first 30 days of negotiation meetings is to be provided at that time. After
three months, both licensees will begin to provide detailed monthly reports on
negotiations. The FCC may demand additional reports as needed. Two members of
the FCC staff are to be present as neutral observers at all stages of the negotiation.44
Assignment of License: Corporate Structure. Another requirement for
receiving the D Block license is the formation of separate legal entities, one to hold
the D Block license, one to own the network assets, and one to serve as an operating
company. The operating company will enter into agreements to lease spectrum rights
from the company owning the D Block and to lease secondary rights to the public
safety spectrum.45 These companies must be “bankruptcy remote,” as attested to by
bankruptcy counsel retained by the D Block license winner.46 A typical corporate
structure that would be bankruptcy remote could consist of a holding company and
subsidiary companies with the assets of each company protected from the possible
insolvency of any other company in the group. Other specific-purpose companies
might also be included within the corporate structure. All must be approved by the
FCC.
The commercial partner in the public-private partnership will therefore be a
corporate structure comprised of quasi-independent companies, each with a
designated function. These entities and any leasing or other commercial agreements
created to implement the partnership will be “subject to the Communications Act, as
amended, and the Commission’s rules and regulations.”47 The parties to this
corporate structure and its various components, as required or authorized by the FCC,
41 Ibid., paragraphs 314 and 448.
42 Measures to be taken if the agreement is not completed within six months are outlined in
the Second Report and Order, especially paragraphs 504 and 508.
43 Second Report and Order, paragraph 525.
44 Ibid., paragraphs 506 and 507.
45 Ibid., paragraph 520.
46 Ibid., paragraph 518.
47 Ibid., paragraph 518.

---

CRS-9
will have the responsibility to build out the shared network, as specified in the
Network Sharing Agreement and the FCC rule making.48
Cancellation of License. Failure to meet the obligations of the NSA,
network build out deadlines, or other rules established by the FCC could lead to the
revocation of all or part of the D Block license and its reassignment by the FCC.49
Duration of License. Unless revoked, the D Block license will be valid for
ten years, effective February 17, 2009, the scheduled date on which analog television
broadcasts on the 700 MHz band must end. As long as the licensee complies with
the rules established by the FCC, it will be eligible to apply for license renewal.50
Network Build Out and Performance Levels
The commercial corporation formed as required by the FCC will be fully
responsible for building the public safety network, using spectrum held by the public
safety licensee and the D Block license holder.51 This build out will conform to FCC
requirements and to specific requirements negotiated with the public safety licensee
in the Network Sharing Agreement.52 Modifications to these requirements may be
permitted, subject to approval of all parties concerned, including the FCC.53
Build Out Benchmarks. The FCC has established benchmarks for a
population-based build out. The first benchmark is four years from February 2009,
by which time the network will reach 75% of the national D Block license. By the
end of seven years (2016), 95% of the population, nationwide, will have coverage.
At the end of ten years (2019), 99.3% of the population is to be covered. Population
measurements will be based on currently available U.S. Census data.54 To bolster
coverage in rural areas, the D Block licensee is required to offer at least one handset
that includes an integrated satellite solution for public safety use.55
The D Block licensee must provide sufficient robustness in signal carriage to
assure that its population coverage requirements are met as well as the coverage and
availability requirements established in the NSA. To assure the FCC’s minimum
standards for coverage are met, it has required the NSA to include a build-out
schedule for major highways, interstates, and incorporated communities with a
48 Ibid., paragraph 519.
49 Ibid., paragraph 522.
50 Ibid., paragraphs 457-459.
51 Ibid., paragraph 366.
52 Ibid., paragraph 438.
53 Ibid., paragraphs 386 and 443.
54 Ibid., paragraph 437.
55 Ibid., paragraph 438.

---

CRS-10
population over 3,000.56 To monitor progress in build outs to specific areas, the
FCC further required an estimated cost for each area.57
The D Block licensee has the responsibility of confirming to the FCC that the
benchmarks have been met. Failure to meet benchmark deadlines could lead to
cancellation of the license.58
Performance Guarantees. The NSA is to establish requirements for service
to public safety users and for network performance and reliability. The D Block
licensee is prohibited by the FCC from discontinuing or degrading service to its
public safety customers unless the change has either been requested by the network
users or approved by the FCC. The commercial license holder must give thirty days
advance notice of any unrequested discontinuance or degradation of network
service.59
Network Sharing Agreement
The Network Sharing Agreement (NSA) is the keystone of the public-private
partnership and its rules are the contractual mortar that unites the two licensees.
Adherence to the agreement is a regulatory condition for both the commercial and the
public safety licensees.60 The FCC will review the NSA and must approve all of its
components.61 Although the FCC allows the two parties leeway in negotiating the
agreement, it has set various requirements, such as network coverage requirements
noted above, that must be included in the NSA. In particular the FCC has included
minimum standards for the network as part of the Second Report and Order.62
FCC Network Requirements
To assure that the network meets the needs of public safety, the FCC has
established a list of requirements that must be addressed through the NSA. These
are:
! Specifications for a platform that provides broadband mobile voice,
video, and data and includes current and evolving technologies that
have features for public safety users, as well as commercial uses.
! Specifications that assure communications interoperability across
agencies, jurisdictions, and geographic areas.
56 Ibid., paragraph 440.
57 Ibid., paragraph 453.
58 Ibid., paragraph 443.
59 Ibid., paragraph 521.
60 Ibid., paragraph 448.
61 Ibid., paragraph 364.
62 Ibid., paragraph 405.

---

CRS-11
! Sufficient signal coverage to meet public safety standards, such as
service reliability of 99.7% or better.
! Sufficient robustness to meet reliability and performance standards
of public safety, including features such as hardening of
transmission facilities and antenna towers to withstand harsh
weather and disaster conditions and back-up power to maintain
operations for “an extended period of time.”
! Sufficient capacity to meet the needs of public safety during
emergency situations and periods of heavy usage without degrading
service, for example by blocking calls or slowing transmissions.
The FCC’s expectation is that the network will use spectrum
efficient technologies to achieve this.
! State-of-the-art security and encryption technologies.
! Automatic prioritization of public safety communications over
commercial uses in real time, and prioritization of public safety
communications by type, with the highest priorities going to safety
of life and property, and to homeland security.
! Capabilities consistent with current and evolving operational needs
of public safety for specific features, such as push-to-talk, that meet
the specifications of the Public Safety Broadband Licensee.
! Operational control of the public safety network by the Public Safety
Broadband Licensee “to the extent necessary to ensure public safety
requirements are met.”
! Right of the Public Safety Broadband Licensee 1) to determine and
approve the specifications of public safety equipment that is used on
the network and 2) to purchase its own subscriber equipment from
any vendor.
! Provision, by the D Block Licensee, of at least one integrated
handset for public safety use that works on 700 MHz and satellite
frequencies.63
! Adoption of a common standard for nationwide broadband
interoperability that must be used by all public safety users that
participate in the network.64
Other Obligations and Stipulations
Guidelines and obligations are stipulated by the FCC in its rule making. Both
licensees must agree to act in good faith in their negotiations to create the Network
Sharing Agreement.65 Other components of the NSA covered by FCC rules include
the establishment of a fee structure and the duration of the agreement.
Fees. The FCC has ruled that all service fees must be specified in the NSA.
These fees would include fees for normal network service and for priority access to
commercial spectrum capacity in times of emergency. The FCC opines that the two
63 This and preceding bullet points are covered in Second Report and Order, paragraph 405.
64 Ibid., paragraph 364.
65 Ibid., paragraph 447.

---

CRS-12
licensees should be left to negotiate “reasonable rates” in good faith, and includes
examples of what it considers to be reasonable. These include expectations that the
fee structure will have “financial incentives for the commercial licensee” based on
the number of subscribers from the public safety sector and that priority access fees
will be structured to protect public safety participants from unforeseen or unbudgeted
payment obligations.66 Other guidelines for a reasonable pricing structure include
affordable rates that are priced in line with comparable commercial services, but at
lower rates for public safety.67 The FCC’s stated expectation is that the D Block
licensee, when negotiating fees with its public safety partner, will provide terms that
best serve the public safety goals established in the Second Report and Order. The
FCC invokes the tools available to it to ensure that NSA disputes are resolved, which
it can apply to assure that the fees charged meet its expectations of what is
reasonable.68
Duration of Agreement. The NSA is to be in effect for a term not to exceed
ten years, beginning February 17, 2009. This term corresponds to the duration of the
D Block license. The NSA may be renewed along with the D Block license. The
FCC will decide whether to renew or modify the NSA at the same time that it
considers renewal of the D Block license.69
Modification of the Agreement. Modifications to the NSA or other
agreements that are part of the public-private partnership structure must be approved
by the FCC Commissioners, in case of major changes, or by the Chiefs of the
Wireless Bureau and the Public Safety and Homeland Security. Approval must be
received in advance of any action, after both licensee partners have agreed to the
modifications.70
Rules for Managing Spectrum
The Public Safety Broadband Licensee is authorized by the FCC to lease access
to the frequencies covered by its license exclusively to the D Block licensee, on a
secondary, unconditionally preemptible basis.71 This means that the D Block
network commercial users will be able to transmit on available frequencies in the
public safety band only when there is no demand from the primary, public safety
users, and that any demand from public safety is to be immediately met by
terminating the commercial traffic and yielding to the public safety user. This
privilege of secondary access is to be accorded to the D Block licensee as part of the
66 Ibid., paragraph 450.
67 Ibid., paragraph 451.
68 Ibid., paragraph 452.
69 Ibid., paragraph 449.
70 Ibid., paragraph 454.
71 Ibid., paragraph 414.

---

CRS-13
interlocking agreements that constitute the public-private partnership.72 For example,
the Public Safety Broadband Licensee is required to lease spectrum to the D Block
licensee, and the D Block licensee is required to build a network for public safety
use.73 The FCC will require a spectrum manager leasing arrangement for the full
term of the ten-year license. This form of lease places the responsibility for
compliance fully on the lessee, the D Block license holder.74 As part of its spectrum
management obligations, the D Block licensee will be required to assure that public
safety users will not experience harmful interference, interruption, or degradation of
service due to commercial operations in the public safety spectrum band. One
prerequisite for this level of assurance is a requirement by the FCC that the network
be designed to assign priority to first responders automatically, with immediate
preemption or exclusion from access to the network by commercial users.75
In return for allowing commercial usage of its bandwidth, public safety will
have the right to real time access, on an emergency basis, of the spectrum licensed
to the D Block.76 The obligation to provide this priority access is one of the service
rules attached to the Block D license. The definition of what constitutes an
emergency is to be part of the NSA. In situations not covered by the NSA, where an
agreement between the two licensees about what constitutes an emergency cannot be
reached, the public safety licensee can appeal to the FCC to declare that an
emergency exists that requires access to D Block frequencies.77
Rebanding Public Safety Spectrum at 700 MHz
In order to accommodate both narrowband and broadband networks for public
safety, the FCC revised the original band plan for the 24 MHz allocated to public
safety.78 In addition to opening the way for a shared spectrum agreement between the
public safety community and the private sector, the FCC resolved other spectrum
management issues that are not discussed in this summarizing report. Among the
FCC decisions of consequence to the operation of public safety networks in the 700
MHz band are:
! Move some networks already in the preliminary stages of build out,
requiring a certain number of technical adjustments to equipment
and software.
! Require the D Block licensee to pay for the costs of these
adjustments.
72 Ibid., paragraph 416.
73 Ibid., paragraph 415.
74 Ibid., paragraph 417.
75 Ibid., paragraph 418.
76 Ibid., paragraph 426.
77 Ibid., paragraph 427.
78 Ibid., paragraphs 325 - 326.

---

CRS-14
! Cap at $10 million the cost of reimbursement for these costs to
public safety network operators by the D Block licensee.
! Prohibit new operations of narrowband systems on 700 MHz public
safety networks that will be relocated as a consequence of the
rebanding.
! Limit building and use of wideband networks.
Relocating Public Safety Networks
The new band plan for public safety in the 700 MHz band creates two separate
sets of paired spectrum blocks. One set of paired frequencies will be used for
narrowband communications, the other set has been designated for the new,
broadband network to be built by the public-private partnership. Because parts of the
700 MHz band intended for public safety use are not encumbered by broadcasters,
some states have begun to build narrowband networks that use the 700 MHz
capacity. Base stations and radios will have to be modified if they have already been
programmed to operate on frequencies that are being reassigned to the broadband
network. These frequencies must be vacated by February 17, 2009, or as soon after
that date as possible, so that they will be immediately available for broadband use.79
Costs Associated With the Relocation. As part of the rule making
process, Motorola, Inc., a leading provider of public safety equipment, provided the
FCC with a cost estimate for a rebanding plan proposed by the National Public Safety
Telecommunications Council (NPSTC).80 The NPSTC plan would have covered
equipment already installed, on order, or planned. Motorola set the cost of the
retuning at $9.45 million, which amount would cover all installations projected to be
in place by July 2008.81 The FCC decided that the D Block licensee would be
obligated to cover the costs of rebanding 82 but took several measures to control the
cost. A cap of $10 million in reimbursements was established. To assure that costs
stayed below that threshold, the FCC ruled that only systems and radios in operation
as of 30 days after the adoption of the Second Report and Order would be covered.
The cut-off date, therefore, was August 30, 2007. By limiting the number of base
stations and radios that would have to be reprogrammed, the FCC figured that the
estimated cost would be around $6 million, based on a pro-rating of the cost
assumptions presented by Motorola. The FCC reasoned that this would provide
leeway, if costs had been under-estimated, to assure that the total cost remained under
the $10 million cap.83
79 Ibid., paragraph 332.
80 Letter from the National Public Safety Telecommunications Council, June 25, 1007, WT
Docket No. 96-86.
81 Letter filed by Motorola, Inc., June 29, 2007, WT Docket No. 96-86.
82 Second Report and Order, paragraph 336.
83 Ibid., paragraph 341.

---

CRS-15
Freeze on New Operations. To further control costs for relocation
expenses, the FCC prohibited new operations on affected narrowband frequencies
after August 30, 2007.84
Determining Reimbursement of Costs. The FCC set out rules for
calculating actual costs and reimbursements. As with the negotiation of the Network
Sharing Agreement, the public safety licensee and the commercial D Block licensee
are obligated to prepare a plan for relocation and an agreement on costs for rebanding
that must be reviewed and approved by the FCC.85 The two licensees are given 30
days to reach agreement on the plan.86 To receive reimbursement, displaced public
safety network operators must meet a number of conditions. For example, they must
provide information, accurate as of August 30, 2007, that is to be accompanied with
a certification of accuracy. This information covers:
! Total number of mobile narrowband mobile and portable handsets
in operation on the affected frequencies.
! Total number of base stations serving the narrowband handsets.
! Contact information for each identified set of handsets and base
stations.
! Geographical area of operation of mobile and portable units.
! The location of the base stations.
The Public Safety and Homeland Security Bureau will publish a Public Notice
to announce the deadline for the certification program. Failure to meet the deadline
for filing information required by the certification program will result in forfeiture
of the opportunity to receive reimbursement for technical changes. Only changes
made to equipment actually in operation as of August 30, 2007, will qualify for
reimbursement.87
The D Block licensee will be responsible for reimbursing only the minimum
cost for necessary changes to base stations, mobiles, and portables, and not for any
unrelated improvements. Specifically, the FCC does not require the D Block
licensee to assume responsibility for costs related to reassigning channels or other
changes to the Regional Planning Committee plans.88 T h e r u l e m a k i n g d o e s
acknowledge the possibility that some reimbursement may be forthcoming for the
Public Safety Broadband Licensee’s cost related to the rebanding program.89
Paying Reimbursements. The D Block licensee and the public safety
licensee are expected to agree on the total costs (not, however, to exceed $10 million)
84 Ibid., paragraph 339.
85 Ibid., paragraph 340. The Chief of the FCC’s Public Safety and Homeland Security
Bureau is assigned the responsibility of reviewing and approving the rebanding plan.
86 Ibid., paragraphs 336 and 504.
87 Ibid., paragraphs 336 and 337.
88 Ibid., paragraph 338.
89 Ibid., paragraph 342.

---

CRS-16
that are to be reimbursed for changes necessitated by rebanding. This amount must
be submitted to the FCC as part of the required relocation plan, with certification
from the two license holders and the relevant equipment vendors that all parties agree
to the negotiated prices and no changes will be made.90 The amount, once approved
by the FCC, must be paid into a trust account established by the Public Safety
Broadband Licensee, no later than the date of execution of the Network Sharing
Agreement. The public safety licensee will have the responsibility of administering
the account and making payments in accordance with the agreed reimbursement
schedule. No payments can be made from the trust account, however, until the D
Block license has been conferred to the winning bidder.91
Wideband Operations
The FCC has ruled that public safety network operators wishing to operate
wideband systems (enhanced capacity for narrowband channels), must obtain a
waiver. The waiver request must contain an application for authorization; a letter
from the Public Safety Broadband Licensee confirming that the wideband operations
will not be inconsistent with broadband deployment plans; agreed upon conditions
of operation; a transition plan to the broadband network;92 and certification that it
will not seek reimbursement (from the D Block licensee) for costs incurred in a
future transition to broadband operations.93 Grants for waivers will only be given for
wideband operations within the narrowband frequencies; except under rare
circumstances, no wideband operations will be permitted in the broadband
frequencies.94 Devices used on the wideband network must be interoperable with the
broadband network.95 Licenses for operation granted for wideband operations will
be valid for five years.96
Congressional Oversight
In the Second Report and Order, the FCC has assigned itself the role of
champion and protector for public safety interests, nationwide emergency
communications, and interoperable networks. Under the umbrella of the
Communications Act, it will undertake to monitor and regulate the actions of the
Public Safety Broadband Licensee and the companies formed to manage the
obligations of the D Block license holder. Congressional oversight of the public-
90 Ibid., paragraph 342.
91 Ibid., paragraph 343.
92 Ibid., paragraph 491.
93 Ibid., paragraph 495.
94 Ibid., paragraph 492.
95 Ibid., paragraph 495.
96 Ibid., paragraph 496.

---

CRS-17
private partnership therefore is placed squarely within the jurisdiction of the
committees dealing with telecommunications.97
Governance through Regulation
In extending the scope of its authority to write service rules for auction,98 the
FCC has made a commitment to oversee and adjudicate the operation of a network
that, when completed, could have an asset value in the tens of billions of dollars. A
large part of that asset will be managed by the Public Safety Broadband Licensee,
which will be governed by its Board of Directors in accordance with FCC
regulations. Of the fifteen voting members of the board, four are to be appointed
directly by the FCC. In its oversight of the public-private partnership, the FCC has
announced its intention of enforcing existing rules or creating new rules as
circumstances warrant in the future. Measures to enforce the rules include litigation,
revocation of license, or other means that might be supported by a reading of the
Communications Act.
The role of Congress, in accepting this arrangement, will be to provide guidance
to the FCC commissioners through the various means available to it. At the member
level, this could include writing letters to FCC commissioners in favor of an industry
position on a ruling. An example of this practice is found in the campaign of the
National Association of Broadcasters to urge members of Congress to write letters
to the FCC in support of the broadcast industry’s position on access to spectrum
known as “white space.” At the committee level, oversight actions could include
hearings as well as direct communications with the commissioners and their staff.
Governance by a Federal Corporation
Congress has the option to consider chartering a federal government
corporation, a quasi-governmental organization, or other legal entity.99 This entity
could manage the public safety network as an equal to its commercial partner. It
could be given powers that include negotiating agreements for sharing, building and
managing its share of the network, collecting fees from users, and acquiring
spectrum, as appropriate. This is essentially the role that, currently, are among those
to be assigned by FCC service rules to the companies that the commercial license
holder is required to create.
97 Senate, Committee on Commerce, Science, and Transportation; House of Representatives,
Committee on Energy and Commerce.
98 The Balanced Budget Act of 1997 gives the FCC authority to conduct auctions, set
performance requirements, and evaluate the qualifications of licensees [47 U.S.C. § 309 (j),
especially, (3), (4) and (5)].
99 Several CRS reports discuss federal government corporations and quasi-governmental
organizations, including CRS Report RL30365, Federal Government Corporations: An
Overview, and CRS Report RL30533, The Quasi Government: Hybrid Organizations with
Both Government and Private Sector Legal Charters, both by Kevin Kosar.

---

CRS-18
To meet its capital requirements and cover start-up costs, a federal corporation
could borrow from the Treasury as well as raising funds through bonds and other
financial instruments, which would be repaid from the revenue stream of service fees.
Such an entity could, if needed, buy out its private sector partner if it defaulted on its
obligations. Its favored access to financial markets could also secure funding even
if a change in market dynamics leads to a reduction in investment capital flows. It
would, to use the FCC’s term, be bankruptcy remote. Benefits of a federal
government corporation could be weighed against disadvantages such as financial
demands on the U.S. Treasury if the federal government is obliged to honor the
corporation’s debt obligations, or concerns about the impact of federal participation
in commercial wireless markets.
Legislating a charter for a federal government corporation or similar entity could
give Congress new opportunities for oversight. Typically, oversight is undertaken
by committees with jurisdiction over the type of activity performed by the
corporation. Jurisdiction of the Tennessee Valley Authority, for example, is shared
between the Senate Committee on Environment and Public Works and the
Subcommittee on Water Resources and Environment of the Committee on
Transportation and Infrastructure in the House of Representatives. Joint oversight
of a governmental corporate entity could provide a mechanism for coordinating the
statutory obligation of the Department of Homeland Security to provide support for
emergency communications with the FCC’s responsibility to manage the spectrum
used by public safety.
Currently, the FCC is preparing to use its regulatory authority over spectrum use
and auctions to take action in an area (improvement to public safety communications)
that Congress has assigned the Department of Homeland Security (DHS). In Title
VI of the Homeland Security Appropriations Act, 2007 (P.L. 109-295), Subtitle D
— the 21st Century Emergency Communications Act of 2006 — Congress created an
Office of Emergency Communications and the position of Director, reporting to the
Assistant Secretary for Cybersecurity and Communications, to oversee the planning
of a national capability to support communications for public safety and others in the
emergency response community.100 In the law, Congress specified that, in reviewing
interoperable emergency communications plans, the Director of the Office of
Emergency Communications must exclude the review of spectrum allocation and
management.101 Additional provisions for the management of a public safety
network were included in the Implementing Recommendations of the 9/11
Commission Act of 2007 (P.L. 110-53).
Conclusion
For the last decade, the primary method by which the Federal Communications
Commission (FCC) has assigned access to radio spectrum has been through the
auctioning of licenses for specific frequencies in designated geographical areas.
100 P.L. 109-295, Title VI, Sec. 671(b) ‘Title XVIII, ‘Sec. 1801 ‘(a) and ‘(b).
101 P.L. 109-295, Sec. 671, “Sec. 1801 “(c) “(12).

---

CRS-19
Previously, some licenses for early cell phone networks were distributed at modest
cost to individual purchasers — many of them selected through lotteries — who then
sold the licenses, which were often resold at high prices to large wireless
companies.102 Subsequently, with the recognition by capital markets that a spectrum
license is a valuable asset, and with the relaxation of rules regarding ownership, sale,
and trading of licenses, radio spectrum licenses have been increasingly treated like
other financial holdings.
The winning bidder of the spectrum license designated for sharing with public
safety users will acquire not only the right to build a network but also the exclusive
right to serve a captive market of first responders. The value of a near-guaranteed
subscriber base and a predictable cash flow of subscriber fees is one of the attributes
of a network shared with public safety that could attract the attention of investors,
especially private equity groups seeking high returns over the long-term.103 A
market-driven solution, relying on private investment, is therefore seen by many as
a viable solution for funding part of a public safety network.
When Congress required the FCC to use auctions as the primary means for
assigning spectrum licenses, one of the perceived benefits was to capture some of the
market value of spectrum for the U.S. Treasury. The earlier practice of assigning
licenses to qualified operators based on merit had worked acceptably when the
licenses were primarily for radio and television. However, this system broke down
as technology and consumer demand created a boom in cell phone use.104 Just as
Congress moved to competitive bidding for licenses in response to changes in the
nature of the cell phone industry, it may wish to evaluate whether FCC rule making
is an adequate mechanism for creating a structure to govern a shared network that
will serve the nation’s first responders and meet other public safety needs. A
different approach — beyond rule making and regulatory intervention — may be
required to assure the creation and operation of a public-private network.
102 The distribution of licenses for cell phone networks from the early days of the
technology until the introduction of auctions is described in Wireless Nation: The Frenzied
Launch of the Cellular Revolution in America, by James B. Murray, Jr. Perseus Press, 2001,
2002.
103 Statement by Morgan O’Brien, Cyren Call briefing for CRS, April 3, 2007. Public safety
has been referred to also as an “anchor tenant.” (For example, statement by Dr. Stagg
Newman, Chief Technology Office, Frontline Wireless, in a presentation at WCA 2007,
Washington, DC, June 14, 2007.)
104 There were nearly 240 million cell phone subscribers in June 2007; statistic updated
regularly at [http://www.ctia.org/].

---